Mumstown Chat

Mortgage Interest Relief

Financial advice that you can trust. With over 20 years experience, Dave Kavanagh from Financial Companion can help you in the areas of personal financial planning, life & serious illness cover, income protection, pensions,
savings & investments, mortgage advice and budgeting.

Dave does the regular finance & consumer advice slot on The Tubridy Show, RTE 2FM. Flexible appointments with no cost and no obligation. Contact to find out how you could be paying less each month.

Mortgage Interest Relief

Postby mammycool » Fri Aug 11, 2017 9:35 am

mammycool
 
Posts: 829
Hi there,

I got a letter from my bank, outlining the current variable rate that I am on and advising about their lower fixed rates.

I bought my house in 2005, so we currently get Mortgage Interest Relief - which is due to end in December 2017.

Before I do anything, I have a few questions:
1) When that ends, does my monthly mortgage payment go up? or
2) Is it added to the end of my mortgage?
3) If I switch mortgage now, do I loose my 1st time buyer status?

Currently, our variable rate is 3.7% - which, when I check around is quite high. We have a 25yr mortgage. So, ideally, I would like to continue to pay around the same but reduce the term.
mammycool

Re: Mortgage Interest Relief

Postby Financial Companion » Fri Aug 11, 2017 10:35 am

User avatar
Financial Companion
 
Posts: 1027
Hi Mammycool.

Firstly, when your TRS (tax relief at source) ends, normally your payments just increase. It's not that your payment changes, just that the lender no longer get supplemented so you get charged the full amount.

Irrelevant of anything you do from now with either mortgage or property, you are no longer a first time buyer.

While 3.7% might seem slightly higher than some of the headline rates, it's not that bad (many I see are on 4.25-4.7%) and the thing is, you could switch and pay the legal fees to do so, and then 6 months later, the bank you switch to could increase their variable so you would have done it for nothing (and possibly a loss).

When considering switching to a fixed rate, the points to consider are:

If variable rate rises above the fixed rate, you will have prevented an increase to your monthly payment. If variable rates drop below the fixed rate, you will have prevented a reduction in your monthly payment. During a fixed rate period, there can be a penalty if you wanted to switch/move house/pay off a lump sum and break the fixed period.

On top of all this, lending criteria is much stricter than it was in 2005 as well as the new Central Bank lending restrictions. I have seen people that qualified for €400,000 mortgages back then that even on the same income now, would not qualify for €200,000 now (so would not be allowed to switch anyway). I hope that all makes sense but if you want to give me a shout, I can ask you a few questions and let you know whether or not a switch would be possible.

The other thing to consider in terms of saving on mortgage costs, is your mortgage protection. If you email me ages, smoker status, balance and term remaining, I can do a quick comparison and see if you are paying too much and can reduce the premium. Much simpler than switching mortgage and usually bigger savings to be had.

HTH.

Re: Mortgage Interest Relief

Postby mammycool » Mon Aug 14, 2017 8:47 am

mammycool
 
Posts: 829
Ohhhh - I have actually no clue as to what we pay on Mortgage protection. I don't think it is too high. It is lumped in with the Mortgage. I must check out, as when we setup, my husband was a smoker. He has not smoked in nearly three years!!

I will have to look at the life insurance too - same again - smoker turned non-smoker!!
mammycool

Re: Mortgage Interest Relief

Postby Financial Companion » Mon Aug 14, 2017 9:06 am

User avatar
Financial Companion
 
Posts: 1027
That would be similar to many people, not exactly sure what they pay for mortgage protection. Especially if it's included with your mortgage payment. In that case, the lender is usually tied to just one life company, so it is highly unlikely you got the best value. Non-smoker rates can be close to half those of smoker rates, so you could potentially be looking at substantial savings. If you either email me on info@financialcompanion.ie or else phone/text me on 087-6414570, I can explain the options and how easy it is to switch cover.

Dave.

Re: Mortgage Interest Relief

Postby Financial Companion » Wed Aug 16, 2017 3:04 pm

User avatar
Financial Companion
 
Posts: 1027
For anyone coming close to a birthday, getting in before that can also usually save you a bit more.


Who is online

Users browsing this forum: No registered users and 1 guest

© Mumstown Ltd. 2010. All rights reserved. Terms & Conditions and Privacy Policy. Website redesigned at 100 Paces.