LTV on Mortgage

Sillycave

Hi all, just after going sale agreed on property and also in the middle of getting mortgage approval from AIB, BoI, Ulster Bank and also hoping to go to EBS and KBC.

My query is in relation to LTV, I am going to be taking out a 90% mortgage from either of the above but during meeting for application I asked whether in say 5 years time that is the LTV of the property was 75% could I move onto the lower rate or would i have to stay on the higher rate i.e. stay on the higher rate for duration of mortgage.
Both Ulster Bank and BoI stated that I could change the LTV of the mortgage and all that would be required would be a new valuation.
AIB however couldn't confirm that this would be the case and the Mortgage Advisor had heard it been done but also it been rejected (obviously didn't give specific info. to me)

Has anyone done this before with AIB or the other two providers?

Thanks in advance

(p.s. I know that this can be done on variable rate and not fixed)

(Mods if this is in the wrong section please feel free to move, thanks)

coylemj

The problem the banks have with reducing LTVs and lower interest rates is that during a period of rapid house-price inflation, your property value will go up which will push down the LTV, this in theory makes you a lower risk and this in theory means that you should qualify for a lower interest rate. And if you do get a lower interest rate, this may provide you with an incentive to trade up, something which will add yet more fuel to the fire. That would probably be the logic behind AIB's reluctance to give you a reduced rate.

Sillycave

coylemj wrote: »

The problem the banks have with reducing LTVs and lower interest rates is that during a period of rapid house-price inflation, your property value will go up which will push down the LTV, this in theory makes you a lower risk and this in theory means that you should qualify for a lower interest rate. And if you do get a lower interest rate, this may provide you with an incentive to trade up, something which will add yet more fuel to the fire. That would probably be the logic behind AIB's reluctance to give you a reduced rate.

Thanks for the reply, it makes sense what you are saying and that is probably why AIB won't agreed to it but it would make a nice difference to monthly payments in say 5-10 years going from say a 4.5% to 4.2% i.e. LTV >80% to below 80%

You could be talking about 500 euro a year approx.

Just wondering if anyone had done this previously and had any issues getting it done with any of the banks mentioned?

iainBB

Sillycave wrote: »

Thanks for the reply, it makes sense what you are saying and that is probably why AIB won't agreed to it but it would make a nice difference to monthly payments in say 5-10 years going from say a 4.5% to 4.2% i.e. LTV >80% to below 80%

You could be talking about 500 euro a year approx.

Just wondering if anyone had done this previously and had any issues getting it done with any of the banks mentioned?

You have to shop around when you get to the LTV of below 80% that is the magic number. We did it when our house went below it. Went from 4.5 to 3.4.

The issue is other expenses can be in the way kids, car loan , Credit card etc. A lot of people can't move mortgage due to bad debt or change in circumstances. Just be aware when you get close to the 80% LTV that you may need to move and get your finance in order.

Sillycave

iainBB wrote: »

You have to shop around when you get to the LTV of below 80% that is the magic number. We did it when our house went below it. Went from 4.5 to 3.4.

The issue is other expenses can be in the way kids, car loan , Credit card etc. A lot of people can't move mortgage due to bad debt or change in circumstances. Just be aware when you get close to the 80% LTV that you may need to move and get your finance in order.

Nice savings getting the lower LTV, do you mine me asking what was the solicitors fees like for switching?

On the other expenses you are correct in saying that, thats why I want to try and get mortgage that allows for this without the need for switching

iainBB

Sillycave wrote: »

Nice savings getting the lower LTV, do you mine me asking what was the solicitors fees like for switching?

On the other expenses you are correct in saying that, thats why I want to try and get mortgage that allows for this without the need for switching

I did not move banks I bullied them to lower the rate on promise I would move.

Trish56

Legal fees to switch would be €1000-€1200 and most lenders now pay you to switch from 2k to 2% of the mortgage.