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Yes - of course. Having it sitting in the account as a credit is doing you no good. Paying it off the capital will save you money in the long run - especially if you also keep to the normal schedule repayments thereafter thus reducing the effective term (and cost) of the mortgage. See Karl Jeacle's mortgage calculator. Obviously the money will then be "locked away" and not easily accessible (e.g. only via an equity release/mortgage topup).We've been overpaying our mortgage for the last 3 years now and have amassed a sizeable credit on our mortgage account. Is there any benefit to taking this amount off the capital / principle amount?
This is only the case with current account/offset mortgages. If you are not on one of those then the money in the account is not saving you anything.As far as I know, the credit amount is taken into account when the interest is being calculated e.g. owe 100K, have credit of 10K, interest is calculated on 90K.
If that suits you better then so be it but it's not the most cost effective way. In fact making the capital repayment now and then asking for a repayment holiday might even be a better idea. But you'd need to crunch the numbers to check.We could take the 10K off the 100K formally and therefore adjust our repayment amount each month or have the term of the mortgage reduced but I like the idea of having this "credit" amount, as long as the end interest is the same. If we wanted to pause the mortgage payments for 6 months, I'm sure we could do this easily.
Read the terms & conditions of your mortgage loan agreement. If it is not a current account/offset mortgage then I would be very surprised if balances in the account were offset against capital when charging interest. Get your man to put his comments in writing and see what happens. If you want the money handy/accessible or want to use it for paying the mortgage at some point in the future then consider leaving it as is. If you want to reduce the effective term and total cost of your mortgage (possibly significantly) then consider paying if off the capital.Thank you very much for the info. The guy reasured me yesterday that when repayments are calculated the credit in the mortgage account is taking into consideration . Now Im really confused.
You mean a "roll your own" current account mortgage? Are you SURE that many lenders offer this? I doubt it to be honest.No problem iIf you agree it in writing with your lender ,then you can let it stay in the account as a credit while being taken into account for interest calculation.
You mean mortgage repayment insurance rather than mortgage protection life assurance? It's not different to saving the money elsewhere.This is handy if you don't have mortgage protection insurance.
We've been overpaying our mortgage for the last 3 years now and have amassed a sizeable credit on our mortgage account. Is there any benefit to taking this amount off the capital / principle amount?
As far as I know, the credit amount is taken into account when the interest is being calculated e.g. owe 100K, have credit of 10K, interest is calculated on 90K.
Can I clarify HOW you are overpaying your mortgage - I have a PTSB mortgage paid by direct debit. How do you overpay it - by lodging money manually to the account?
I looked at my mortgage account online and it shows the very large debit - my outstanding mortgage, and about €500 "prepayment" - no idea where it came from, must have been lying there from the start. I assume this is where the overpayment figures others are referring to is specified. But how do you KNOW that you are paying interest on the net amount as the service doesn't provide a breakdown of interest/capital? Do you just take PTSB's word for it? (short of trying to work it out yourself by looking at the balance outstanding each month..
PTSB Terms&Conditions said:D. No refunds of Overpayments or Lump Sum Payments
No refunds of Overpayments or Lump Sum Payments will be made to the Applicant when payment thereof is received by permanent tsb.
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