Erratic Income: Interest Only/Not: Tracker/SVR: Income Prot

Sale agreed today.........! YIKES
I am not actually sleeping at night
Approved with EBS and First Active. Refused by Bank of Ireland and didn't go elsewhere. Erratic income so want option of repaying lump sums as available. Also am drawing down 92% of purchase price i.e. 410 k on completion and then need 100 k for works. Both are agreeing to 100k for works upon satisfaction as to value.
I am truly at sea in relation to APRs etc. I have simply been looking at interest rates as presented simpliciter.
I have been advised by colleague that interest only repayment is best suited in terms of ease of repayment at initial stage and facility to deposit lump sums. EBS have refused interest only and First Active are offering it.
Forgive the lack of detail but seems EBS are offering tracker whereas First Active are saying I wouldn't be eligible for tracker (?)
Which do I go with? Interest only option is very attractive....

Any help at all would be most appreciated.

p.s. any thoughts on that whole insurance lark? Self employed so out of work means no dough.....:eek

title edited by ajapale to reflect questions

Re: Erattic Income: Intrest Only/Not: Tracker/SVR: Income Pr

A lot of issues here.

You always have the option to repay lump sums, on any mortgage (save that you can be penalised if you're on a fixed rate). Lenders don't like it much and may imply that it can't be done/is very difficult to do but ignore that guff. Therefore, this facility is not relevant in making your choice.

You talk about an "interest only repayment" mortgage. This seems to be a confusing amalgamation of two products:

An interest only mortgage is where your regular payments only cover the interest. Thus the sum owed does not reduce over time. You need to have a vehicle for repaying the sum borrowed at some stage in the future - this is where the dreaded "endowment" rears its ugly head (we don't even want to go there).

A repayment mortgage (also called an "annuity mortgage") is paid down by you over time i.e. the regular payment is greater than just the interest.

That's why interest only mortgages are superficially attractive i.e. they appear cheaper. But you don't want to be left with a sum to repay when you're old and poor (because your pemsion has bombed).

Bottom line - unless you have specific tax reasons for an interest only mortgage (and they are not convincing in the case of PPRs), take out a repayment.

You mention trackers. We like them on this site - certainly versus satandard variables. If you're going to go for one, trawl the market and get the lowest possible rate from the outset. A tracker makes a mortgage nothing more than a financial commodity so it's only the price (i.e. the rate) that matters.

If you're really worried about ability to repay, you should at least consider a fixed rate. Yours sounds like a stonkingly large commitment so do the sensitivity analysis of rates rising by up to 3 or 4 per cent (at the very least) and see what would happen to you. Try our old friend Karl Jeacle - he's great on the numbers.....

On insurance, shop around and see what you can get. I'd be reluctant to suggest to anybody that they should take a risk on illness - certainly not if they don't have some equity in their property which might facilitate a move to a smaller house if their income dried up.

You say you're not sleeping. Try and look at the positives - buying and doing up a house is immensely rewarding. Don't focus on the negatives....

Re: Erattic Income: Intrest Only/Not: Tracker/SVR: Income Pr

I'm sure the very broad nature of this query has annoyed a few of you.
Thanks a million to Oysterman.
Any other thoughts on
1. Interest only as offered by First Active. Smaller repayments and facility to deposit lump sums
2. Regular tracker mortgage with EBS.

Perhaps the amount of the loan is absolutely ludicrous. Income varies but averages 100 K approx per annum.

If you have a thought I beg you to share. Nothing signed and all advice is very much appreciated.

Re: Erattic Income: Intrest Only/Not: Tracker/SVR: Income Pr

Can you confirm that First Active are willing to offer an interest-only mortgage with no seperate repayment vehicle on a PPR? If so, that represents a new low in irresponsibility and money grabbing. In other words, they'll offer an open-ended loan on a property which, by definition being a PPR, can't be sold to repay the capital sum in the future. I wouldn't touch it.

Are you sure that EBS is the best traker rate in your specific case? The rate issue is too important to be left to inertia. Check all the other tracker lenders.

Re: Erattic Income: Intrest Only/Not: Tracker/SVR: Income Pr

First Active will allow an initial interest only period of five years on a main residence under certain income criteria. For what the poster is looking for (interest only, tracker and the ability to repay lump sums) IIB homeloans offer a 3.1% tracker (or a 2 year discounted rate of 2.99% with the option to switch to tracker after the 24 months), interest only for up to 36 months throughout the term and - as with all variable/tracker mortgages - you can repay lump sums at any time without penalty.

Kind regards,

Sarah

www.rea.ie

Re: Erattic Income: Intrest Only/Not: Tracker/SVR: Income Pr

The NIB offer a tracker rate of 2.74, I believe this to be the cheapest around.
Brokers dont recommend it as they dont get commission!!

Tracker 0.8%

sarachbell
Registered User
Posts: 6
(22/2/05 5:44 pm)

Tracker 0.8% Very quickly, I presume tracker at .8% with 92% loan is as good an offer as I am going to get?
With option of interest only for five years.

p.s. I have spoken to Sarah in REA and would like to publicly say thanks. As it turns out, had offer better suited to my erratic income history but she was incredibly helpful and I would recommend her services to anyone negotiating the delightful world of the financial institutions.

Re: Tracker 0.8%

Yep, looks like you've got the best available there (who's it with, by the way?).

Now that you've got the best rate available, please don't blow what you're saving by being taken to the cleaners on life and, particularly, house & contents insurance.

On the house & contents front, have a look at this thread:

I've never bought life or salary protection cover over the internet but have a look at this excellent key post:

Don't, on any account, take any insurance product that a mortgage provider offers you - no matter how pathetically grateful you may be to them for having offered you a loan of an amount beyond your wildest dreams...... They trade on this and pocket all that lovely commission that you should have in your own pocket to buy soft furnishings for your new palace. I'm warning you - fall into their honey trap and never, ever log on to this site again.....we'll know what you've done!

Good luck with your purchase - hope the sleepless nights are over.

Re: Tracker 0.8%

Rate is with First Active. Very pleasant to deal with.

Hadn't applied my mind too much to insurance either house or life. Prepare for many more questions.....:lol