How rising interest rates will push up the amount you actually end up paying
Example (based on the Permanent TSB/ESRI House Price Index -- Q3 2010):
Based on the average price for a house nationally -- €198,689.
A property at €198,689 now would cost the following:
A mortgage of 90pc LTV (loan to value) = €178,820 over 30 years @ 4.39pc (AIB current five-year fixed rate):
Monthly repayments will cost €894.40.
Cost of credit over the five- year term of the loan will be €20,688.60.
Scenario with 5pc drop in the purchase price of this property and a 1pc increase in interest rate:
If, say in six months, the property fell by 5pc to €188,755, but the fixed rate increased 1pc to 5.39pc.
A mortgage of 90pc LTV = €169,879 over 30 years.
Monthly repayments would now cost €952.86.
Cost of credit over the five- year term of the loan would be €24,279.20.
Scenario with 10pc drop in this property and 1pc increase in interest rate:
If, say in six months, the property fell by 10pc to €178,820, but the fixed rate increased 1pc to 5.39pc (90pc LTV €160,938 over a 30-year term).
Monthly repayments would now cost €902.71.
Cost of credit over the five-year term of the loan would be €23,018.40.