There are 2 types of mortgage contracts: tracker and fixed. A fixed mortgage breaks down the sum that needs to be repaid into equal monthly rates. On the other hand, a tracker mortgage comes with unequal monthly rates that depend on a number of financial factors like the inflation rate and the interest rate for loans given between banks.

There are quite a lot of people in Ireland who have fixed mortgages. Some of them have now the possibility to get their mortgage on trackers. This will reduce their monthly payments at least in the short term.

Frank Conway, from MoneyCoach.ie, tells us more about this situation: “A few years back fixed rate mortgages became popular as inflation was soaring and interest rates were gathering pace.”

During the past 3 years, oil prices increased, food became more expensive and inflation soared. Given these economic uncertainties: “Irish people generally look for a safe bet so began to lock into their mortgages for about three to five years.” This means that people who borrowed money to buy houses didn’t want to have their monthly payments skyrocket just because of the global economic uncertainties. A fixed rate offered them certainty.

About 3000 to 6000 people living in Ireland signed a fixed mortgage contract that can be also reversed. You can find out if you are one of them just by reading your mortgage contract or by asking your broker. Read carefully the terms and conditions, Conway tells us: “The loan will not automatically revert to a tracker so people should check their terms and conditions. It is important to be thorough and not leave it to the last minute.”

How much can you save by reverting your contract to trackers? Let’s take a mortgage of €250.000 as an example. A fixed mortgage of this value comes with a monthly rate of €1.266. And a mortgage with trackers comes with a variable monthly rate of €988.

It’s important to understand that the €988 tracker rate tells you just what you have to pay this month. The same rate can go from €988 to €1500 in less than a year. Or it can go to even less. Educate yourself about how the variable rate is calculated. Know all the factors that can influence it. In this way, you may be able to predict how it’s going to evolve if for example a double-dip recession is coming.

An important factor that influences the tracker rate is the ECB’s (European Central Bank) base lending rate. ECB prints euros and loans them to the banks. The lower the base lending rate, the cheaper is for the bank to borrow money from ECB. This in turn lowers the mortgage repayment rate for mortgage borrowers.

Article by Loans Ireland, independent loans website in Ireland.

The problem with trying to get the best mortgage rate is not in the percentage of interest that you will sign up with, most mortgage companies will have basically the same rates or not too far from each other for it to be of much difference.

Looking at More than Just the Rates

The best mortgage rates are more than just numbers telling you how low the interest is on your loan, it’s those low rates coupled with reasonable conditions on keeping those rates as low as advertised. So before you jump in and put up your property as collateral to a deal that seems too good to be true, take a second look at why the institution is giving you those rates.

What Can Affect Your Rates?

The most common thing that will affect the interest rates on your mortgage would be your ability to pay the amortizations on time. Oftentimes, the best mortgage rates apply only during that grace period in which you are supposed to pay that amortization, say on or before every 15th of the month. Should you be on default and pay on the 16th (sometimes there is a three day grace period, so look into that as well), your mortgage rate may shoot up from 5.5% to 7.9%, plus the fines, fees and penalties applicable. While this practice may seem unpalatable to you, it is completely legal and quite widely practiced. If you have a problem in understanding the conditions of the contract in which you can avail the best mortgage rates that they can give, or if it seems that the amortizations are too big, then remember that “best” is a relative term, and look for deals that are better for you.

Another thing that will affect your rates is your credit rating, the better your credit rating, the lower the best mortgage rate available to you. Credit rating is something that wil be easy enough to check, and if your rating is only good, do not expect to get the same rates as people who have pristine credit records. The difference in the rates is rationalized by the forgone conclusion that people with better credit ratings are less of a risk for non-payment.

Reading Between the Lines

For your part, getting the best mortgage rate is a good idea on the onset of the mortgage deal because it would seem like you are paying less interest for the money that you borrowed. Just remember that sometimes lending companies will give low rates to hook you in on a deal that may be hard for you to actually fulfill.

The Right One

This is not to say that all mortgage companies are out to get you, there are very good ones who will give you good rates at reasonable terms. It is only saying that you should not rely on numbers alone. Good credit companies would rather get their loans paid than take your house. Bad ones will make sure the loan is paid even after they take your house.

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You might want to invest in a business but do not want to deal with the daily business management that comes along with owning a company. You might want to consider investing in a company as a limited partner. In this way the general partner will deal with the daily running of the company and you do not have to, while you will enjoy the benefits of the profits.

Explanation of a Limited Partnership

A limited partnership is when somebody provides the capitol that a business needs but has limited control. The amount of control the limited partner has is decided upon either by a contract or the limited partnerships general rules. They can’t be held liable personally for any transaction that take place within the business. They also can’t lose any personal property by law if the corporation needs funds.

The limited partner usually gets to vote at different types of business meetings, and also has the right to vote a general partner out if the majority votes to as well. Even if the partnerships general partners change the limited partnership stays. Usually all profits are divided equally between all partners unless stipulated otherwise. All losses or profits must be reported on their tax returns, whether its a personal or company return. Limited partnerships are non tax entities, so before the income reaches the limited partner it is only taxed one time.

Limited Partnership Could be the Right Choice for You

When dealing in finance and business this could be a right choice for you if you want the convenience of not dealing with the daily running of a company and still have an income coming in with your investment.

If you have a partner that wants to go into business but that does not want the responsibilities of the day-to-day business dealings, this could be right for you and them. As long as the company is effectively managed then the limited partners funds should not be in jeopardy. The limited partnership stays in place as long as there is a general partner.