National Irish Bank (NIB) has announced a new mortgage product that it claims could save customers thousands over the life of their mortgages.
The bank is offering a loan-to-value (LTV) mortgage that directly links the interest rate to the value of the property: The greater the property value over the loan, the lower the interest rate.
With the rapid increase in house prices over recent years, the bank says the new mortgage will be especially attractive to home owners who have built up equity in their home, particularly those on a standard variable rate mortgage with their existing lender.
According to NIB, most lenders offer standard variable rate mortgages at an interest rate around 1.35 points above the ECB rate. It says it will offer an interest rate of between .5 points and .59 points above the ECB - depending on the customer's loan to value.
Andrew Healy, chief executive of NIB said homeowners, said: "I am confident that, when they make the comparison with other lenders, customers will see that National Irish Bank's LTV mortgage could save them thousands of euros over the life of their mortgage. We are rewarding people for the equity they've built up in their property."
The new LTV mortgage is available only for principal private residential mortgages with a loan to value up to 80 per cent. It will not apply to investment properties.
Every three years, customers will have the opportunity to adjust the rate of interest they pay by getting a new valuation completed to determine their new LTV.
