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The Irish mortgage market can be an absolute minefield with fixed, variables,
trackers,interest only, top ups,
buy to let blah blah blah, where do you start?
First things first: Complete our maximum loan wizard and remember this a guide not an offer.
Once our wizard has calculated your maximum loan, you can then look at the repayment plans from the
different institutions & the type of mortgage you require. You can apply online for your mortgage at
any stage. Your third step is to use our personal budget planner to see exactly how much you have left
in your pocket each month after all of yours bills are paid. See if you can afford that dream home or just
see where you need to cut back in order to live comfortably within your means.
Should you wish to combine all of your loans into one manageable sum, take a look at our
consolidation wizard.
We would not recommend you look for your home until you have worked out your finances.
This often leads to heartbreak when you find your dream-home but the banks won’t loan you the money
When searching for your home & calculating costs, there are quite a lot of hidden charges which you
must build into the final sum such as solicitors, valuers,
stamp duty, snaggers, include any building modifications
or re-decorating work as well as furniture and fittings. When buying apartments, a lot of
furniture companies are supplying complete fit-out packages which can
work out very economical as well as stylish and modern. Also include
mortgage protection, as well as home insurance.
In our glossary we take the jargon out of mortgages and explain terms such as
Loan to Value, TRS, Consolidation & more.
We hope you enjoy our wizards and guides and find them useful and informative
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Fixed rates can be useful in the early years of your mortgage, as it will give you the assurance of a fixed budget. You are in effect taking a gamble that rates will only rise and to such an extent that the ECB (European Central Bank) will overtake your initial percentage rate. EG: a lender’s rate today is 4.75% and analysts may say rates will rise steadily over the next few years so you may take a fixed rate of 5% in the hope rates will rise, so initially you may pay a little more than somebody on a variable but as soon as the rate hits 5% you are equal, and on it’s next rise you are winning. Remember too that we have had no less than 8 one quarter per cent interest rate rises in the last 2 years alone with another due before Christmas 2007.
Also remember that coming out of a fixed term can be a bumpy ride, Borrowers who fixed their rate 3 years ago would have got a rate of approx 3.25% - today it’s pushing 4.75% which means borrowers can pay ˆ700 more this month than they did last month on average loans of ˆ300,000.
Variable mortgages are set by the individual lending institution and can vary month to month but usually only when the ECB set their rates. Variable rates can go down as well as up so borrowers are really going with the flow and in the hope of reduced rates. It is wise to remember we haven’t had a rate decrease in over 10 years.
Tracker mortgages are variable but the difference is a tracker mortgage is index linked to the
European Central Bank and your repayments will always be a certain percentage above
that rate. The exact percentage above the ECB depends on your loan to value and the actual
amount being borrowed but it’s an average of 1% more.
Interest only mortgages literally only repay the interest on the mortgage over a set period. On maturity of the fixed period you must pay the original underlying sum. While repayments initially maybe cheaper than fixed or variable, the loan will never be paid off unless you re-borrow or sell the property.
Because of the sharp increases in property in Ireland, some lenders are offering mortgage
top-ups which can be as much as ˆ65,000 (depending on the positive equity in your home) and
spent on almost anything, cars, holidays, home improvements, college fees etc without the need for re-mortgaging
which can be costly. As well as topping up your mortgage you may also need to top up your life cover to suit the
new sum.
Because of the sharp increases in mortgage rates, the rental market in Ireland has increased in popularity 10 fold. Coupled with unrivalled growth in the housing market, buy to let schemes are becoming very popular for people with high positive equity as up to 100% loans are available if the loan does not exceed 80% of your combined properties.
Since January 1st ’02, investors of a second property to let have offset their mortgage interest repayments against their rental income which has resulted in huge savings overall.
Conveyancing is the act of transferring the legal title in a property from one person to another. The buyer must ensure that he or she obtains a good and marketable 'title' to the land; i.e., that the person selling the house actually has the right to sell it and there is no factor which would impede a mortgage or re-sale. A system of conveyancing is usually designed to ensure that the buyer secures title to the land together with all the rights that run with the land, and is notified of any restrictions in advance of purchase.
A typical conveyancing transaction, whether a sale or purchase, contains two major 'landmarks', which are exchange of contracts (whereby equitable title passes) and completion (whereby legal title passes), plus the three stages: before contract, before completion and after completion.
In most mature jurisdictions, conveyancing is facilitated by a system of land registration which, in the near future, is likely to lead to widespread (if not mandatory) use of electronic conveyancing.
Electronic or Digital Conveyancing can be defined as
- the system of exchanging sales & mortgage documentation and property data electronically
- between vendor & buyer, agent & lawyer, brokers & banks, government & land registry
- from point of sale to contract to settlement
- with or without printed documentation.
We have listed a number of specialist conveyancing experts although most solicitors will complete this function. It is always wise to get a price up front and also shop around
Your chosen lender will insist on an evaluation being carried out on your home prior to purchase. Most lenders will have a panel of valuers from which you can choose. However you must remember that these valuers will only value the home based on size, location etc. They will not inspect the building or it’s structure and therefore it is wise to have your own independent evaluation carried out.
After much attention surrounding stamp duty, the new rules and rates are now clear and this small table will now assist you.
| Property Value |
Rate |
| Up to ˆ125,000 | Exempt |
Next ˆ875,000 | 7% |
| Balance | 9% |
Snaggers can range from professional surveyors to retired builders etc but to the untrained eye, this particular stage is a critical part of the buying process. Snaggers will spot defects such as structural damage, dampness and cosmetic trouble down the line, which can save you a small fortune on the potential pitfalls – we have a list of snaggers here.
Packages to furnish your apartment can start from as little as ˆ2000 and can save a small fortune while adding style and convenience to your home.
This means that you will pay a monthly premium for the duration of your mortgage and should you die before your time, your mortgage will be paid off relieving your family of a financial burden at such a tragic time. Mortgage lenders are legally obliged to ensure you have adequate mortgage protection in the event of your death. Some protection plans can include loss of earnings, critical illness and unemployment while others are death only.
Home and contents insurance are vital for peace of mind and there are literally hundreds of policies to choose from. While lenders insist you have adequate home insurance, (if you’re house burns down, the banks want their money!) it is wise to remember that contents insurance is not always included to read the small print!
Loan to Value is the ratio between the value of the home to amount to borrow.EG:
Home value ˆ400,000, loan needed ˆ300,000, loan to value = 75%
How to work it out – simply divide the loan by the value: 300,000 / 400,000
TRS – Tax Relief at Source - Since 1 January 2002, tax relief for home mortgage interest (known as TRS) is now given at source (off your mortgage).
Mortgage TRS can be claimed in respect of qualifying loans secured on the deeds of your main residence i.e. a new mortgage, a top up loan, a home improvement loan, a re-mortgage or a consolidation of existing borrowings. The mortgage tax relief element on the mortgage interest is given, by your lender, either in the form of a reduced mortgage payment or a credit to your funding account. It is not necessary to claim mortgage interest relief in the annual tax return, and it no longer appears on your Notice of Tax Credits.
TRS can result in up to ˆ3200 per annum returned to you.
Consolidation – bundling all of your loans into one manageable sum can reduce your monthly outgoings considerably. It also means you can claim TRS on all of your loans instead of just the mortgage part of it. It also means stretching out the length of your loan beyond your initial term and in some cases into your more mature years so borrowers need to ensure they can keep up repayments later on in life.
Positive Equity – If you originally bought your home for ˆ200,000 and it’s current value is ˆ350,000 you have a positive equity of ˆ150,000
Negative Equity – is becoming more common with the introduction of 100% Loans and the slight decrease in house values. The same house bought for ˆ350,000 which is expected to decrease 2% this year equals a negative equity of ˆ7000.
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