Thoughts - pay off mortgage early

Mclovin

Registered User
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Hi,

I would really appreciate some third party perspective on paying off a mortgage early. Details as follows:

PTSB, tracker ECB + 2.3%
110,000 to be paid down over remaining 24 years.
Property in negative equity - circa 50,000

130,000 in savings sitting on deposit.
Annual salary of 70,000. Paying into company pension.
No other loans and no dependants.

I think repaying early will save me around 28k on interest repayments. I realise I'm lucky to be on a relatively low interest rate, although the ECB is set to rise next year.

Would love to hear your thoughts.

Mclovin
 
Hi,

I would really appreciate some third party perspective on paying off a mortgage early. Details as follows:

PTSB, tracker ECB + 2.3%
110,000 to be paid down over

130,000 in savings sitting on deposit.
Annual salary of 70,000. Paying into company pension.
No other loans and no dependants.

I think repaying early will save me around 28k on interest repayments. I realise I'm lucky to be on a relatively low interest rate, although the ECB is set to rise next year.

Would love to hear your thoughts.

Mclovin

Is that your primary residence ?

The ECB are unlikely to raise rates with the state much of the eurozone is in.
 
The house is valued at 60,000, very low price, it must be a very small house in a rural area.
 
The house is valued at 60,000, very low price, it must be a very small house in a rural area.

Yep, 3 bed in rural village. The purchase price was 155,000. 110,000 remains on the loan. House value currently 100,000.
 
Then the negative equity is 10,000.

Negative equity is the difference between house value and mortgage balance.

You have a capital loss of 55,000.

Capital loss is not the same as negative equity.

I have met an AIB mortgage official who confused them.
 
The key question here is that the interest return on the savings is far less than the 2.3% mortgage interest cost.

You could be earning 0.5% on 130k deposit, and paying 2.3% on 110k mortgage.

So, based on the limited info we have, yes, repay some or all of the mortgage.
 
I think I would pay off the mortgage in this situation too. (Unless you plan to purchase another property in the near future)
 
This forum is brilliant! I'm not financially savvy so I really appreciate the advise and different points of view.

Just to add more detail. The property is not currently my primary residence, I am currently renting in another county. The intention is to move back to the property, clear the mortgage and build the saving back up again. I am interested in purchasing another house but this is probably 8 - 10 years out.
 
It really depends on what you mean by buying somewhere else. Do you intend to keep this house then ? If you don't intend to buy in 10 years and are happy that you can save money for a new house by then, then you should pay off most of this. I say most rather than all, because it may be handy to have an 'overdraft' of say 30k for emergencies which is only effectively costing you 3%. Then in 3 or 4 or whatever years when you have saved 30k, pay off the remainder.
 
Yeah the recent post by someone who cleared their mortgage to then want to go and do some return.

Clear it down to 30k and build up savings and then clear down the rest further down the line.
 
I say most rather than all, because it may be handy to have an 'overdraft' of say 30k for emergencies which is only effectively costing you 3%.

Yeah the recent post by someone who cleared their mortgage to then want to go and do some return.
It's a bit different here. OP can clear mortgage, and still have 20k in cash.

Why pay 3% per year for the security of extra money? Someone with 20k cash, earning 70k with no loans, no dependent, and no mortgage doesn't need to be throwing away 900 per year for access to money they might never need.
 
On reflection red onion is right - if you feel comfortable on having 20k in savings and know you have ability to raise this up relatively quick and with no concerns go with red onions suggestion.

Well done being in the position to do this.
 
Thanks everyone for your take on this scenario. The logical breakdown is of enormous help to me.

My next steps have become a lot clearer.
 
You could compromise with both and re mortage for a much smaller amount letting you keep a little more in your savings .
Your tracker isnt a fantastic rate worth keeping at any cost if your in a position to clear if rates have a large hike.
You could get 2.2% 3 yr fix from kbc and similar from others ,avail of the cash back schemes and you could get upto 3k back from the likes of ptsb etc for switching.
Is it defintely 24yrs left as last tracker was about 10 yrs ago and your principle hasnt reduced greatly in that 10 yr period .
 
You could compromise with both and re mortage for a much smaller amount letting you keep a little more in your savings .
Your tracker isnt a fantastic rate worth keeping at any cost if your in a position to clear if rates have a large hike.
You could get 2.2% 3 yr fix from kbc and similar from others ,avail of the cash back schemes and you could get upto 3k back from the likes of ptsb etc for switching.
Is it defintely 24yrs left as last tracker was about 10 yrs ago and your principle hasnt reduced greatly in that 10 yr period .
Your post doesn't make any sense.

Firstly, the lowest 3 year fixed rate from KBC is 2.55%

Also, he doesn't live in the house, so won't be able to avail of these rates.
 
Kbc have a 3yr 2.2% if he moves his current account and has a loan ratio less than 60% which would be the case here if he cleared some of the mortgage .
Im less sure if what they would do for him if he didnt live there although im sure he could move in on paper until the mortgage came through
 
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