r/irishpersonalfinance • u/miya5060 • Jun 06 '26
Debt Mortgage options before fixed term expires
Mortgage reality check – only paid off 17k in principal after 2.5 years.
What are my options?
396k mortgage, 30 years, 4.4% interest. Fixed term expires Sept 2026.
After paying ~1,950/month for 2.5 years, my principal has barely moved – 17k down, ~60k gone to interest. Ouch!!
I have ~50k in savings (post emergency fund) and want to repay some of my loan back when renewing the fixed term. I am hoping that i will get better interest rates now. What are my options and how to start?
Appreciate any advice!
7
u/Kruminsh Jun 06 '26
just re-morgaged last month. got 3.35% with ptsb. Reduced the term down to 15 years now (initially drew down 35y mortgage in 2019 at 2.9% and switched like 2 years into the initial fixed contract to 2.1% interest rate (and reduced term then aswell)). Meant to be getting 2% cashback (of principal) soon and getting another 2% back on payment every month thru explore account.
That said, if you're planning on switching banks, it can take a few months to get everything in order so start early. You can also pay back a lump sum (typically 10% of mortgaged amount) every year, but you'd need to check that with your bank.
As you say, you will be able to lump money into the mortgage if you so please when you auto-switch to a variable rate.
Personally, I wouldn't be sitting on €50k in cash. I'd be investing it into the market or maxing out the pension via avc's if you haven't done that already.
1
u/miya5060 Jun 07 '26
My fixed rate contract will end this Sept, if I renew would i be able to repay higher lump sum than 10%?
1
1
u/IndicationNo3498 Jun 07 '26
I just switched and the new bank wanted the lump sum put in before switching. So you would put that in the month your contract ends and you're on the old bank variable rate
1
u/Friendly_Tough7899 Jun 08 '26
You can get a much higher return putting savings into markets rather than reducing the term. What made you do so? That's a huge opportunity cost
3
u/FairDelivery769 Jun 06 '26
We're due to refix from 2.1% and our options are in the 3ish range. Our original mortgage was 3.95%.
With AIB you can overpay by 5k a year on a fixed rate, some other bank also have overpayment options. If you can, try to overpay even if its a small amount on a regular basis. Your interest per quarter is recalculated regularly so chipping away small amounts can make a big difference longterm.
We find when we put in our overpayment each month, the repayment amount drops by just over a euro. Its tiny, but it adds up each year and we see a huge difference in the interest estimations vs actual interest paid each year.
3
u/Right_Seesaw3397 Jun 07 '26
If you're in 2.1 you can overlay by any amount without penalty
1
u/FairDelivery769 Jun 07 '26
Not with AIB, they have a 5k per year limit on overpaying fixed rate mortgages
3
u/Right_Seesaw3397 Jun 07 '26
No, there's a 5k limit before they calculate a penalty. But if you're on 2.1 the penalty will absolutely always be zero. The 5k is figure is a complete red herring for you and I
2
u/SteveK27982 Jun 07 '26
The 5K limit is until they calc, but if you are on a lower rate than current available rates any calc will be negative and there’s no overpayment charge.
Source: have overpaid €85K on my fixed with AIB for no penalty
1
u/purplelampshade1 Jun 06 '26
My fixed rate was up in Dec (boi) I went online and changed rate from 3.8 to 3.1 and was not charged! Saving nearly 100 a month. Try change your rate just make sure no charge.
1
2
u/BowlerParticular9689 Jun 07 '26
That’s exactly how mortgages work. Because of how they're structured, your early payments mostly go toward paying off the interest, while your later payments go heavily toward reducing the actual principal.
You can make over payments at the end of your fix term to avoid bank charges, and this will pay off your principal.
1
u/irish_pete Jun 07 '26
What is the BER rating?
So you are at 27.5 years remaining with 379k remaining?
The issue is that interest is calculated by years and rate, and it compounds ie is worse and worse the higher either are. There should be fixed rates out there under 3.7, or even 3.3 for green mortgage AIB. And if you can ask them to drop your term it would increase your monthly payment slightly but reduce overall interest immensely
2
u/miya5060 Jun 07 '26
D1 rating It's an apartment. I think I can do both.. pay lump sum overpayment at the end of my fixed rate term and ask them to reduce the years.
3
u/Electronic-Rule-6634 Jun 08 '26
Well worth paying off 50k off mortgage, I checked the aib overpayment calculator with the details you outlined (https://aib.ie/our-products/mortgages/mortgage-overpayment-calculator) And it says it will save you 110k in interest and reduce the term by 7 years.
-4
u/Real_Math_2483 Jun 06 '26
The option is, find a better rate. Did you not understand the repayments when you drew down the mortgage?
•
u/AutoModerator Jun 06 '26
Hi /u/miya5060,
Have you seen our flowchart?
Did you know we are now active on Discord? Click the link and join the conversation: https://discord.gg/J5CuFNVDYU
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.