Interest only mortgages - will bank loan you more money?

Over on AAM, Brendan Burgess is defending his recommendation that first time buyers start with interest only mortgages:

One thing is states is:

“Liam makes a very good point, that the amount lent has no relationship to whether you are going interest only or not.”

Do you know if this is true? Certainly, many other financial sites state that banks will lend higher sums to people who go interest only: … t_only.htm

"Buy More House: It is common for families to begin with a “starter house”, then move into a more expensive house as their incomes rise. This process of “trading up” carries high transaction and moving costs.

You can avoid these costs by skipping to the second house now. In the short term, this will cause a cash flow strain, but the IO mortgage may make it manageable."

Does anyone know what the story in Ireland is?


Seeing as they used all kinds of tricks to bump up the amount that could be lent, I’m sure it did happen.

By the by, there is nothing inherently wrong with IO mortgages etc. If you are financially responsible, you would be better off at the moment moving to interest only and putting the capital payments into a higher interest savings account. You can then pay it off in a few years.

Why wouldnt someone who has shares in AIB argue that point? What he fails to see or say is the diifference is measured in risk, i.e. the lower the mortgage the more likely its annuity and the greater the ability to make payments even if one half of a couple is made redundant plus it will eventually be paid off in total.

Interest only mortgages are only beneficial under certain circumstances, they carry more risk as none of the capital is paid off and in our bubble they were utilized to buy more and more expensive property because " sure property only ever goes up doesnt it" and the thieving banks would lend you mare because the monthly payment was lower than annuity.

Lastly on a personal note I wouldnt take advice from some guy who advocated IO to FTBs, thats like asking an arsonist for advice on fire extinguishers. :angry:

I always thought Brendan was as unfallible as the pope :angry:

I hope you didn’t invest too much in the Church’s morality bubble. That’s burst too.