What are the different Types of Mortgages
The banks are lending and we can help secure the mortgage that best suits you. One of the first things to do is to figure out which type of mortgage suits you best. There are a number of different types but the most common and the most widely used is the Annuity Mortgage.
Interest only mortgages
No Longer available in Ireland
Tracker mortgages
Tracker mortgages are no longer available for new mortgages.
Annuity mortgage
The repayment or 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.
Remortgage
If your existing mortgage rate is high or if you’re tired of paying very high 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.
If you need to consolidate debt or are just looking for smarter financing of upcoming projects, a home equity release can satisfy your obligations, and lower your payments. Second Mortgages are also a smart source of funding for a myriad of uses, from second homes to home improvement. We can help you combine the financial power of your equity to free up the cash you need to achieve your personal goals.
Endowment mortgage
This type of mortgage is not widely used nowadays. 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. Not too back offering this facility now.
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-pensionable 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.
The above is for information purposes only and does not constitute financial advice in any, we recommend that you speak with us before making any financial decisions.
We recommend a holistic approach to financial planning and we can help you put your plans in place.
Call us today in Letterkenny: 074 910 3938
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Talk to us now and make an appointment with one of our Letterkenny team of QFAs. We are here to help with your Financial Planning Concerns. Ask us questions on Retirement & Pension, Life Insurance & Protection, Mortgages, and Investment Advice. Get in touch here or give us a call at 074 91 03938.
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