We were speaking with Sean O’Rourke about mortgage rates, that they were falling as part of a trend and that new moves to force them down would likely not work. It came on the back of a piece by Conor Pope in the Irish Times that quoted us in the article entitled ‘New bank levy could see mortgage rates rise not fall‘.
Paying off your mortgage early (we got it wrong)
Yesterdays Irish Times carried a story in which our firm was mentioned regarding how to reduce your mortgage balance faster by paying every two weeks.
The idea of paying twice per month would give you 24 repayments whereas paying ‘every two weeks’ would result in 26 payments. It’s the same type of simple calculation error that makes people say there are 4 weeks in a month rather than 4.33 months (52/12)
If you are merely using a time period where payments add up to the same amount then the actual end results are somewhat the same, I used the formula below
M = P [ i(1 + i)n ] / [ (1 + i)n – 1]
M = Mortgage Repayment P = Principal borrowed i= interest rate (for monthly payments this works out at i/12) n= payment periods (eg: 10yrs = 120 monthly payments) And took an example of a €250,000 mortgage over 25 years with a 5% rate after which you get this
