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- Compare Irish mortgage lender facilities
- What mortgage products are available to first time buyers?
- What rates choices are available?
- Discounted mortgages !
Compare Irish mortgage lender facilities
To compare current Irish mortgage lender facilities please click here_:Mortgage lender facilities..What mortgage products are available to first time buyers?
Mortgage product choices for first time buyers
There are a number of choices available to first time buyers both in terms of mortgage product choice and perhaps more importantly in terms of rate choice. We are here to advise you on the alternatives. As a golden rule the term over which you borrow should always be kept to a minimum.
Annuity mortgages
The vast majority of mortgages whether to first time buyers, remortgages or investors are classified as annuity mortgages.
An annuity mortgages works in such a way that repayments are spread evenly over the term of the mortgage. Within each repayment is a capital and an interest element and the capital element reduces the amount owing on the mortgage with the interest covering the interest as it arises.
Over time the capital reduces to zero and your mortgage is paid off in full. In the early years of your mortgage the bulk of the repayments will go towards interest and unfortunately it is surprising how slowly the capital balance reduces. Our mortgage calculator provides details on the capital and interest split.
Interest only products
As the name suggests an interest only mortgage is a mortgage where interest only is paid and the capital balance never reduces. Up until 2007 this was a popular choice particularly with investors who banked on the value of their property increasing. However the housing downturn has severely curtailed this product with interest only products only being offered to applicants with high equity in their property or portfolio. Some lenders continue to offer an a interest only period to first time buyers to help them in the early years of their mortgage.
Offset mortgages
By combining your current account with your mortgage account you may make significant savings on your mortgage interest bill and reduce the term of your mortgage. Naturally it depends on the balance held in credit in your current account. This is a useful product in that you have the use of the cash in your current account should you so require but when its sitting there at least you are effectively receiving interest equivalent to your mortgage rate. A slightly less sophisticated way of achieving asimilar result is to overpay your mortgage as you are going along thus ensuring that your interest is calculated ona lower capital balance. Our consultants would be happy to explain the workings of this innovative and highly competitive Mortgage product.
What rates choices are available?
Mortgage Rate choices for first time buyers
Tracker mortgages
News..(nov08).Tracker mortgages no longer available !
This product basically guarantees to track the European Central Bank's rates plus a margin. Any change in rates announced by the European Central Bank are passed on by the bank in full to tracker mortgage holders within a fixed period, usually 5 business days. The actual tracker rates on offer vary according to the loan to value ratio. Loan to value expresses your mortgage as a percentage of the house value with the cheapest trackers being available to the lower loan to value applicants. This has occurred as a result of the credit crunch and the inability of lenders to source funds at the European central bank rate. The products track the European central bank rate but lenders are now paying as much as 1% above this rate for their funds. Some lenders have maintained the link with Euribor but have dramatically increased the tracker margin level.
Variable rate mortgages
Before the arrival of tracker mortgages the vast majority of new mortgages were issued at a variable rate. This rate is sometimes described as the standard variable rate and if one was to do an analysis of all mortgage holders in Ireland This standard variable rate would be by far the most common mortgage rate type. Like the tracker rate it changes as underlying rates change but unlike the tracker the level of change is not guaranteed. This is not to say that the lenders will always overcharge on this rate as if they did the competition would move in quickly for their business .However there are a number of lenders who have significantly increased their standard variable rate and this is a cause for concern. Most fixed rate products return to standard variable rates at the end of the fixed term and this is an area that we have looked at very closely in designing our mortgage calculators and in assessing the relative merits of various arte offerings. One of the benefits of having a variable or tracker rate facility is the ability to make lump sum or regular repayments over and above your repayments.
Fixed rate mortgages
Many of our first time buyers are choosing fixed rate mortgages when there is uncertainty in the air and there is certainly a great deal of this around in late 2008. As the name suggests fixed rate mortgages fix the repayment for a given chosen period .The terms vary from 1 to 10 years .The price of fixed rates are set by reference to the markets current view on what will happen to rates in the future. So if the market feels that rates are likely to rise in the future they will build this sentiment into the rate.
Split rates ( mixing and matching)
An attractive option is to split your mortgage into partially fixed and partially variable. You can choose the split percentage yourself or in consultation with your consultant but this option is a good way of hedging your bets .Most lenders will offer this facility.
Discounted mortgages !
Some lenders offer mortgage products with attractive initial term rates followed by unattractive follow on rates.
The crisis in the mortgage market in the USA has shown us the problems with this type of product .Here in Ireland there tends not to be a tendency towards misleading introductory discounts and no doubt the Regulator is watching this area closely as lenders still want business but at higher margins .
Our mortgage repayment calculator looks at both the initial rate and the follow on rate so that one can look at the total cost over given periods betwenn mortgage products.