A mortgage is a loan secured against a property. Mortgages are available from financial institutions including Banks and Building Societies and due to the wide range of options available it is important to seek independent advice. The following are the most common types of mortgage facility currently available in Ireland.

Repayment/Annuity Mortgage

Repayments made reduce both the capital and the interest balance each month. The loan amount decreases progressively so that at the end of the term both the mortgage and interest are completely paid off.

Fixed Rate Mortgage

A fixed rate mortgage allows the lender to choose from a range of offers whereby a rate is fixed against a term ie 1,2,3,4 or 5 years. This means that the repayments will be the same for the term agreed. Normally the loan will then revert to the institutions variable rate at the time of expiry or another package will be offered. It is important to bear in mind that fixed rate mortgages normally carry a penalty for early redemption.

Endowment Mortgage

Monthly repayments only cover the interest due on the loan. In tandem with this the lender takes out an Endowment Life Assurance Policy on which a monthly premium will be paid to an Assurance company. The capital is then repaid from the tax paid maturity value of the policy.

Pension Mortgage

Repayments are made to cover the interest on the loan and a separate payment is paid into a Pension fund. At the end of the mortgage term the capital is then repaid from the proceeds of the pension plan.