do you have savings and a mortgage?

if so then is your mortgage rate rate of interest higher or lower than your savings rate of interest? if so by how much? After DIRT/any fees does it still make sense?

if it’s not higher then are you going to put it towards your mortgage to clear debt that is more expensive than what you are earning on deposit?

either way its an interesting point given how much banks are jacking up rates, with many people there is now no way that they are getting on deposit the same as they are paying out on interest. and i’ll say in advance ‘yes pinsters, it’s research for me poxy blog!’

any feedback/help appreciated!

You make a valid point MB. After finishing a “PIP” SSIA in April of last year, I was quite content 12 months ago with the account worth about 25K. One year on and 12 X €254 later, it was worth 24K.
I decided to cut the losses and dump the proceeds to the mortgage. My situation is better than a lot who are not so fortunate, down to good luck rather than good judgement. Tracker mortgage at 4.7% until last month with 15 years to go on the term and 107K remaining. Maintaining the repayment level and reducing the principal to 83K (107-24) stripped 4.5 years off the term. Better return than anything the banks are offering!

But deposits rates were always lower than mortgage rates MB save for some recent regular monthly saving schemes that give you 8% on up to €1000 a month saved in the scheme . It may be an idea to divert an overpayment on a 6% mortgage into an 8% deposit and lump the lot over later but its small beer really .

There is an argument for having €10k liquid because it could be very handy instead of taking out a 9% car loan , in fact the difference between a 9% car loan and an 8% regular saver is 17% if you look at it that way .

But apart from that, pay off the bleddy mortgage .

I keep cash and liquid assets on hand that are roughly the same size as my mortgage, so I could in theory pay my mortgage off in full.

My mortgate rate is 4.75% fixed (not including tax benefits) until the end of next year. My assets are two-thirds cash earning about 4% gross and one-third bonds and international equities (which are taking a beating at the moment). I would save money now by chucking the lot into the mortgage but there’s no way I would do that.

I value liquidity and property is not a liquid asset. The stock market is in the dumps now but I want to be able to take advantage of any upswing should it come in 2009 or 2010. I think I should be able to beat 4.75% p.a. in the long run.

Also having cash on hand is important for security in the event of job loss or emergencies.

You’ve also got to consider the potential loss of savings if your bank tanks. BoI & Anglo share prices both down by over 70% :open_mouth:

On the other hand, there are people who cant stand the idea of being in debt and want to clear it as fast as possible, and others who view owning their home outright as priceless.

Very true. Personally I’d hate the idea of having every penny tied up in a house, so I suppose it depends on the individual as much as the relative rates of return.

I paid a whack off the mortgage 2 years ago and then fixed for 5 years at 4.8%. Will repay some more when the fixed period is up (mind you, I expect to be well and truly in NE by then - bought in 2004 on a 85% mortgage in a good area :cry: ). My current deposit rate is 5.5%.

excellent points folks! Although I think that Pin members might skew the figures compared to the general public!

Don’t forget that interest on your mortgage earns tax relief, which you miss out on if you clear the mortgage.

It’s all maths, folks.

You might find that paying down a chunk of the mortgage gets you into a lower LTV deal with a better rate which could be worthwhile.

-Rd

Thought I’d resurrect this thread given the changing interest rate landscape

independent.ie/business/personal-finance/property-mortgages/dont-overpay-your-mortgage-2153629.html

Truth is guys you should have access to some cash “in case of emergencies” i.e. car breaks down or house flooded etc 3 months salary in a deposit account that has easy access. As far as paying the mortgage off is concerned I would always advise paying off any extra cash you have besides the 3 months money but remember you have to live.
Some people like a few nights out a week on the beer some like nice restaurants or long haul holidays and all of these will eat cash so its a matter of balance and your own happiness index i.e. are you happier that the mortgage is reduced by €2k or that the holiday to Thailand in the 5 Star hotel is booked for €2k. Your choice, personally we dont have the mortgage issue as ours is negligible and could be paid off out of savings so we’re lucky and thats because we wer’nt greedy with property and theres time enough to pick up a nice house when the arse finally falls out of it.

I agree with this - having 3 months salary readily available helps me sleep easier at night. At the moment I’m keeping a big cash balance as I expect to move house within the next 12 months. If I was planning to stay put for five years, I’d put the money into the mortgage.

I don’t have a huge amount of savings, but again, I’d rather keep it handy for any unforseen events. The interest rate on the savings is slightly higher than our tracker mortgage of ecb+.9.

Yeah i have a fixed rate with 1.5 years to go and we will hopefully have close to €80k in savings if all goes well(€61k now). We plan to keep 10k in cash and pay the remainder off the mortgage which stands at approx €250k. Our goal is to get the mortgage cleared as quickly as possible.

I would fall into the i hate being in debt category and have no other debts. I don’t borrow for luxury goods and always pay CC off each month. Just in case anybody thinks i never leave the house :wink: we spent 5 weeks in oz last year on a hol and 3 weeks in thailand 2 years before.

I can never work out where the hole in my wallet is.
I’m always just bumping the curve, trying to stay solvent tbh.
But with a house&wife&4kids&2cars&being a single income family, I often just thank my stars I’m afloat.

Neither are my borrowings outlandish, my house is sub 200k and both cars are +10 yrs old.

How people afford new clothes and cars and holidays and extensions and nannies and au-pairs and nice shooz and drinking at the weekends and new York at Xmas and blah blah is beyond me!

:sob:

Hmmm.

I’m struggling with this particular quandary at the moment. Am on a tracker ECB +1.25 IIRC.

I want to trade up but my problem is the estimated sales proceeds, realistically, will probably just about clear the mortgage. Am I better off using savings to reduce mortgage, hold off on trading up for a year and in the meantime build my savings back up?

Credit cards, car loans, top up mortgages etc. Be glad you’re not q debt monkey like them .

that tracker rate is a superb reason NOT to trade up

your interest rate will likely double if you do

I like liquidity, it gives flexibility. It is also a great buffer if you lose your source of income for a while. The bank will not be very understanding if you can’t pay for 2 years even if you paid downa big chuck just before that.