Mortgage Products
- Interest Only
- Tracker Mortgage
- Re-mortgage
- Repayment / Annuity
- Endowment Mortgage
- Current Account Mortgage
- Pension Mortgage
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Interest only mortgages
Traditionally interest only mortgage facilities were only available in respect of investment property purchases. In an interest only facility, as the name suggests, only interest is paid to the lender with the capital balance staying constant. In the past two years a number of lenders have made such facilities available in respect of home loan, although there are usually a number of conditions attached to the facility. One lender will offer first time buyers interest only facilities up to a maximum of three years with the underlying thinking being that it gives first time buyers a chance to get on their feet. Most lenders are happier offering these products to high income earners and will generally impose a review of the interest only facilities every five years.
Tracker mortgages
This relatively new product offering basically guarantees to track the European Central Bank's rates plus a margin of on average 1% and 1.3%. 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 30 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.
Re-mortgages
If you're tired of paying exorbitant interest on your credit cards and unsecured debt, it may be time to take advantage of a home equity loan, either with your existing lender or with a lender offering a more competitive product.
Re mortgaging is also a smart source of funding for a mixture of uses, from second homes to home improvement. We can help you combine the financial power of your equity with the benefit of tax savings to supply you with the cash you need to achieve your personal goals.
Repayment / Annuity
The repayment/annuity mortgage is the most common one. Each month the borrower repays both monthly interest and a portion of the loan amount. 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.
Endowment mortgage
The product is an interest only mortgage that is supported by an investment or endowment policy. The borrower pays only interest during the term of the mortgage and the loan amount remains outstanding until the end of the term. Premium payments are payable on the investment / endowment policy during the term. The endowment policy is similar to a life assurance investment / savings policy that is designed to provide an amount to repay the mortgage at the end of the term.
Current account mortgage
By combining your current account with your mortgage account all money that would normally be lodged into your current account will be taken off your mortgage meaning that you could pay off your mortgage years ahead of your expected date by simply reducing the capital amount.
The current account mortgage is a variable rate product and does not facilitate fixing your rates.
Pension mortgage
Pension mortgages are similar to investment/endowment interest-only mortgages. A pension plan supports the mortgage instead of an endowment policy. The product is generally only available to the self-employed or persons in non-pension able employment, or Company Directors.
The lump-sum portion of a pension plan is used to repay the mortgage principal at mortgage maturity, timed to coincide with retirement.
The borrower has the unique advantage of gaining dual tax relief at the highest tax rate on the pension premiums, which are all the "capital" repayments, and also gaining maximum tax relief on the mortgage interest.
This can be the most tax efficient mortgage method for suitable borrowers
