Wednesday 17 January 2018

Deal would cut €1,087 repayment to €870

THE Permanent TSB tracker incentive overpayment offer will work for some people, but not for others.

Take the example of a couple who in 2006 took out a €300,000 mortgage over 30 years.

They have a tracker which is set at 1pc above the European Central Bank rate.

This means their borrowing rate is 2.25pc, and they currently owe €250,000 on the mortgage.

After the recent rise in ECB rates, their monthly repayments have gone up to €1,087.

But they have savings, and are considering an overpayment on their mortgage.

The bonus being offered by Permanent TSB for overpayments on tracker mortgages means they can pay €45,000 and get a bonus of 10pc.

This would see an additional €4,500 extra wiped off their debt -- meaning the total value of the overpayment would rise to €49,500.

This would bring the sum owed down to just over €200,000, so monthly repayments over 25 years would fall to €870.

The couple would save €16,000 in interest payments in the next 25 years by paying off this chunk of their mortgage early.

Alternatively, they could choose to keep their monthly repayments at €1,087 and get their mortgage paid off in 20 years, instead of 25.

The couple decide they would avail of the overpayment offer.

Irish Independent

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