Key Post Take a mortgage holiday and put the money on deposit

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4,874
It might be in your financial interest to ask for a mortgage holiday. A lot of mortgage terms and conditions allow you a mortgage holiday at no cost. You can then invest your normal mortgage payments at 5.50% - 6.00%. There is no hurry to pay off a low cost loan when there are such great/higher deposit rates out there where you will earn more.
 

Brendan Burgess

Founder
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40,657
Fungus

This is such a good point, I moved it from its original thread so that it would not get lost.



If you are permanent tsb mortgage holder and you have already made payments ahead of schedule, you will are entitled to take such a payment holiday until you have used up the advance payment. This is discussed elsewhere on Askaboutmoney.

Brendan
 

picaresque

Registered User
Messages
25
For this to be worth while would you need to have a low interest rate and be able to get a high deposit rate? This might be a silly question but I find it dificult to get my head aroudn these things sometimes.

eg
I have a year left on a fixed rate of 5.1%
I overpay by roughly e200 a month and have been doing so for about 2 years. lets assume I get a deposit rate of 6% would it really be worthwhile to move my payments from the mortgage to the interest earning account for say 1 year.

I appreciate this is kind of a hypothetical question as I doubt PTSB will allow such a long payment holiday.
 

Brendan Burgess

Founder
Messages
40,657
Hi picaresque

This would be of little benefit to you. But people on a variable tracker are paying as low as 2.5% at the moment.

Brendan
 

bigandy

Registered User
Messages
5
all,

this looks like good idea alright....depending on one's own circumstance

my example is, tracker mortgage of 1.95%, regular saving acct at First Active paying 3.46%, so I would be better going interest only on the loan and diverting the balance into the saving account, or am I missing something ?

any response welcome, as a longtime viewer and new poster.......thanks
 
Messages
4,874
If you tracker is 1.95% it is not in your financial interest to pay off any lump sums with your mortgage. You are financially better off saving. I suggest you put any excess savings in accounts such as high rate term deposits to maximise your pay out.

With regard to interest only, I suggest you ask a mortgage expert for advise.
 

bigandy

Registered User
Messages
5
If you tracker is 1.95% it is not in your financial interest to pay off any lump sums with your mortgage. You are financially better off saving. I suggest you put any excess savings in accounts such as high rate term deposits to maximise your pay out.
Thanks Fungus,
I kinda figured that, if only I had some savings....you see my cunning plan is to defer the capital portion of the mortgage payment for a year or two, and divert it into a high interest savings account.
Then at the end, the amount saved, plus the interest minus DIRT, should be of a greater value to be lumped into the mortgage.
Especially as the interest payments are tax deductible, because the loans are buy to let.
Probably too good to be true though....


With regard to interest only, I suggest you ask a mortgage expert for advise.
any mortgage experts out there ??
 

Odea

Frequent Poster
Messages
401
When mortgage interest rates were higher than saving rates I would have advised my customers to switch money from their savings account to their mortgage. By saving on higher mortgage interest charges they were in effect getting a saving rate equal to the mortgage rate.

Now that rates are operating the other way it is a good point that Fungus is making and should be looked at.
 
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