Reducing the term of AIB mortgage

[Gab]

I am thinking of lowering the term of my mortgage, the mortgage is a variable rate mortgage with AIB which I have had for 2 years and find the repayments eary to manage.

Any advice?

Thanks

 

[Bank Manager]

a) if you have other short term debt, e.g. credit cards or personal loans - clear those first as they will be attracting higher rates of interest rather than mortgage

b) if you are planning a purchase e.g. in the next year or two - I'd probably advise to save for that - the alternative will mean you'll reduce mortage debt but find yourself having to borrow for purchase (back to point a) above)

c) how are you fixed pension wise - may make more sense to increase pension payments (and avail of significant tax break) rather than reducing relatively cheap mortgage finance.

just some ideas to think about.............

 

[tonka]

If you are on an AIB standard variable mortgage the best thing to do now is to get on an AIB tracker rate , that would be at 3-3.1% rather than 3.5-3.6% . Ring AIB and threaten to leave them for NIB or Bank of Scotland. That one phone call should get you a reduction on the monthly payment amounting to c. €50 PM on a €150k mortgage.

Then do as Bank Manager says although his Point C is very complex and can lock you into a crappy pension scheme where you are being totally gouged by management fees by morons calling themselves investment managers BUT its a tax break. Take extensive widescale advice before locking yourself into a pension scheme that could be crap.

You could then round up the mortgage payments to say €1000 a month anyway (on a €150k mortgage) and reduce your term by systematically overpaying but keep some cash liquid in case you need to fatten up the pension .

it helps if
a) you need short term funds and
b) in case you do get a pension as you were correctly advised and can check in a lump sum at the beginning, keep more than €2k in the slush fund

 

[Philip2005]

The best way to reduce the length of your mortgage is to
overpay it.

Ask your bank how do you pay extra into your mortgage account.
You will reduce the lenght of your mortgage and save alot of interest in the process.
You can find overpayment calculators on the internet. There is an example on this website.
www.sharewatch.com On the left hand side is a link to a mortgage calculator.

 

[brodiebabe]

Thanks for that link to sharewatch, can't believe the difference it makes to even overpay by 50 euro a month.