Where to save €500 per month?

S

Shaz

Registered User
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I have an Offset Flexible Mortgage with First Active and currently the interest rate is 4.9%. I intend to save €500 per month in it so that I can reduce the interest of the mortgage. With 4.9% as the benchmark and taking into account DIRT at 20%, am I right to say that if I choose to save the money in another savings account, I would need a savings account that pays an interest rate of at least 6.125%?

I know that AIB is pay 7.1% AER (or is it EAR)? Does it mean that 7.1% is the interest rate that they will pay per year? If so, should I not go with AIB? I have read the Financial Best Buy section but am confused with regard to the rates given? Are they annual rates or is it something else?

Thanks.
 
Confused about compounding interest

I have an offset flexible mortgage. I intend to save €500 per month in it to reduce my interest longterm. Am I better putting the €500 into a regular savings account as there would be interest paid and I can leave the interest in for the compounding effect. If I just keep saving €500 a month in the offset mortgage account, am I right to say that there is no compounding effect at all?

I am very confused. Please help! Thanks.
 
check out bankrate.com if you have a mortgage, an extra 500 a month can take a 200k morgage down by 9-10 years!
 
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