Deferred Start on Mortgage for FTB

[ftb_2007]

I am a first time buyer and planning to take a mortgage worth 300K for a property with 2 month deferred start.

Can you please let me know if any disadvantages/issues in taking a mortgage with 2 months deferred start?
1) Would there be any issues if I switch the lender later?
2) Would I need to pay anything extra if I switch the lender?
3) Or any other financial drawbacks???

And also I am not sure if I understand the deferred start quite well.. If anyone explain the same with detail that would be great as well...

Thanks a million in advance..

 

[Howitzer]

Well firstly I'm surprised financial institutions are still offering these type of products in the current financial climate. These are effectively negative amoritistaion mortgages (which are banned in Ireland) by another name.

By not paying the mortgage for the first 2 months the interest that you should have paid on your loan is simply added on to the principle amount so that when you do start paying your mortgage after 2 months you now be paying it on a loan of 302.5K. (assuming rate of 5%)

What institution have you got this mortgage through?

 

[LDFerguson]

Deferred start mortgages are not uncommon Howitzer - the one that springs to mind is Permanent TSB with their option. I'm sure the name sounded great at a morketing (sic) meeting.

FTB - I'd avoid the deferred start option if you can as you're effectively borrowing the couple of months' repayments and spreading them over the remaining term of your mortgage. It's expensive.

It doesn't have any implication for switching lender later except that you owe a bit more because of the two months extra repayments.

 

[ftb_2007]

Thanks a lot for the details and I think I can make the decision now.
The mortgage is with AIB...

Cheers...