Entering the property market..

As the title suggest I’ve thought about it long and hard over the past while and I’ve decided to go and buy a house. I had been living in a rented house for 7 years. I moved out in Oct. 2007 and moved into a house not far away with Tara. Amy and Niall. While living with a few people is good and all, the house we’re in isn’t great and it’s difficult to keep clean.

I’ve gone and made an offer on the old house and this has been accepted. It’s pretty new territory for me as I’d no idea how many forms that would be required or about the amount of paper work I had to get.

So I’m getting a 92% mortgage from Permanent TSB via a broker. It’s going to work out around 250 euro a month more than it would cost to rent a house on my own. So it’s not too bad. Also I’m getting all the furniture and fixtures so it’s a pretty sweet deal.

The mortgage is a “discounted tracker mortgage” which basically means it’s at a lower rate for the first year 4.7% AER and then it’ll move to around 5.2% in year two. Lots of people don’t know what a tracker mortgage is so I’ll try and explain it in simple terms. Basically the ECB (european central bank) sets a recommended rate in Europe that banks are supposed to follow. Now in the last 30 odd years (before tracker mortgages) you could be waiting a year before you bank gives you any discount on your loan rate after a drop. Now a tracker mortgage is linked to the ECB rate and is usually 0.25% and 1% in the difference of the ECB rate. Mine is going to be 0.75%. That means that if the ECB sets a rate of say 5.125% my rate could be either 5.2% AER or 5.05% AER. It’s up to the bank to decide. The main benifit of this is that when the rate changes my bank automatically adjust it for me. They can’t decide “We’re not going to give people the benifit of the ECB dropping their rates”, they have to give me the break. It also means that they have to put it up when it goes up.

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