We looked at some of the recent coverage on the idea of state supported ‘split-mortgages’ and found the figures lacked integrity when calculations were made on the examples being used. It is not the ‘cheapest’ solution and it would also promote the creation of capital repayments from the state which is a wealth transfer.
There was also a figure of €925 as being the ‘cost of rent allowance’ but that figure is also wrong (at least for Kildare) which tops out at €750.
We have said in the past that split mortgages are not all they are cracked up to be, but they do have a place. We even made a nifty calculator to help people see what the results of doing this might be.
The problem with them is two fold, first of all they don’t necessarily work, second is that it is going to be refused unless you can’t even service the interest. Splitting a mortgage requires that the non-warehoused bit is on full repayment, so in 20 years time you might owe half of the original loan (assuming you never ‘un-warehouse any of it), but if you can service interest and keep going then you won’t get one.
Doing this can make sense though, even if the other part of the loan isn’t amortizing because in this situation at least your future debt isn’t stagnant, it’s reducing. The banks are blocking these though, because they have no ‘borrower solvency agenda’ they have only the ‘collect to the point of the person going bang’ agenda.
See …