QI want to convert my fixed-rate mortgage into a lower-cost variable-rate mortgage. I have about $265,000 outstanding on my 30-year mortgage on a $380,000 home. I’m looking at a couple of variable rate deals, one offering 4.2 percent with a cash back offer of 2 percent of the amount borrowed, and another offering a lower interest rate of 2.95 percent but no cash -Back offer. What would be the cheaper option over the entire term?
A Cash back offers are a popular incentive for mortgage gamblers and can seem like a good deal. The most important consideration is the interest rate, as this determines the overall cost of the loan, according to Joey Sheahan, Head of Loans at online broker MyMortgages.ie and author of The Mortgage Coach.
This could prove more expensive than the lower-rate option, even after a cash-back deduction, he said. For the first option with cash back on a loan amount of €265,000 at 4.2 percent APR (APR) you will see monthly repayments of €1,295 for a total loan cost of €201,522 you will remain with this lender for the entire term . You get €5,300 cashback, which means the borrowing cost is closer to €196,222.
With the second option, you expect monthly repayments of €1,110, for a total loan cost of €134,642, again assuming you’ll stay with that lender for the entire term, Mr Sheahan said.
You should re-evaluate your mortgage in the market every three to five years as there is a good chance there is a better deal in the market. And you should get advice from a mortgage broker, he said.
Q We bought a property in Turkey 17 years ago by rescheduling our family home. We have no rental income from it. If we sell what will be the capital gains tax implications? In addition to the purchase and legal fees associated with the purchase of the property, we also have costs for the modernization of the property. We paid annual management fees of around €750 to €1,000.
A Capital gains tax is a tax you pay on any capital gains you realize when you dispose of a capital asset. The capital gain is the difference between the price you sell the asset for and the price you paid for it.
According to Barry Cahill, director of Taxback.com, the current capital gains tax (CGT) rate in Ireland is 33 per cent.
In addition to the acquisition costs, deductible expenses are all ancillary acquisition costs, such as the legal fees associated with the purchase of the property, as well as value-enhancing expenses, the benefits of which must not have evaporated before disposal.
Plus incidental costs of disposal, which may include, but are not limited to, fees, commissions for professional services of an appraiser or appraiser, auctioneer, accountant, agent or legal adviser, and conveyance or transfer costs (including stamp duty).
If an expense eligible as a deduction has been made in a foreign currency, it must be converted into Irish currency at the exchange rate at the time of the expense, Mr Cahill said.
Management fees and general repair or maintenance costs would not be considered deductible for CGT as if the property were a fixed asset of a business, they would be considered income expenses and not capital expenses.
Q My daughter is doing a nine-month Erasmus program in the next academic year and I am wondering about health insurance options. I checked with my insurance company and was told that if you are abroad for six months you are not covered. What are the best options?
A Contact VHI International to explore its options, said broker Dermot Goode of TotalHealthCover.ie. Its plans are specifically designed for people who are out of the country for six months or more.
The advantage of these schemes is that you can transfer directly from a domestic health plan to one of their international plans and then switch back to an equivalent domestic health plan on your return without insurance break.
The other option is to consider getting a “backpacker” policy with Blue Insurance, but health insurers do not recognize this type of policy to ensure continuity of coverage.
The most important thing is to make sure you have adequate cover for any travel before you leave the country, Mr Goode said.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-is-a-lower-mortgage-rate-with-no-cash-back-deal-better-value-41861285.html Your Personal Finance Questions – Is a Lower Mortgage Rate Cheaper Without a Cash Back Deal?