Mortgage Rates Query

Shedite27

I'm about to take out a mortgage which will be about 83% LTV. We're going to be fixed for the first 2 years, before (probably) switching to variable.

With the AIB rates, there's quite a different between the <80% and >80% rate (3.75% v 3.55%). Am I right in thinking that as soon as my LTV goes below 80% it will automatically move to the <80% rate? Or do I have to move my mortgage to get the better rate?

And a follow on, is the LTV calculated as the cost price V outstanding loan, or do you need to get an evaluation to prove your "current value"?

pyramuid man

Shedite27 wrote: »

I'm about to take out a mortgage which will be about 83% LTV. We're going to be fixed for the first 2 years, before (probably) switching to variable.

With the AIB rates, there's quite a different between the <80% and >80% rate (3.75% v 3.55%). Am I right in thinking that as soon as my LTV goes below 80% it will automatically move to the <80% rate? Or do I have to move my mortgage to get the better rate?

And a follow on, is the LTV calculated as the cost price V outstanding loan, or do you need to get an evaluation to prove your "current value"?

I'm no expert on AIB's mortgage offerings but as far as I know, the rate in relation to the LTV offered is based on the LTV at drawdown and doesn't change as you pay your mortgage. Could be wrong on this but it is my understanding of it.

athtrasna

Mod note

Moving to banking forum from A&P as it's a better place to get answers to this query. New charter applies.

Trish56

The rate applicable will be the loan to value rate at the date you draw down your mortgage. Lenders do not reduce the rate as the loan to value decreases although once your fixed rate expires in two years you will have an option of moving your mortgage to avail of a better LTV rate.

You will pay a valuation fee of €130 for a Valuer on the lenders panel to carry out a valuation on the property prior to loan offer. If Valuer values the property higher than the purchase price the LTV will still be based on the mortgage and purchase price.

Call me Al

Trish56 wrote: »

The rate applicable will be the loan to value rate at the date you draw down your mortgage. Lenders do not reduce the rate as the loan to value decreases although once your fixed rate expires in two years you will have an option of moving your mortgage to avail of a better LTV rate.

You will pay a valuation fee of €130 for a Valuer on the lenders panel to carry out a valuation on the property prior to loan offer. If Valuer values the property higher than the purchase price the LTV will still be based on the mortgage and purchase price.

This is really interesting! I was under the impression that the interest rate was dependent on the current value in conjunction with the mortgage outstanding.
We initially had an 80% mortgage. When our fixed rate ended we weren't offered another fixed rate reflecting this ratio. Instead we were only offered variable which I put down to us being in negative equity. Does it work the other way around?
This is with UB.
Sorry to hijack but this has really piqued my interest.

Shedite27

Trish56 wrote: »

The rate applicable will be the loan to value rate at the date you draw down your mortgage. Lenders do not reduce the rate as the loan to value decreases although once your fixed rate expires in two years you will have an option of moving your mortgage to avail of a better LTV rate.

Thanks for that Trish, I assume when you mean "moving your mortgage" you mean to another lender, which (as far as I know) requires solicitors/valuators etc again yeah?

Trish56

Yes it will entail moving your mortgage to avail of a better rate however there are some good deals out there at the moment for switching with rates as low as 3.20% and 2k cash back. Legal fees to switch should be approx. 1k depending on Solicitor. Valuation fee circa €150.

Shedite27 wrote: »

Thanks for that Trish, I assume when you mean "moving your mortgage" you mean to another lender, which (as far as I know) requires solicitors/valuators etc again yeah?

Trish56

When your fixed rate ended your lender should have offered you a choice of fixed or variable rate options. If you are with Ulster Bank and in negative equity their current variable rate is 4.30% however they should have better value fixed rates to offer. The lower the loan to value the lower the interest rate on offer. Unfortunately for the people in negative equity the lenders are fleecing them as they know they cannot move and the Government is doing very little about it. Contact Ulster Bank and see what fixed rates are available. If you are thinking of fixing I would do so for 2 years as rates are expected to remain low however they will eventually rise so when 2 year expires consider going for a good value 5 year fixed if available.

Call me Al wrote: »

This is really interesting! I was under the impression that the interest rate was dependent on the current value in conjunction with the mortgage outstanding.
We initially had an 80% mortgage. When our fixed rate ended we weren't offered another fixed rate reflecting this ratio. Instead we were only offered variable which I put down to us being in negative equity. Does it work the other way around?
This is with UB.
Sorry to hijack but this has really piqued my interest.

Call me Al

Thanks for that Trish.

ted1

Shedite27 wrote: »

I'm about to take out a mortgage which will be about 83% LTV. We're going to be fixed for the first 2 years, before (probably) switching to variable.

With the AIB rates, there's quite a different between the <80% and >80% rate (3.75% v 3.55%). Am I right in thinking that as soon as my LTV goes below 80% it will automatically move to the <80% rate? Or do I have to move my mortgage to get the better rate?

And a follow on, is the LTV calculated as the cost price V outstanding loan, or do you need to get an evaluation to prove your "current value"?

No it won't change