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Mortgages & Advice

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Mortgages. Mortgage Types

Annuity Mortgage:

This is the most common type of mortgage. Each month the borrower repays both monthly interest and a portion of the loan amount. In the first few years the repayments comprise of mainly interest. But as the years go by the borrower pays more of the capital, until the loan is paid off completely.

Interest only mortgages:

Here, only interest is paid to the lender, leaving the capital balance constant. There are a number of conditions to avail of this facility.

Tracker Mortgages:

This type of mortgage guarantees to track the European Central Bank's rates plus a margin of on average 1% and 1.3%. Any changes in the ECB rate are passed on to tracker mortgage holders within 5 business days.

The tracker rate varies according to the loan to value ratio. Loan to value expresses your mortgage as a percentage of the house value. The cheapest trackers available are to those applicants with a lower loan to value ratio.

Re-mortgages:

Home owners can release equity in their homes to pay for other needs or to consolidate debt. Mortgage finance is the cheapest form of finance available.

Endowment mortgage:

This is an interest only mortgage that is supported by an investment or endowment policy. The loan amount remains outstanding until the end of term.

Pension Mortgage:

A pension mortgage is similar to an investment or endowment interest only mortgages. A pension plan is put in place to pay off the mortgage principle when the mortgage matures. The usual scenario is that the mortgage pension matures at the same time as retirement. On maturity of your pension mortgage plan, you receive a tax free lump sum which is used to clear the principle amount of the mortgage and then you are left with a monthly pension income payment.

You only repay the mortgage interest during the term of the mortgage and repay the principle upon the mortgage maturing.

The mortgage pension is generally only available to the self-employed, company directors and to one who is in non-pensionable employment.

There are excellent tax benefits to be had by procuring a pension mortgage such as; you are in a position top claim dual tax relief on the pension premiums and also gain the maximum tax relief on your mortgage tax relief.

It is highly recommended that one seeks expert advice prior to applying for a pension mortgage in order to be in full receipt of any risk that may be involved.