AIB Deferred Start Moratorium

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Pneuma

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Hi all,

Are any of you familiar with AIB's Deferred Start Moratorium? Basically you can defer your mortgage repayments for the first 6 months. I spoke to AIB about it but am still none the wiser. It seems that the interest still accrues and is added on to the total cost of the mortgage but my question is:

I own a property which I do not need to sell to buy the current house we're after. If we are successful and get the house, and avail of the deferred start, and then sell my existing property in the first 6 months and pay off a significant portion of the capital of the new mortgage with the proceeds, have I saved any money on interest in that time? The guy in AIB either didn't know what I was asking (maybe none of you do either) or didn't want to say.
 
Pneuma said:
Hi all,

Are any of you familiar with AIB's Deferred Start Moratorium? Basically you can defer your mortgage repayments for the first 6 months. I spoke to AIB about it but am still none the wiser. It seems that the interest still accrues and is added on to the total cost of the mortgage but my question is:

I own a property which I do not need to sell to buy the current house we're after. If we are successful and get the house, and avail of the deferred start, and then sell my existing property in the first 6 months and pay off a significant portion of the capital of the new mortgage with the proceeds, have I saved any money on interest in that time? The guy in AIB either didn't know what I was asking (maybe none of you do either) or didn't want to say.
Click to expand...
how would you have saved money on interest? the full amount of the mortgage will be accruing interest over the period.
 
Blackrock1 said:
how would you have saved money on interest? the full amount of the mortgage will be accruing interest over the period.
Click to expand...
so even though I have deferred the payment the interest will still need to be paid off. So no advantage? It definitely seemed too good to be true!
 
No real advantage to you, the advantage for people who are buying possibly for first time is that it gives them 6 months to furnish/do up or whatever to the house without having repayments. Then they start say a 30 yr mortgage with 29.5 yrs to go and instead of it being 300k for example it will be 300k plus 6 months interest. They will pay over the term for the deferred start option but that said it can be very useful to someone.

In your case not so much unless you do not have the disposable income handy for the 6 months until you sell your existing house. There is no money saving in it for you as such it's just a feature/benefit of the mortgage that would appeal to some people.
 
Thanks for the explanation Monbretia, very clear. I found an excel formula that breaks down exactly what portion of the repayments is interest vs capital reduction for each year of the mortgage and it was fairly eye opening/sickening. Thought I'd found a loophole!
 
I am always amazed by how many people are confused by the difference between interest charged and repayment made. A lot of our explanations probably assume that this is obvious.

It's interesting that the guy in the bank was unable to explain this clearly to @Pneuma

The bit on the AIB website should be a lot clearer and should give an example.

aib.ie

What is a Deferred Start? - Mortgage Questions

aib.ie aib.ie

And should have a prominent warning "Note: you will continue to be charged interest during this 6 months"
 
I see it has been a feature of AIB's mortgages since at least 2010

Deferred start refused - what next?

We have been approved for a mortgage with AIB. Used a broker and asked about the initial 3 month moratorium (or deferred start) as advertised on AIB's website: It says: First Time Buyers can avail of a range of benefits including: A choice of competitive interest rates available. View our...
www.askaboutmoney.com
 
Brendan Burgess said:
I am always amazed by how many people are confused by the difference between interest charged and repayment made. A lot of our explanations probably assume that this is obvious.

It's interesting that the guy in the bank was unable to explain this clearly to @Pneuma

The bit on the AIB website should be a lot clearer and should give an example.

And should have a prominent warning "Note: you will continue to be charged interest during this 6 months"
Click to expand...
I always knew that repayments were bairly reducing the principal at the start. Just when you see the breakdown by year and its not until the last 10 years that it really starts to move!

The guy in AIB referred me to the website and said that would clear up any confusion. All I could find was a short paragraph on it.
 
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