When you take a mortgage, are your first months repayments just interest?

phormium

I'm sure the average cashier in the bank may not know the ins and outs (although they did years ago!) but the mortgage/loans advisor in any branch will know this stuff. Better to look for the relevant person for specific queries.

Jfrost

I can only recommend upping your payments if in a position to do so.
Better then any savings account.
Money you pay off, in its own way comes directly off the loan along with the interest you would have paid if you hadn't.
Had a 100,000 loan over 25 years, after year one the still owed 99,500 or similar...then upped payments and am rid of mortgage after 16 years.
Just in time to save for kids in college, eldest is Junior Cert.
There is always pressure, but secret is managing that pressure

bmwguy

Basically if you take out a 100k mortgage at 3.5% your balance at the end of year 1 would be 103500.

If you structure your loan that you pay back 3500 a year your balance will be 100k, I. E. the loan will never be cleared.

If you pay back 5k your interest payment will be 3.5k and your capital repayment will be 1.5k. Balance then will be 98.5k

If you pay back 10k your interest will be 3.5k and your capital repayment will be 6.5k. Balance will then be 93.5k

So to answer your question it really depends on the amount you want to pay back each month.

This is why a 20 year mortgage costs less than a 30 year mortgage overall.

4ensic15

bmwguy wrote: »

Basically if you take out a 100k mortgage at 3.5% your balance at the end of year 1 would be 103500.

If you structure your loan that you pay back 3500 a year your balance will be 100k, I. E. the loan will never be cleared.

That is not accurate. Interest is added every 3 months and is based on the average balance over the previous 3 months.
100k at 3.5 % with a repayment of 3,500 in the year will result in a monthly payment of approx €291.67. If 3 repayments are made and interest added on the average balance over the 3 months the balance would by €99969.66 at the end of year 1. It would take about 137 years to clear the loan at this rate. It would take about 117 years to get to the halfway point and about 20 after that to the end.

Samuel T. Cogley

4ensic15 wrote: »

Can't see how it is that much of a shock. Add up how much rent you would pay for the use to the property over the life of the mortgage if you want a shock!

Neither will many people yet, some people do...

...I don't know what a tracker mortgage is :pac:

Don't get me started on rent adjusted for inflation over 30+ years - even I know I'll attract the wrath of the OT warning there!