Different types of mortgage
Annuity mortgage
Annuity mortgages are the most common mortgage in Ireland. They are designed to spread the costs evenly over the term of your mortgage. Repayments in the early years of the mortgage are mainly comprised of interest. The balance of the mortgage loan owed decreases as the period progresses, until the loan is fully paid at the end of the mortgage term.
The results section of our mortgage repayment calculator gives a split between the capital and interest element of your mortgage.
A really helpful calculator is our capital interest split calculator. Here you will see the annual interest payments and the annual capital payments and how much your mortgage balance reduces each year.
Capital interest split calculator »
Interest only mortgages
Interest only mortgage, as name suggests, are mortgages where you only pay the interest on the loan and the capital is paid in one lump sum at the end of the term. Interest only is not available for home loans but is available on a limited basis for certain residential investment property mortgages.
Green mortgage
This recent innovation was to categorise mortgages by reference to their energy rating, BER. This classification has been adopted in different forms by some lenders. Bank of Ireland, AIB and Haven Mortgages all have some form of Green Mortgage Product. Avant, Nua and ICS do not have specific green rates and offer the same rates irrespective of the BER rating.
Variable rate mortgage
This is a mortgage where the interest rate can be changed by the lender from time to time. Typically, the change in rate occurs where there has been changes to the underlying cost of funds for the lender. For example, where inflation is high market rates may rise and consequently lenders could raise their rates. The opposite is also true. Variable interest rates are popular when there is an expectation that market rates are stable.
Fixed rate mortgage
This is a mortgage where the interest rate is fixed for a chosen period. The lender will not change the rate during this period. After the fixed rate period is up you will need to decide whether to go for another fixed rate or a variable rate. Fixed rates are popular when interest rates are expected to rise and where people want certainty into the future regarding mortgage repayments.
Mixed rate mortgage
This is a mortgage where you can split your loan between variable and fixed. This product is attractive in that it gives you a degree of certainty and also an opportunity to avail of cheaper variable rates if interest rates fall.