# Wipe out savings or higher mortgage repayments

Would it be wiser to use all savings now when buying a house by paying 20% deposit and have lower repayments?

Or pay 10% deposit & keep some savings.

Apologies if question is too general.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

Oh, wait.

With savings rate likely to be lower than inflation for the foreseeable future, is it better to rid yourself of the ‘worry’ of having savings to lose if Ireland does leave the Euro? Not interested in gold, bonds or stocks.

Paying off your mortgage early is equivalent to a gross return calculated as follows

Interest rate on mortgage / (1-.33)

Interesting - what does 1-.33 represent? That’s a handy formula.

Not quite right -

The SVR on a < 80% BOI is 4.4% APR, > 80% 4.6% APR. Best savings rate about 2.6% - one year fix - (2.1% call) - 33% dirt, so 1.73% based on one year fix.

Taking this into account, the saving is a net return of 4.458% on the extra amount funding the purchase, or a cash difference of 446 per 10k. So the difference in rate between having the mortgage between 80and 81% actually increases the benefit of extra funds.

If there is no difference between 80 and 90% - assuming both 4.4%, the saving is 2.658%.

The formula assumes a difference in the SVR less dirt that has been the norm for the past few years which has been disappearing.

@ the op, you always have the option of paying the savings into the mortgage. Keep the cash at the moment maybe?

Thanks grumpy.

Great name.

calculator here

moneysavingexpert.com/mortga … vs-savings

Handy calculator. Bank of Ireland also has an online tool for this. Slightly rigid in that you seem to have to put in a lump sum and a regular overpayment.

I’d be inclined to keep a few quid aside at the beginning for unforeseeable costs associated with moving, then reassess after a year or so of paying the mortgage and see if you can afford to put a few grand off the mortgage and/or start overpaying a bit if possible. At the same time, if you had tens of thousands sitting in your account for a year that could be a bit wasteful.

Surely the question here is do you foresee a point in the future where you might actually need your savings?

I’ll have to assume you’re asking how much of your savings to put in, rather than whether to throw them all in (which would be mad, Ted).