What types of mortgages are available?
There are currently few types of mortgages on the Irish market for people. We have listed out a range of options here for your information.
1. 92% Mortgages
Any First Time Buyer (FTB) now entering the mortgage market can borrow a maximum 92% of the value of the property they are buying. So, if you have agreed to purchase a property for €100,000, the highest amount a lender can give you is €92,000. FTB’s can arrange to repay the loan over a number of repayment terms are available up to and including 35 years.
It is possible to obtain a variable term mortgage, allowing the holder to reduce the term of the Mortgage as it progresses. This eases the financial burden during the period after the loan is taken out and allows for payments to be increased when the mortgage holder is in a position to do this. It is possible also to make a joint application, further broadening the options available to those buying their first home. In the case of a joint application, at least one of the applicants must be a first time buyer.
2. Interest Only
It may be possible to make interest only payments on your mortgage for a specified period after it is taken out. When this period has elapsed, repayments are then recalculated ensuring that the loan will still be repaid within the agreed term. Depending on whom you borrowed money from, interest only payments can be made for a number of years in some cases from the start date.
Warning: the entire amount that you have borrowed will still be outstanding at the end of the interest only period.
3. Current Account Mortgages (no longer available)
This combines a day-to-day current account for general banking with a person’s interest bearing mortgage. Any money contained in the day-to-day current account thus reduces the amount owed on the mortgage there by reducing the interest bill. This is especially effective just after a person has been paid and has a large amount of money in the current account. Interest is typically calculated on the amount someone owes each day as, by its very nature, a current account balance will continually fluctuate. It enables the mortgage holder to make their money work for them in a more effective fashion.
4. Flexible mortgage repayment options
Pay off lump sums to reduce the term of your loan or repayments. Lump sum payments are a way to reduce both the interest bill on a mortgage and the term over which it will be repaid. It is a useful way to provide for a period where you plan to take a break from repayments if your Financial Institution provides you with this option. This facility is available on variable rate mortgages only. In some cases there will be a minimum lump sum payment an individual can make.
5. Increase Monthly Repayments to reduce the term and save money
This allows the principal to be paid off more quickly thus reducing the term of the mortgage and reducing the interest payments up to the ultimate repayment date.
6. Reduce your monthly repayments by extending your term
Should it suit you to have more money available each month, it is possible to extend the term of your mortgage. This will reduce monthly outgoings on repayments.
7. Discount mortgage rates for new business
Many lenders now offer FTB a lower rate of interest for an agreed period on commencement of a mortgage. This normally applies to both fixed and variable loans and means the borrower pays less as they adjust to having a mortgage and learn to manage their finances.