Anyone hear anything about the option of changing your mortgage payments from monthly to fortnighly reduces the overall interest you pay and in turn lowers the mortgage term by a couple of years?
The was a big fuss about it about a month ago following a big article in the Times. I had my letter and all ready to go. But the journalist/analyst made a fcuk up on all his calcualtions and the next day on the Ray Darcy show had to apologise and admit that he got it wrong. As far as I know thats the case anyway. I remember at the time thinking to myself 'I bet that cute whore Shay is already on this'!!!!!!!!
Change the date for big savings http://www.irishtimes.com/newspaper/pricewatch/2011/0404/1224293731588.html Problem is getting your bank to accept twice monthly direct debits.
haha a fella in here was sussing it out a few weeks ago so I wanted to see how he got on first but he never said anything about it. Must ask him how he got on. Be interesting if there's any bankers on here that could confirm it, might have a look around askaboutmoney forum to see if it's true
so has anyone done it.? I was sure the journalist made an error in calculations etc and admitted the next day or two that he cocked up
Hi I reckon it will work to the Borrowers benefit over the years, but: A) it will only benefit those making repayments of principal and interest on their loans, those just paying interest won't get any benefit B) you need to either get your mortgage provider to take mortgage repayments by direct debit every two weeks or cancel your direct debit mandate and set up a standing order (if you do this, make sure the mortgage provider gets notified in writting, otherwise some of them will continue to try and collect d/ds, then hit you with unpaid charges when the d/d gets returned unpaid). C) Anyone on a fixed interest rate needs to first get written confirmation from their mortgage provider, to confirm that they won't be penalised for making payments every 2 weeks, rather than the traditional monthly repayments. In a nutshell, the benifit comes from you effectively paying half your scheduled installment faster, hence reducing the amount of interest which accrues on the remainder of your debt each month. An alternative, for anyone other than those on fixed rates, would be to just throw a few quid at the mortgage from time to time when you have it to spare ... might suit those who get overtime, shift work or bonuses, but don't have a regular amount they can pledge. Anyone doing this should try and have their homeloan provider subsequently shorten the term of their homeloan after these payments go in, rather than let the homeloan provider just reduce the monthly installment so the loan still gets repaid over the original agreed term.
What he made a mess of was his calculation as to how much you could save. His article in the times mentions two payments a month (i.e. 24 payments a year) over the duration of the mortgage (24 x 25/30/35 years) whereas the actual saving would be achieved be paying every forthnight (i.e. 26 payments a year). The jist of the story is obviously correct though. You are paying more every year so you can therefore reduce the amount thats paid every 2 weeks/month or whatever.
There was a retraction in the times the next day; they made a balls of it. Garrett has pretty much explained it above. You’re essentially paying more each year and with money being tight very few people can afford to pay more each year. Plus it has always been the case that if you’re not on a fixed term mortgage you could pay of your mortgage earlier and save on interest.
Here's some good discussions on it, posts above have hit the nail on the head. Basically by changing your paying 13 months (26/2) payments rather than 12 so your paying the mortgage down earlier. http://www.askaboutmoney.com/showthread.php?p=1155434#post1155434 Good detail on this too http://www.askaboutmoney.com/showthread.php?t=152979
In addition to that Shay, your also speeding up your payments ... So instead of interst clocking up on the entire loan amount for the month (then you pay both that month's interest and an element of principal on the loan), your paying half the principal on the loan two weeks earlier each time, so the interest clocking up for the second half of each month, is on a slightly lower amount of loan principal.
True mate but what what I've seen the interest gain is tiny for the amount of hassle in making 26 vs 12 payments a year. Personally I think i'd rather pay an extra month at my leisure than tie myself up to it for the rest of the mortgage
Me too. For those that are interested in making 26 payments the problem is getting your bank to accept twice monthly direct debits.
To be honest mate, in a single month I'd agree with you, the odds are the interest gain would be small ... however, this is obviously something which needs to be done long term (i.e. a number of years), in which case it could potentially save thousands. Having said all that, optional additional payments when it suits you, can be just as good. The only thing to remember is to write to the Mortgage Provider each time, telling them exactly how you want the additional funds applied (i.e. use them to shorten the remaining term of the loan, or to reduce the subsequent monthly repayments for the remaining period ...)
Hi, Another thing worth mentioning in this thread, is the discount currently being offered by PTSB to Tracker Mortgage Holders... whereby they will give you a 10% bonus on additional repayments made (of €5k or more and there are some restrictions on how much you can pay in advance etc, but it may be worthwhile for some people with PTSB Tracker Mortgages). I don't have full details or bank with them, but some of these news articles should help answer questions for people & thereafter, obviously give the PTSB a shout if your interested. http://www.rte.ie/news/2011/0418/mortgages.html http://businessetc.thejournal.ie/pe...ent-tracker-mortgage-discount-122774-Apr2011/ http://www.irishexaminer.com/business/kfojkfsnausn/rss2/
im on a ptsb tracker and i got the letter out for that and ya wanna see it gareth.instead of being honest and go look were in trouble with trackers so we want to do this deal its weve set up a great deal to benefit you the customer because we love you all so much!!it starts off at 5k ya can only do multiples of 5k and only up to half your outstanding balance.i suppose if people have 15 or 20k around doing nothing its a good deal but whos gonna have that these days!
Hi mate, I'm not a PTSB customer myself, so hadn't seen it. While a lot of people have no spare cash these days, they reckon that there is also quite a few have money saved, basically those who have been able to save in the past couple of years since the recession started, in particular. No doubt about it, have a hidden agenda here, even if they won't say it in a letter to their customers. It's clear that once they get the level of debt reduced on each of these mortgages, then they become a much lower risk - so why give the bonus to people to repay in full, when they don't necessarily want that, only to reduce the risk on each tracker homeloan ? Anyway, I'm sure it will suit some people.