Split Mortgage - fixed and variable

[podgerodge]

Eur190,000 mortgage. Currently on tracker at 2.99% over 19 years. Repayment circa Eur1,100 a month.

Tempted to split between fixed and variable (120k fixed, 70k variable), but not due to a concern over inability to pay if rates go up, more for satisfaction that the mortgage was hedged a little if it happens. (I'm assuming, rightly or wrongly as no-one can ever be sure, that the ECB rate will move from 2% to 3% by the end of 2006)

5 year fixed from AIB available at 3.6%.

Question - I want to increase my outgoings on the mortgage to circa Eur1,700 a month - Karls calculator suggests that this will bring the date of redemption to approx 11 years from the current 19.

Do I go to AIB and ask for a new mortgage term i.e 11 years and ask for a split between fixed and variable or, do I keep the current term and current repayment, split between fixed and variable, and prepay the extra Eur600 into the variable portion of the mortgage. By my reckoning the second option would leave me not far off redeemed on the variable part by the time the 5 years fixed are up. Is there an advantage to proceeding either way or is it six in one hand dozen in the other?

Thanks

 

[ClubMan]

Have you seen this recent thread?

 

[podgerodge]

Thanks yes, but I'm sort of fixated (geddit??!) on splitting right now!

 

[WizardDr]

If you reduce the term, you will commit to be paying a higher outlay.

You seem to know what you want with the fixed rate.

Your variable rate option - I would go for longer term with lower payments. Pay off lump sums whenever you want, and as they are all more or less daily interest you can then cut the term if you want.

With the fixed, you may not have flexibility to pay off lump sums without a penalty, so make sure you know if the lender allows periodic amounts to be paid off without penaly.