ECB Rate Cut

Thought I'd post up this article in light of the ECB interest rate cut this week

http://www.thejournal.ie/interest-rate-impact-on-irish-borrowers-1654189-Sep2014/

Anyone who's on a tracker will see their mortgage payment fall again now. However now is a great opportunity to make inroads into the mortgage while rates are low and before they inevitably rise in a few years time.

If you take your saving (or a bit more) if you can afford it and make an additional payment to your mortgage not only will it reduce the effective term of the mortgage it'll also mean you have a lower loan balance when rates rise again at some point in the future. If needs be you can cancel the overpayment at that stage so the impact of the rate rise is not so severe.

I think the best way to make the additional payment is to set up a standing order to your mortgage account. You can set it up or cancel it online without having to talk to anyone in the bank which would be the case if you wanted to change the existing direct debit.

We shouldn't forget ecb rates were very low up 2008 but when they started to rise it was very very quickly.

Just my 2p

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

Some good information there @[JohnH] and @[ciars]

im glad now we didnt ban you after selling the e92 :D

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Originally Posted by ciars

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

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@[ciars] That should give a big saving. I remember hearing years ago if you make 13 payments a year rather than the normal 12 it would mean you'd repay a 30 mortgage in 23 years, resulting in 7 years interest being saved

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Originally Posted by JohnH

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Originally Posted by ciars

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

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@[ciars] That should give a big saving. I remember hearing years ago if you make 13 payments a year rather than the normal 12 it would mean you'd repay a 30 mortgage in 23 years, resulting in 7 years interest being saved

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Yup its something along those lines alright. I've yet to do the math but it will be fairly substantial....especially seeing as I'm now on a variable rate having lost my tracker when I moved homes a few years ago :crying:

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Originally Posted by ciars

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

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That's something I would definitely do if I was paid weekly or bi-weekly but I'm currently paid monthly so some months it wouldn't work out for me.

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Originally Posted by John_D

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Originally Posted by ciars

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

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That's something I would definitely do if I was paid weekly or bi-weekly but I'm currently paid monthly so some months it wouldn't work out for me.

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I'm paid monthly so do a monthly standing order. €100 per month is €1,200 over the year compared to about €1,100 for the mortgage payment

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Originally Posted by John_D

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Originally Posted by ciars

Personally, I pay every 4 weeks instead of every month, giving me an additional 1 payment per calendar year (13 payments every 4 weeks versus 12 monthly payments). A small yet significant (to me) interest saving at the end of the term.

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That's something I would definitely do if I was paid weekly or bi-weekly but I'm currently paid monthly so some months it wouldn't work out for me.

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Over paying monthly by 8.33% will have the same effect as an extra monthly payment over the year, apologies if that's not what you mean by not working for you.
Kevin

True that, I'm a tired boy at the moment so maths ain't working for me right now :D
[hr]
Would I have to clear it with my lender first or just fire ahead and make extra payments to my account?
I presume it would work like any other eft transaction?

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Originally Posted by John_D

True that, I'm a tired boy at the moment so maths ain't working for me right now :D
[hr]
Would I have to clear it with my lender first or just fire ahead and make extra payments to my account?
I presume it would work like any other eft transaction?

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No just fire ahead, you might just need the account number to pay into which your lender will give you

Grand, cheers @[JohnH]
One more question, did you have to give instructions whether to reduce payments or term? Or do they automatically just reduce the term?

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Originally Posted by John_D

Grand, cheers @[JohnH]
One more question, did you have to give instructions whether to reduce payments or term? Or do they automatically just reduce the term?

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No instructions needed. It'll just reduce the term, your usual payment will stay the same. The benefit of doing it via standing order is that you're not committed to it and can cancel the extra payment at a later stage if needs be

I started doing this a few years back. I cancelled all direct debits from my account. Only have 2, TVA licence and Mortgage Protection Insurance.

I do online transfers every 2 weeks (pay day). ESB, gas, upc, meteor, mortgage etc
I just take my monthly mortgage and multiply by 12 then divide by 26, round up as much I can and pay that. Sometime paying an extra €10, sometimes, €20 but the end result should be all the same. Might shave a year or two off the mortgage towards the end.......hopefully!!!

Spare a taught for idiots like myself trapped in a variable mortgage!
Banks have increased their rates over the last few months to combat against their losses on trackers!:crying:

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Originally Posted by Eoin

Spare a taught for idiots like myself trapped in a variable mortgage!
Banks have increased their rates over the last few months to combat against their losses on trackers!:crying:

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Sorry :(