How much can I borrow?Is there any Tax Relief on Buy to let property?What is a Section 23 property?What is a Section 50 property?Can I get approval for a mortgage before I find my property?What about Insurance?What are Pre-1963 Properties?What interest rate options are available to me?What types of mortgages can I choose from? How much will it cost?What is an Indemnity bond Fee?What can NC Mortgage Brokers do for the investor?What is Stamp duty?What is a Property valuationHow much can I borrow?
The amount your mortgage provider will lend you is based on your salary, bonuses and commissions. In addition to the prospective rental value of the property, each lender will have its own formula for calculating how much they will lend to you.
The maximum amount you can borrow is 90% of either the property value or the purchase price - whichever is the lower. Repayment terms vary between 5 years and 25 years depending on your age.
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Back to TopIs there any Tax Relief on Buy to let property?
With respect to investors, interest relief on monies borrowed to purchase or improve rented residential properties has been restored by the Minister for Finance in the recent Budget and will apply from 1 January 2002 and can be set off against rental income for the same period. This relief had originally been withdrawn following the 1998 "Bacon Report".
Back to TopWhat is a Section 23 property?
A section 23 property is a tax-efficient property, which allows for a tax deduction on the capital cost of the property. When this relief is combined with mortgage interest relief and the other expenses of letting the property, it means there is often no tax due on the rental income from a Section 23 property for many years.
Back to TopWhat is a Section 50 property?
This is student accommodation relief, which operates in a similar way to the Section 23 property.
Back to TopCan I get approval for a mortgage before I find my property?
Yes. NC Mortgage Brokers will help you to find the mortgage that suits you before you have found a property, and then to get an Approval in Principal from a lender. An approval in principle can be helpful in getting the mortgage process underway, but the lender won’t make a formal mortgage offer until a valuation has been carried out on the property you wish to buy.
Back to TopWhat about Insurance?
It is mandatory to take out both building cover on the property you intend buying and life cover on your own life. NC Mortgage Broker has a wide range of insurance and assurance policies, geared specifically towards the investor.
Back to TopWhat are Pre-1963 Properties?
Finance Act 2001 also restored the tax relief available for interest on monies borrowed to purchase, improve or repair certain rented properties which had been converted into multiple residential units before 1 October 1964 and which are purchased on or after 5 January 2001. However, as all interest relief has been restored with effect from 1 January 2002, these properties no longer have a tax advantage over other properties
Back to TopWhat interest rate options are available to me?
What is a Variable interest rate
With variable interest rate loans, the amount of your repayment will increase and decrease depending on changes in the base interest rates set by the European Central Bank. In other words if European rates go down and this decrease is passed on by the lender, you will benefit through lower monthly repayments. If on the other hand rates go up, and again this is passed on by the lender, your monthly repayment will also increase.
What is a Fixed interest rate
With fixed rate loans your mortgage repayments remains constant for a set period of time. This can vary from 1 year to 10 years.
Fixed rates offer greater security to borrowers, certainly in the early stages of a mortgage. However there is a caveat. If you have a fixed rate loan, and you decide to pay your loan back early or change to a different interest rate offer, you will have to pay an “early redemption fee” for terminating your fixed rate agreement. This redemption fee can be substantial.
Rates based on Loan to value Ratio (LTV)
Loan to value ratio is essentially the amount you borrow against the actual value of the property. Whilst most lenders will allow you borrow up to 92% of the property value, others will reward you if you borrow less.
What is a Split Rate
A split rate is where a portion of your mortgage is on a fixed rate and the other portion is on a variable rate
Back to TopWhat types of mortgages can I choose from?
There are a wide range of different kinds of mortgage you can opt for: Repayment, Tracker, Endowment, Pension, Interest only, are just some of the wide range of mortgage products available.
Repayment Mortgage
This is the most popular mortgage and is also known as an annuity mortgage. Your monthly repayments are made up of both interest and principle i.e. the interest due on the borrowings plus a portion of the actual amount borrowed i.e. the principle. In the early years of a mortgage, borrowers tend to pay back more interest than principle. However this trend is reversed in the second half of the mortgage life, where more principle than interest is paid off.
Tracker mortgage
A tracker mortgage is a repayment mortgage with an added commitment from the lending institution that the interest rate will not move more than a certain percentage above the European bank base rate. Generally, this product is highly recommended as it is transparent and good value for money.
Endowment Mortgage
This is an interest-only mortgage. The principle (the original sum borrowed) ,is repaid by taking out a policy with an insurance company. Each month, you will make two payments – one to cover the interest on the loan, the second to cover the premiums on the insurance policy.
Endowment mortgages while still sold, do attract their sceptics. With volatility in equity markets in the past, there have been a number of cases both in Ireland and the UK where the value of the policy on maturity was less than the original principle borrowed. In this case the customer has to make up the short fall – through their own savings or through borrowing.
Pension mortgage
This is an interest-only mortgage, with the principal being paid off through a pension plan. A pension mortgage only an option for someone who is either self employed or in non-pensionable employment.
A personal pension plan is designed to pay a tax-free lump sum on retirement in addition to a monthly pension income. It is the lump sum that is used to repay the mortgage debt. The advantage of this type of repayment method is that the pension contributions attract tax relief at the saver's highest rate of tax.
Back to TopHow much will it cost?
At NC Mortgage Brokers we shop around to find you the lowest possible mortgage deal. We will negotiate with the different financial institutions to source you the most competitive mortgage to suit your needs.
Back to TopWhat is an Indemnity bond Fee?
No indemnity bond fee applies if the property purchased is your main residence. Some lenders to charge an indemnity bond fee for buy to let properties.
Back to TopWhat can NC Mortgage Brokers do for the investor?
It is our job to negotiate the very best deal on your behalf. And with over 65 years experience in financial services we are well placed to provide investors with expertise in all areas of investment funding, efficient tax planning and wealth management.
Back to TopWhat is Stamp duty?
This is a tax payable to the government when you buy a new or second-hand home. However, in certain circumstances, you might not have to pay it. (New homes are exempt from stamp duty provided they are owner occupied and the floor area is less than 125 metres square). All other properties incur stamp duty
Back to TopWhat is a Property valuation
To assess the value of the property a registered valuer must complete a valuation report on your property. This is a prerequisite for all lending institutions before they issue a loan offer. The cost of this valuation depends on the value of the property and the minimum costs you can hope to incur will be €127 plus VAT @ 21%
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