|
Q. What type of
mortgages are available?
|
Repayment/AnnuityMortgage: |
|
|
|
This is
the most popular mortgage. Each monthly
repayment will reduce part of the loan balance
(capital) and part of the interest. In the
earlier years, the monthly instalments are
servicing more of the interest but nearer the
end, more capital is being paid off. With this
method of repayment, the mortgage is guaranteed
to be paid in full at the end of the agreed
term.
|
|
|
|
|
|
|
This type
of mortgage differs from the annuity in that you
only repay the bank/building society the
interest on the amount borrowed. The capital sum
is paid off at the end of the term from the
proceeds of an Endowment Fund policy which is
taken out specifically for this purpose. As fund
values can fall as well as rise, there is no
guarantee that there will be enough to repay the
capital sum.
|
| |
|
|
|
Becoming
increasingly more popular of late. It operates
similar to an Endowment mortgage except that a
Pension Plan is used to back it up. Its
attractive to self employed individuals because
of the tax advantages
available.
|
Interest Only
Mortgage
This type of loan is where you only pay
the interest on the outstanding loan balance. As
no capital repayments are made during the term,
the capital balance is repaid at the end of the
term from a separate source or from the sale of
the property. This propduct is generally only
suitable for the experienced
investor.
Q.What Types of Rates are available?
Variable
With a variable rate loan the interest
rate charged will fluctuate over the term of the
loan in line with the general interest rates
which are usually determined by The European
Central Bank. When rates rise your monthly
repayments will increase. When they fall, your
monthly payments will reduce. Your property will
be mortgage free after an agreed
term.
Discounted Variable
Rate
This is generally offered to new
customers, it is a rate lower than the lenders
current standard variable rate by a set
percentage. The discount is normally for a short
period at the beginning of the loan and then the
rate will revert to the banks standard variable
rate
Fixed
The rate is fixed for a predetermined
length of time during which your monthly
repayments remain the same regardless of whether
the variable rate moves up or down. This type of
rate can provide you with the security of
knowing what your repayments are guaranteed to
be.
Warning – The entire amount that you have borrowed will still be outstanding at the end of the interest-only period. |
Q. Now long will it take to repay my mortgage?
You can normally repay your mortgage over any term between 5 to 40 years. The
longer the term, the less your monthly repayments will be, however you end up
paying back more over the long term.
Q. What additional costs are invoked?
You will need to take out a life policy, which is a mandatory part of the
mortgage. You will also need Insurance on the house and it's contents.
You will have to pay a solicitor who will charge a professional fee plus
outlay. It is wise to shop around and get estimates from a few solicitors in
advance of proceeding with the purchase.
You will need to get a valuation report carried out to ensure the property is
worth at least what you are paying for it. You should budget for a fee of
around Euro 130 inc. VAT
In many cases it is good advice to get a surveyors report carried out before
you agree to purchase. This is more usual where the property is old - any
structural faults, dampness, dry rot etc. will be identified.
Q. What is the difference between a fixed and variable rate?
A fixed rate means the interest rate remains the same for a set period of
time - 1,2,3,5 years etc.
This option will give you the comfort of knowing that your repayments won't
go up or down during this period. No matter what happens with interest rates
in the meantime, you will always pay the same amount. On the other hand, a
variable rate means that your repayments are linked to market interest rates.
These can go up or down during the life of the mortgage. If interest rates go
up you pay more, however if rates go down you benefit from lower repayments.
Q. What happens if my circumstances change and I want to pay more or less
each month?
Mortgages can be tailored towards peoples ever changing circumstances. These
options will allow you to pay more, pay less, or believe it or not, pay
nothing at all for a set period! Here are a few examples of flexible options:
Take a break from your mortgage
This is a 3-month break from your mortgage and gives you breathing space when
you need it. For example the birth of a child, a wedding, a career break etc.
Once you have made two years repayments, you can take a 3 month break. You
can take up to four of this 3 month breaks over the term of the mortgage.
Index link your repayments
This allows you to increase the amount of your monthly repayment by a certain
percentage each year, enabling you to payoff your mortgage earlier and in
turn pay less interest.
Deferred start
This option is specifically available for first time buyers. It allows
customer make no
repayment at all for the first 1,2, 3 or even 4 months of their mortgage.
This allows breathing space in the critical first few months of the mortgage
when outgoings tend to be very high. These missed repayments are then spread
over the remaining term of the mortgage.
Q. What if I want to top-up my mortgage, in the future?
More than likely, your property will increase in value over the life of the
mortgage. At certain times, you may wish to release some of the equity that
you have built up in your home to pay for expenses such as home improvements,
school fees etc. Releasing equity is a cost-effective way of financing these
expenses.
For example: if you have a mortgage of Euro100,000, and your home is valued
at Euro160,OQO - you therefore have Euro60.000 equity built up in your home.
You could therefore borrow up to 90% of the value of the house eg.
Euro144,000 (160,000 x 90%)
Q. When
choosing a mortgage should I just go for the
cheapest?
Don't select a lender just because they have just reduced their interest
rate. The rate is of course very important but also look at the overall
offering.
FOR EXAMPLE
- Does the lender-charge an indemnity bond or an acceptance fee?
- Will they allow you flexibility on repayments in the future?
- What fees and charge apply for existing customers?
-
Choose a lender who will support you over the
life of the mortgage? |
