Strengths and weaknesses of interest-only mortgages

Interest-only mortgages have surged in popularity within the mortgage industry, offering a distinctive structure and potential advantages. Yet, like any financial tool, they come with both pros and cons that warrant careful consideration for prospective homebuyers. In this article, we delve into the merits and drawbacks of interest-only mortgages, empowering you to make a well-informed decision regarding their suitability for your journey to homeownership.

Interest-only mortgages offer several appealing advantages. Initially, they feature lower monthly payments compared to conventional mortgages. During the initial period, borrowers are solely responsible for paying the interest portion of the loan, resulting in more manageable payments, particularly in the early stages of owning a home. Moreover, opting for an interest-only mortgage can free up additional cash flow, which borrowers can redirect towards other financial objectives or investments. This flexibility is especially beneficial for individuals with variable income or those seeking to optimize investment opportunities. Furthermore, some borrowers may opt for interest-only mortgages to invest the savings from lower mortgage payments into higher-yielding investments. Financially savvy borrowers may reap rewards if these investments yield returns surpassing …

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The role of credit scores in mortgage approval

Understanding the intricacies of credit ratings is paramount for those seeking mortgage approval, as it significantly influences loan conditions and eligibility. In Ireland, where securing financing for one’s dream home is a significant milestone, comprehending how credit scores affect mortgage approval is essential.

Credit scores serve as a key metric for lenders to gauge an individual’s creditworthiness and repayment capability. Factors such as payment history, credit utilization, credit history length, new credit accounts, and credit mix contribute to these scores. Timely payments, low credit utilization, longer credit history, and diverse credit portfolios are all factors that positively impact credit scores.

Mortgage lenders utilize these scores to assess risk levels associated with lending and determine interest rates, minimum credit score requirements, and down payment obligations. Generally, higher credit scores translate to lower interest rates and more favorable loan terms, while lower scores may lead to higher rates, larger down payments, or even application rejection.

Various types of mortgages and lenders may impose different minimum credit score requirements. Conventional mortgages typically demand higher credit scores compared to government-backed loans like FHA or …

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What you need to know about ECB’s raising interest rates

The European Central Bank raised interest charges more than what they initially announced. Over the past few months, the rates have increased by around 1.25%. The clients have not yet been reached by institutions including Bank of Ireland and Permanent TSB.

Customers have a lot of pain for the future because there are a lot of uncertainties. They now have to deal with high mortgage interest rates in addition to inflation, rising electricity and fuel costs. New customers face a direct problem because their five-year fixed rates increase by 2%. As a first-time buyer, you will receive a rate of 5.95%. Long-term fixed loans rise by 1.49% to 1.58%. (depending on size and running time). As a result, banks such as AIB, ESB, and Haven must raise their rates for new and switching customers. The current customers are not affected. Customers with tracker mortgages face an increase in interest rates due to contractual obligations. Some of the new customers must take an expensive rate, which means they must pay 240€ more than before the ECB increase.

If the AIB, EBS, …

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Compare Mortgage Rates of Irish Lenders

The ECB will continue to raise the interest charges over 2% by the end of the year 2022. In 2023 it will be up to over 3%. If you are a first time buyer you must have 10% of the  whole house price. If you have more than 10%, your rates will be lower. There are a lot of products out there and you must have a look at which one is the best for you. There are  products for first time buyer, second time buyer, self builder and switcher. Some of them have  some special products like green mortgages or for renovator.  

The following companies were compared: Bank of Ireland,  Finance Ireland, Avant Money Mortgages, ICS Mortgages,  Permanent TSB, Haven, AIB, EBS. 

Bank of Ireland has a lot of offers when you get a mortgage. If you get your first mortgage with this bank, they will give you 2000€ for saving up. They also have a  cashback system, so if you take a mortgage there they will give you 2% cashback of the mortgage and 1% extra cashback if …

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The 10 Mortgage Lenders in Ireland

There are 10 mortgage lenders available in Ireland. These include (no particular order):

AIB Avant Money Bank of Ireland EBS Finance Ireland Haven ICS Mortgages KBC Permanent tsb Ulster Bank

Many mortgage holders qualify for a change of mortgage and could thus save significant amounts of money. It is important to compare your options before deciding on a mortgage. The central bank’s mortgage lending rules impose a limit on the amount of money a bank is allowed to lend.

Currently, Irish banks can lend up to 3.5 times a borrower’s annual income. Lenders may exceed the 3.5 loan-to-income limit for 20% of the total loan value in a calendar year. Lenders examine bank statements to understand a borrower’s ability to repay. You will be asked to submit six-month bank and credit card statements.

This post was written by Veronika Pluháčková who was a research intern at Irish Mortgage Brokers in May of 2022.

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Mortgage switching 2022

Last year of the people approved for a mortgage about half of those are first-time buyers. The slowing in the numbers approved for a home, comes as some lenders have already said they increasing their rates. (AIB, Bank of  Ireland, EBS, Haven and Permanent TSB). Around 775 homeowners need mortgages or are switching to another lender at any given time

If you want to buy a house, you have to pay the owner for the house and have to pay your bank for lending the money. Still more than 200,000 households repaying their mortgage on standard rates.

Homeowners should now consider their rates. But there is a risk for those on fixed rates. If they roll out of fixed-term contract in one or two years, the rates could be higher. The prospect of higher mortgage costs is prompting to switch from variable or short-term fixed rates in a bid to the expected increase.

If you decide to switch mortgage, you need a solicitor to take care of the processing, paperwork and liaising. The cost and workload is about half of …

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What is the Local Property Tax of 2022?

 

Local Property Tax is a self-assessed tax based on your property’s market value. Until recently, all Local Property Tax costs have been calculated using the prior property assessment date.

The next property valuation date is 1st November 2021, according to the most recent revisions to LPT released in June 2021. For the 2022 Local Property Tax charges, property owners must submit a revised self-assessed valuation of their property based on the new assessment date of 1st November 2021.

 If you sell your home after 1st November 2021, you will be responsible for the Local Property Tax in 2022.

Housing prices will be reassessed every 4 years under the current LPT system, and new properties will be added to the system every November.

Local Property Tax is payable by all holders of residential land, including rental homes. As a result of the current LPT system, first-time purchasers and new houses purchased since 2013—which were previously free from LPT—will be responsible beginning 1st November 2021.

The following is a list of individuals that are liable for Local Property Tax:

Individuals with a …

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All you Need to Know about a Credit Score in Ireland

 

Having a good knowledge about your credit score and the contents of your credit report is very important since you are able to clearly understand the factors that may impact your score when getting a mortgage to buy a home. With the report, you get an overview of the things you are doing right and the parts you should change so that you can increase your credit score. 

Factors that determine your credit score

Your credit including a mortgage, car loans, store credit cards, and a mortgage affect your credit score. Additionally, the credit that you are using affects your score. In this case too much use of the available credit reduces your credit score. The third factor is late repayment since it stays in the report for a lot of time. Sometimes there can be some error in the credit report but this can be fixed within a day. Therefore, before going to a lender for a mortgage, you need to ensure that the report is up to date. If you discover an error, file a dispute with …

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How to Buy an Apartment Building in Ireland

 

It s often very hard to comprehend how best to invest in apartment buildings. However, a good understanding of the 4 steps below will see to it that the entire process becomes more easy and successful. 

Be sure that you owning an apartment building is the right thing for you

Regardless of whether you are a novice in real estate or have already built up a portfolio, the most crucial question to explore is whether owning an apartment building is the right thing for you. There are many things to consider and these include time and cost. The costs associated with an apartment building include ongoing cash flow matrix and of course, the initial capital requirement. An apartment building requires a lot more management and involvement, like addressing issue to do with management, leasing paperwork, and dealing with the turnover of tenants. Prior to owning an apartment building, ensure that your finances and schedule are set up to cope with the change. 

Try to figure out the type of apartment building you want to buy

Apartments come in all …

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What Types of Mortgages are Available in Ireland?

A mortgage is a type of debt that is secured by real estate. In default payments, the borrower is responsible for repaying the debt. The primary reason for obtaining a mortgage is to purchase a property that cannot be paid in total upfront for an individual in Ireland who cannot afford to pay in cash. The COVID-19 pandemic has shown that financing a mortgage in the modern era of the economic downturn may be more complex and complicated than previously anticipated. In addition to limiting the guidelines, creditors and lending companies appear to pick and choose which people’s lives will improve.

Types Mortgages Available in Ireland

Fixed-Rate Mortgage: It is a type of mortgage with a fixed rate for the loan duration, allowing buyers to estimate the cost of a large purchase while making smaller, more predictable payments over time. Reverse Mortgage: It is a type of mortgage loan that allows the borrower to access the property’s unencumbered value through residential property. Typically, older homeowners are targeted for these loans, which do not require monthly mortgage payments. A reverse …

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