Interest Only Mortgage

G

Gal1

Registered User
Messages
18
Hi,
We have just got a letter out from our bank saying our interest only mortgage was up for renewal at the end of November.
We changed our mortgages last year to TSB. The investment property
got a rate of 2.55% which made the monthly payment on interest only
of 479.75. The letter now offers five options at interest only
The mortgage is €222,000. House is valued €400,000

Tracker variable rate 4.50% 823.69
(ECB + 1.2500%)
Standard Variable Rate 841.74
Year 1 Fixed rate 4.75% 868.80
Year 2 Fixed rate 4.85% 886.85
Year 3 Fixed rate 4.85% 886.85

Our fixed rate has gone from €479.75 to approx €868.80
Does this seem correct.

Thanks a mil
Gal1
 
This one may be more useful (CCOVICH, the interest only on the one you posted requires a fair bit of manipulation of the figures):


I should probably have specified, beyond the bald "yes" that I ran the calculation to check for reasonableness, and it came out very close to the sums the OP posted.
 
Also, i find it strange that the interest rates for years two and three are the same.
 
I don't think these tools are even necessary and, in my opinion, contribute to the idea that there is some mystery to how these figues are reached. This is basic maths. Teach a man to fish and all that ...

2.55% of 222K = 5661 / 12 PA = E472 monthly
4.50% of 222K = 9990 / 12 PA = E832.5 monthly
.......

Interest only is the easiest of mortgage numbers to figure out. So much so that most mortgage calculators don't even give you that option. I'm curious as to whether the OP understands the workings of an interest only mortgage, specifically the notion that your payments make no inroads into the principle amount borrowed and that each year you are only ever paying the interest on your loan at whatever rate you've agreed to?

The 2/3/4 .. 5 million term is irrelevant. The bank is simply offering you different interest rates for these terms
 
Thanks Howitzer
That's exactly what I was looking for.
Thanks again,
Gal1
 
Howitzer,
This is an investment property. I understand that you are not paying the capital/principle amount. This is the first year of the mortgage and we decided to go interest only for the first year/ maybe second year. We are in a position to pay the interest and the principle but just thought it would be easier for a couple of years to do interest only.
Thanks
Gal1
 
You must log in or register to reply here.
Back
Top