What to do with Lump Sum

T

TiggerW

Guest
Hi ,

I know this has probably been done to death before , but I'm looking for some advice on what to do with a lump sum of 60k.
I have 20yrs and 140k (house worth 200-220k approx) left on my mortgage. Repayments are easily manageable as we are both working (in Public Sector). Mortgage is variable at the moment at a rate of approx 3.5%.
I think I should use the money to pay off a lump of mortgage given that interest rates are probably only going one way and its unlikely I'll get close to any incresead rate on deposit. We are likely to get some paycuts over the next few years , but like I say the mrotgage is manageable at the moment and should be so barring a massive interest rate hike.

We were considering moving house , but I dont think that will be so easy any more . And even if we do , paying a lump off the mortgage will serve to keep us in Positive Equity for a while longer.

Any Advice gratefully recieved.
 
Rather than sink it all into the mortgage - why not think about paying off enough to bring the LTV down to under 50% - this may then allow you to get a better rate on the mortgage.

- Irish Nationwide 3.05% variable on LTV under 50% or 3 yr fixed at 3.25%

Or even 3.7% at PTSB - not lower than your current one - but it could be a good fix for 5 years of certainty.

Rates Here

With the bailout - variable mortgage rates are more likely to rise beacuse the EMF/ICb want the banks to get more capital in.

By keeping some of the lump sum - you will be reducing your "investment " in property - and will have some spare cash if you need it.
 
That sounds like really good advice. I hadnt considered a fixed rate as I thought they would be higher .

Cheers
 
Hi folks,

I was watching this post with interest as I'm in a similar situation except I'm currently on a tracker mortgage.

Was looking at paying off a 100k on a remaining 160k mortgage (19 yrs to go).

Bank has informed me if I do this my repayments will drop from €920 to €325 per month else I have the other option of paying the lump sum and continue making the current €920/month repayments and finish my mortgage in 2017 instead of 2029!!

Just wondering what the best option would be in this instance.

Apologies for hijacking your post TiggerW but didn't want to create a new one as it is very similar and maybe some other advice may came our way.

Any info would be appreciated.

Marty004
 
marty004 - If I was in your position I wouldn't be in a hurry to pay off the mortgage while the ecb rate is so low.
You should be able to get 3.5% on deposit - after DIRT that is 2.625%
This is slightly more than your mortgage rate of 1.95%
If/when ecb rates go up - than you could think about paying some off.

I would keep some cash rather than have it all tied up in property - where you might not be able to get at it if you need to.

Best Deposit Rates Here
 
How disciplined are you with your money? If you are fairly disciplined, then Irishlinks' advice makes sense. If you are undisciplined and may spend the money on unnecessary things - then never mind the rate, just pay it off the mortgage and keep the monthly repayments the same - it will be great to be mortgage-free in 7 years rather than 19:)
 
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