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Mortgage Switching

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  • 06-12-2006 8:55am
    #1
    Eoghan25
    Registered Users Posts: 121 ✭✭


    Hi, I am currently mortgage switching from the shared ownership scheme. I think I have found a lender who is willing to provide me with the fund me for the entire mortgage it is still going through but the feedback so far is positive. I am thinking of the future I feel I can afford a larger mortgage to buy a larger property but in the bank eyes I cant. So i am using my chance of switching to the bank to try and prove meself. I am undecided on how i am going approach this
    the current loan period im taken out is over 35 years. Now my options are

    1) Take out a similar loan period and save my arse off and then come back with savings etc saying i was able to save x amount on top of making your repayments give me larger loan or

    2) Drastically reduce my loan period i.e 20-25 years so i am making similar repayments to the larger loan i want over 35 years.

    With my age I am working with a max loan period of 37 years..
    Firstly I want advice on which people think is a better option and secondly if I was to reduce my loan period if i do fall into problems where i feel i am living too thight is it a major issue returning the current loan back to a higher term with the banks??
    At the moment I see option 2 as a better option as I get the feel of paying back the higher loan with a safety net of been able to extend the term if i find it too hard. Where if I just jump in next year and take the higher loan over 35 year term there is no comeback if i fall into problems.Am I thinking right on this or missing anything i should consider??

    cheers

    eoghan


Comments

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    #2
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    First of all- interest rates are still going up- by how much is unknown. Your repayments could potentially rise by a lot more than you envisage in the short-term.

    The banks are not in the business of having their customers living on the breadline- which is why they have rules governing the amount of money you can borrow.

    Personally- I think you would be most prudent simply to follow a third option that you do not seem to be considering- namely to move the entire mortgage to the bank and sit tight for the short term. Your borrowing capacity is going to rise over time- as indeed will your credit rating. When you have a better idea of the lie-of-the-land in 6-8 months time you can re-access the situation then?

    S.


  • Options
    #3
    aniascor
    Registered Users Posts: 503 ✭✭✭aniascor


    Eoghan25 wrote:
    1) Take out a similar loan period and save my arse off and then come back with savings etc saying i was able to save x amount on top of making your repayments give me larger loan or

    2) Drastically reduce my loan period i.e 20-25 years so i am making similar repayments to the larger loan i want over 35 years.

    If you go with option 1, you might want to look at the Offset Mortgage account from First Active, because any savings you have will help to reduce the repayment term and reduce the amount of interest you pay. It also allows you a bit more room to breathe if the interest rates rise a lot, because you won't be tied into a shorter term mortgage.


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