Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Which mortgage would you take between interest only and capital + interest

Options
  • 09-09-2020 11:11am
    #1
    Fol20
    Registered Users Posts: 3,624 ✭✭✭


    Hi Guys,

    Im in the process of refinancing and im not sure which option i should take between the following options:

    Both will have a sample 300k loan
    Option A
    LTV @60pc
    IO rate: 4.85
    C&I: 3.75

    IO period for 1 year and C&I for 34 years.

    Monthly payment would be 1212 for first year and then it would revert to 1302


    Option B:
    Rates remain the same.
    IO period for 10 years and C&I for 25 years

    Monthly payment would be 1212 for first 10 years and then would revert to 1542.



    Which would would you take and why?

    My thoughts are that option A would be more consistent and interest rate would be lower for more of the payment term although half of it can be expensed anyway. Option B gives more short term flexibility for the next 10 years but then the payment will be higher for the rest of the mortgage. Im wondering with inflation would it make sense to go for Option B maybe as money wont be worth as much in 10 years.


Comments

  • Options
    #2
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    Hi Guys,

    Im in the process of refinancing and im not sure which option i should take between the following options:

    Both will have a sample 300k loan
    Option A
    LTV @60pc
    IO rate: 4.85
    C&I: 3.75

    IO period for 1 year and C&I for 34 years.

    Monthly payment would be 1212 for first year and then it would revert to 1302


    Option B:
    Rates remain the same.
    IO period for 10 years and C&I for 25 years

    Monthly payment would be 1212 for first 10 years and then would revert to 1542.



    Which would would you take and why?

    My thoughts are that option A would be more consistent and interest rate would be lower for more of the payment term although half of it can be expensed anyway. Option B gives more short term flexibility for the next 10 years but then the payment will be higher for the rest of the mortgage. Im wondering with inflation would it make sense to go for Option B maybe as money wont be worth as much in 10 years.

    We are in a period of low inflation ( possibly deflation) and likely to remain so for a few years so money will not drop in value as you would hope


  • Options
    #3
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    Opt C and 20 years at 2.5% C &I
    Is this a buy to let or commercial loan?


  • Options
    #4
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    brisan wrote: »
    We are in a period of low inflation ( possibly deflation) and likely to remain so for a few years so money will not drop in value as you would hope

    I think we are still in a period of inflation next year.


  • Options
    #5
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    lomb wrote: »
    Opt C and 20 years at 2.5% C &I
    Is this a buy to let or commercial loan?

    Buy to let. There is no rates at 2.5 for btl. Plus I prefer the flexibility a longer term offers. If I wanted to over pay. I can still do that.


  • Options
    #6
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    If it's residential buy to let run a mile from the purchase. Your talking a 500k property which means it's too dear has too low a yield and unsafe to get a loan on it. If the tenant overholds for 2 years as they could if they wanted and your talking about saving a few bucks it isn't going to matter . If it's a commercial property that's different but also risky at that level. If rather 3 cheap industrial units etc something like that. Forget inflation , labour has no unions now and because of technology the need for labour is less meaning employers aren't bidding for labour . We're likely in 10-20 years of static labour rates meaning property which is fully priced will not increase .That's why you should pay the property in 20 years so it cashflows and works for you.
    Can I ask who is lending at 3.75 that's a really good rate for B2Let


  • Advertisement
  • Options
    #7
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    lomb wrote: »
    If it's residential buy to let run a mile from the purchase. Your talking a 500k property which means it's too dear has too low a yield and unsafe to get a loan on it. If the tenant overholds for 2 years as they could if they wanted and your talking about saving a few bucks it isn't going to matter . If it's a commercial property that's different but also risky at that level. If rather 3 cheap industrial units etc something like that. Forget inflation , labour has no unions now and because of technology the need for labour is less meaning employers aren't bidding for labour . We're likely in 10-20 years of static labour rates meaning property which is fully priced will not increase .That's why you should pay the property in 20 years so it cashflows and works for you.
    Can I ask who is lending at 3.75 that's a really good rate for B2Let

    It’s residential and it’s a refi so I’m already in the game and have gone through both the good and the bad. I won’t name the lender as I’m still in the process but there isn’t many in the market so you should be able to find them. I’m doing it more for holding cash in this situation we’re in to make me more liquid Combined with increasing my mortgage term again to make it more flexible if I hit hard times.


  • Options
    #8
    brisan
    Registered Users Posts: 2,242 ✭✭✭brisan


    Fol20 wrote: »
    I think we are still in a period of inflation next year.

    https://www.boards.ie/vbulletin/showthread.php?t=2057915176&page=32

    Post 469


  • Options
    #9
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    brisan wrote: »
    https://www.boards.ie/vbulletin/showthread.php?t=2057915176&page=32

    Post 469


    I can see a Japanese style deflation for next 10-15 years after that who knows if governments run up massive deficits. I likely would sell the property and buy a one bed in cash and put 700 or 800 after tax zero stress in cash in my pocket but that's just me.


Advertisement