Confused re mortgage

scrips

I took out a mortgage in 2002, which I mistakenly thought was a Tracker mortgage, as I had identified that I wanted a Tracker mortgage at the rate of 1% offered by the bank in its promotional material.

However, nowhere on the application form did the option for a Tracker appear. The options given were 'Standard Variable' and 'Fixed Rate'; I had to tick a box and my Solicitor indicated for me to tick the Standard Variable box.

When I learned I was on a Standard Variable rate of 1.5% and not a Tracker, I complained to the bank but their response was that I had signed the contract so tough luck.

The Standard Variable rate on my mortgage has consistently tracked the ECB base rate at 1.5% so is this not a Tracker anyway? What makes it 'variable' and why would anyone have considered opting for the Standard Variable rate when the Tracker rate was better? Could the Standard Variable rate theoretically have gone down lower than the Tracker?

CeilingFly

Your post is not making sense.

A standard variable rate does not track the ecb rate.

You should have your mortgage contract which will have all the details.

In many cases the word "tracker" was not in the contract - the rate description would possibly say it is a variable rate mortgage at "1.5% over ecb refi rate"

In layman's language that's a 1.5% tracker.

I can't ever remember standard variable rate being 1.5%

Also back in 2002 the ecb rate was 2.25%, so your tracker would have been 3.75% if it was a 1.5% tracker.

CeilingFly

I'm guessing you're trolling - you don't make mortgage applications through a solicitor.

Very little of your post makes any sense.

scrips

I'm sorry, I'm obviously not explaining my situation very well. I'm definitely not trolling.

My bank offered (1) a Standard Variable that would be 'no more than 1.5% above European Base Rate' and (2) a Tracker Rate which would 'track ... at 1% above European Base Rate'.

In the event, my mortgage was a Variable rate mortgage which as far as I can tell has consistently been 1.5% above the European Base Rate.

I'll agree, I'm confused.

The offer of the mortgage loan said legal advice should be taken before signing, which is where the Solicitor came in.

CeilingFly

Then you have a 1.5% tracker.

Possibly the other was a "dismounted tracker"

In any case the specific rate will be detailed in your mortgage contract which your solicitor will have and can give you a copy. Usually its the last page.

1.5% tracker is about right for 2002

Tenigate

scrips wrote: »

My bank offered (1) a Standard Variable that would be 'no more than 1.5% above European Base Rate' and (2) a Tracker Rate which would 'track ... at 1% above European Base Rate'.

In the event, my mortgage was a Variable rate mortgage which as far as I can tell has consistently been 1.5% above the European Base Rate.

Seems your bank offered 2 products: ecb+1% and var capped at ecb+1.5%, and following legal advice you chose the latter. Perhaps you were not even offered ecb+1% on the mortgage application, but you should have addressed this prior to signing any contracts.

The scandal you're thinking of is where people who were on trackers were moved off trackers, usually after a fixed period (bank would send letter only offering variable rate or another fixed period)

I reckon at some stage your bank wrote to you offering a fixed rate, but never gave you the option of tracker+1% again.. it's because it's a different product.

Your product is more or less still a tracker, just a different product than the tracker at ecb+1%. Your rate is ecb+1.5%, but the contract provides that the bank can give you an even lower rate (spoiler alert: they didnt). You still did pretty well, considering how low the ecb rate is right now

If you think something's amiss, best speak to your solicitor. No one here can truly say what's going on without seeing the contract you signed and letter you received.

scrips

Thanks for that, your comments basically echo what I had been thinking but wasn't sure of - that given a choice of tracker products I ended up with the one with the worse rate. The bank's mortgage information was really unclear and I don't think my Solicitor paid due attention to what I was signing.

The lower tracker rate was not a temporary discounted rate, it was the rate for the duration of the mortgage and said as much.

Financially it hasn't hit me as hard as it might have, as the Variable rate capped at 1.5% was still relatively low, but I've still paid a few grand over and above what I would have, over the lifetime of the mortgage.

Superniamh

Can anyone tell me the meaning of a "variable annuity"? Our mortgage documentation from
Aib from 2008 states that once our fixed rate ends our mortgage will revert to a variable annuity. Could this be either the standard variable rate or a tracker? It's all very confusing!!

Superniamh

Tenigate wrote: »

(backseat mod: Welcome to boards, don't post the same message twice in different places)

You are on a variable rate mortgage.

All the term "variable annuity" means is that you are paying off both the interest monthly, and a portion of the capital each month too, so that at the end of the term your mortgage will be entirely paid off.

You do not have a tracker. Unless the paperwork for your mortgage mentions that your rate is tied to the ECB rate (plus a certain percentage), it's not a tracker. More likely your contract will specify that your rate is something AIB plucks from the sky, and "may" change in line with interest rates.

Thanks Tenigate!

I just discovered an earlier mortgage offer letter from 2007 which states that our mortgage type is a Variable Annuity. Beside this in the description box it states trackerhome LTV >80% and in the Rate box it states 3.5 + margin 1.1%.

Now, the thing is, whilst we signed these docs, we soon realised we needed additional funds to build and when the new letters of offer arrived they simply state fixed term x 3 years and at the end our mortgage will revert to a Variable Annuity!

Now I'm even more confused as it seems in 2007 a variable annuity meant tracker rate!!

Also, in our T&Cs attached to the later 2008 letter it states that at the end of any fixed rate period we can choose between another fixed rate, a variable interest rate, or a tracker rate!!

I have ordered my original docs from AIB!

I'm lost!