Interest Only Mortgage - HELP?

F

Fmoore

Guest
Hi .

Im going for my first mortgage with my girlfriend. We're looking alot of different places for our mortgage - ebs , first active , ulster bank.

My girlfriend is keen on getting the interest only option from ulster bank. We're looking to take out around 260,000 - 280,000 , and hopefully keep the house for 2/3 years before selling it on.

Are there any hidden penalties , or costs with these types of mortgages ?

Also , the guy in Ulster Bank said that we have to take out our life assurance policy through them - I believe he's talking fluff , as I believe this is something we can arrange for ourselves (ie not complusary with the mortgage lender?)

Any help at all would be good !
 
You're right about the mortgage protection you can take that out with anybody. I have used labrokers.ie and it's cheap (a few others on this site also use them).
 
Fmoore said:
My girlfriend is keen on getting the interest only option from ulster bank. We're looking to take out around 260,000 - 280,000 , and hopefully keep the house for 2/3 years before selling it on.

Are there any hidden penalties , or costs with these types of mortgages ?
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There's an obvious risk here that if house prices happened to fall (generally or specifically in your area) then you might not be able to clear the mortgage through such a sale - in which case it might be prudent to think about how you might otherwise clear the mortgage or shortfall. In addition your mortgage protection life assurance premiums may be higher than necessary due to the need to take a level/convertible term policy rather than a (usually) cheaper decreasing term policy to cover the borrowe amount which will not decrease over time as it would with an annuity/repayment mortgage.

Why is your girlfriend so set on an interest only mortgage?
Also , the guy in Ulster Bank said that we have to take out our life assurance policy through them - I believe he's talking fluff , as I believe this is something we can arrange for ourselves (ie not complusary with the mortgage lender?)
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This is illegal. Lenders cannot insist that you take their mortgage protection life assurance and prevent you from shopping around for (usually) a better deal.
 
Fmoore said:
Also , the guy in Ulster Bank said that we have to take out our life assurance policy through them - I believe he's talking fluff , as I believe this is something we can arrange for ourselves (ie not complusary with the mortgage lender?)
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He's wrong (as ClubMan has pointed out), and AFAIK Ulster Bank act as intermediaries or tied agents for Irish Life, who wouldn't be seen as the most competitive on mortgage protection.

As another poster has said, www.labrokers.ie tend to be one of the more competitive brokers for mortgage protection.
 
Hello,

Why is your girlfriend so set on getting an Interest Only Mortgage?

Eagle Star are currently the most competitive in relation to offering Level Term Mortgage Protection! But the best advice would be to shop around!
 
I can't believe this sharp practice still goes on. It's outrageous how banks still treat potential customers. I'd report him to the regulator if I were you. Better still ask him to put it in writing that you must take the mortgage portection policy with them just to see what he says and how he tries to wriggle out of providing you with it in writing, which is clearly something he will never do.
 
As per Pexus1976 ,if you are going interest only, mortgage protection will not suffice, you will require a Level Term Policy
 
Actually - I did point that out in my first post. :)

And strictly mortgage protection simply means any life assurance policy linked to a mortgage and assigned to the lender - it says nothing about it being level, decreasing or convertible term.
 
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