Tracker, moving house

zg3409

I have a tracker with BOI.

BOI say if I move I get existing rate + 1%.
Any additional amount is a new loan at new variable or fixed rate.

So first I thought I could move my tracker to a new address without penalty (this does not seem to be the case)

I have 3 questions.

BOI don't have the best rates, can I split my new mortgage between 2 banks, one old BOI with tracker with 1% moving penalty, and the rest with another bank?

Do any other banks allow you to move your tracker from BOI at a tracker like rate to them or am I being naive and optimistic? (Most seem to offer the tracker+1% but for existing loans with them I assume)

Should I go for variable or fixed rate now, fixed seem lower, but run out after a number of years. Main downside I think is I cannot overpay a fixed without possible penalties. I suppose the general question is would I be mad going for higher rate variable than lower fixed term?

Geuze

No bank will agree to another bank having a charge against the same house.

Geuze

If you switch bank, then obviously you use the tracker completely.

Some banks allow the tracker balance to be ported to the new house, i.e. BoI in your case.

The banks that allow tracker portability have conditions attached, for example tracker +x% for y years, etc.


In your case, existing tracker rate +1% might be 1% + 1% = 2%, that is very attractive.

But as you say, any new extra borrowing is at standard BoI rates.


Check out the Best Buys mortgage rates on AAM.

Geuze

zg3409 wrote: »

Should I go for variable or fixed rate now, fixed seem lower, but run out after a number of years. Main downside I think is I cannot overpay a fixed without possible penalties. I suppose the general question is would I be mad going for higher rate variable than lower fixed term?

(3) some banks allow limited repayments during fixed rates, with conditions.

UB allow 10% over payment per year.

con747

zg3409 wrote: »

I have a tracker with BOI.

BOI say if I move I get existing rate + 1%.
Any additional amount is a new loan at new variable or fixed rate.

So first I thought I could move my tracker to a new address without penalty (this does not seem to be the case)

I have 3 questions.

BOI don't have the best rates, can I split my new mortgage between 2 banks, one old BOI with tracker with 1% moving penalty, and the rest with another bank?

Do any other banks allow you to move your tracker from BOI at a tracker like rate to them or am I being naive and optimistic? (Most seem to offer the tracker+1% but for existing loans with them I assume)

Should I go for variable or fixed rate now, fixed seem lower, but run out after a number of years. Main downside I think is I cannot overpay a fixed without possible penalties. I suppose the general question is would I be mad going for higher rate variable than lower fixed term?

The banks have had years to reduce variable rates in line with EU rate movements and numerous non acted upon threats by our Governments over 10 years and the variable rate has stayed fairly static. Interest rates are not going down in Ireland in my opinion. It's when they are going to go up after the pandemic you need to gauge.

Darc19

Without knowing the term left on the tracker and tracker value no-one can give you the correct advice.

If it was €150,000 and five years, then the 0.5% rate advantage (after 1% extra) would mean just €2,300 advantage over the 5 year period.

A better overall rate elsewhere would easily be the better option.

If you have 15 years left on the tracker and €300,000, then the 0.5% would be worth about €11,000 over the 15 years, thus probably making boi the better overall value.

Darc19

con747 wrote: »

The banks have had years to reduce variable rates in line with EU rate movements and numerous non acted upon threats by our Governments over 10 years and the variable rate has stayed fairly static. Interest rates are not going down in Ireland in my opinion. It's when they are going to go up after the pandemic you need to gauge.

Why are KBC and Ulster leaving and why have no new banks except for Avant, come into the market.

1. There are in excess of 16,000 mortgages that are 5 years+ in arrears (central bank figures)

2. It takes over 5 years on average to repossess a home from someone who will not pay their mortgage and the average cost of repossession is in excess of €100,000

But guess who pays for all the freeloaders and the legal fees - we do in higher interest rates

con747

Darc19 wrote: »

Why are KBC and Ulster leaving and why have no new banks except for Avant, come into the market.

1. There are in excess of 16,000 mortgages that are 5 years+ in arrears (central bank figures)

2. It takes over 5 years on average to repossess a home from someone who will not pay their mortgage and the average cost of repossession is in excess of €100,000

But guess who pays for all the freeloaders and the legal fees - we do in higher interest rates

That has what do do with me? If you think the banks are hard done by :eek:

sillysocks

Darc19 wrote: »

Without knowing the term left on the tracker and tracker value no-one can give you the correct advice.

If it was €150,000 and five years, then the 0.5% rate advantage (after 1% extra) would mean just €2,300 advantage over the 5 year period.

A better overall rate elsewhere would easily be the better option.

If you have 15 years left on the tracker and €300,000, then the 0.5% would be worth about €11,000 over the 15 years, thus probably making boi the better overall value.

Could I hijack on this thread as in a similar position to the OP, have approx 125k left on a mortgage that’s on a tracker of +1.25 at the moment and would have 1% added if we move to a new house. Current mortgage has 20 years but new might be 25.

Haven’t met our broker yet to fully discuss it but in passing he mentioned that there may not be a big advantage to keeping that tracker.

I don’t fully understand all the rates and variable loans etc, and wondering if there’s any expertise you could add? If we go for variable and rates increase can the bank essentially increase that indefinitely where the tracker is set to ecb so more stable? Or am I misunderstanding?

Geuze

sillysocks wrote: »

I don’t fully understand all the rates and variable loans etc, and wondering if there’s any expertise you could add? If we go for variable and rates increase can the bank essentially increase that indefinitely where the tracker is set to ecb so more stable? Or am I misunderstanding?

A variable rate means the bank have full discretion - they can change the interest rate whenever they like.

A tracker means a variable rate, where the variable rate is a fixed margin above the ECB base rate.

That is why trackers were so attractive, you know the bank will always charge x% margin above the main ECB base rate.

Geuze

Margin of +1.25 means a current rate of ECB 0% + 1.25% margin = 1.25%.

If you move house, and port the tracker, the bank might let you keep the tracker, but add 1%.

So then it becomes ECB + 2.25% = 2.25% currently.


Maybe the broker is referring to fixed rates that are close enough to 2.25%?

sillysocks

Geuze wrote: »

Margin of +1.25 means a current rate of ECB 0% + 1.25% margin = 1.25%.

If you move house, and port the tracker, the bank might let you keep the tracker, but add 1%.

So then it becomes ECB + 2.25% = 2.25% currently.


Maybe the broker is referring to fixed rates that are close enough to 2.25%?

Thanks, I haven’t met him yet to get full confirmation of rates, but you wouldn’t get fixed rate for the full term of the mortgage would you? So even if the rate was 2.25 for a while it may then go variable where the bank will rise it more than the ecb rate goes up (assuming that goes up in the future)?
So the benefit of tracker is the amount they can rise it is constricted by the ecb rise?

Geuze

The massive benefit of a tracker is that the bank's discretion is removed.

It's like a shop saying to you:

I will always charge you x% above the wholesale cost.

The wholesale cost can vary, yes, but the margin can't vary.

The lowest tracker margin in Ireland was 0.5% (I got that).

This meant I was paying ECB + 0.5% = 0.5% a few years back.

My interest bill was something like 7 euro per week.


I now pay 100 euro per week!!!

sillysocks

Geuze wrote: »

The massive benefit of a tracker is that the bank's discretion is removed.

It's like a shop saying to you:

I will always charge you x% above the wholesale cost.

The wholesale cost can vary, yes, but the margin can't vary.

The lowest tracker margin in Ireland was 0.5% (I got that).

This meant I was paying ECB + 0.5% = 0.5% a few years back.

My interest bill was something like 7 euro per week.


I now pay 100 euro per week!!!

Thanks! That’s what I was thinking, at least they can’t randomly up their rates unfairly. At 2.25% (inc the 1% surplus for moving) it’s probably not a huge advantage but at the same time it means about half the new mortgage would have a bit more certainty and stability.

Darc19

con747 wrote: »

That has what do do with me? If you think the banks are hard done by :eek:

You are paying approx 1% extra because of the restrictions and the impossibility of repossession of strategic defaulters.

1% on a €300k mortgage over 30 years is over €40,000.


Have you that to spare so that freeloaders can play the system?

Q&A

I take the point about the benefits of trackers but staying with an existing mortgage provider to keep a tracker (with 1%+ additional margin) isn't as clear cut a decision as it use to be.

When deliberating over this people should explore the benefits of switching to Avant. The ability to lock in for 7 years at 1.95% is eye catching.

Of course it won't be one rule fits all, especially when factoring in switching costs but something to consider.

Darc19

sillysocks wrote: »

Could I hijack on this thread as in a similar position to the OP, have approx 125k left on a mortgage that’s on a tracker of +1.25 at the moment and would have 1% added if we move to a new house. Current mortgage has 20 years but new might be 25.

Haven’t met our broker yet to fully discuss it but in passing he mentioned that there may not be a big advantage to keeping that tracker.

I don’t fully understand all the rates and variable loans etc, and wondering if there’s any expertise you could add? If we go for variable and rates increase can the bank essentially increase that indefinitely where the tracker is set to ecb so more stable? Or am I misunderstanding?

1.25 tracker means the mover tracker is 2.25% so considering you can get rates at that level anyway, there's no advantage.

In terms of what the 1.25 tracker is worth to you if you were putting this into an overall house moving calculation and taking the 2.25% as a reference rate. Its about €12,000. Basically you are leaving €12,000 on the table just by moving house. Sounds a lot, but if moving as a long term new property, its not a life changing amount.

However if you were able to get a 1.95% rate with avant, that "loss" would be about €8,000.

So I'd shop around for a full single mortgage at the lowest ltv rate available and forget the tracker and being tied to that bank

kippy

Darc19 wrote: »

1.25 tracker means the mover tracker is 2.25% so considering you can get rates at that level anyway, there's no advantage.

In terms of what the 1.25 tracker is worth to you if you were putting this into an overall house moving calculation and taking the 2.25% as a reference rate. Its about €12,000. Basically you are leaving €12,000 on the table just by moving house. Sounds a lot, but if moving as a long term new property, its not a life changing amount.

However if you were able to get a 1.95% rate with avant, that "loss" would be about €8,000.

So I'd shop around for a full single mortgage at the lowest ltv rate available and forget the tracker and being tied to that bank

It's important that you factor in the time you've left on the tracker as well.
Had a similiar situation a few years ago.
Bank issued is with an amount, duration(14 years)and rate plus one percent tracker that we had on the previous house as well as a smaller portion 'new loan' that we initially fixed for three years but spread out the duration to 30 odd years.

We'd be hoping to pay off the tracker portion then up the payment into what will eventually be a variable rate portion of the mortgage.

Worth using an app called simple mortgage calculator to work out the total cost of every option available and run the figures a few times.

con747

Darc19 wrote: »

You are paying approx 1% extra because of the restrictions and the impossibility of repossession of strategic defaulters.

1% on a €300k mortgage over 30 years is over €40,000.


Have you that to spare so that freeloaders can play the system?

Maybe just discuss the OP's question if you want and leave the side tracking alone if you can.

Darc19

kippy wrote: »

It's important that you factor in the time you've left on the tracker as well.
Had a similiar situation a few years ago.
Bank issued is with an amount, duration(14 years)and rate plus one percent tracker that we had on the previous house as well as a smaller portion 'new loan' that we initially fixed for three years but spread out the duration to 30 odd years.

We'd be hoping to pay off the tracker portion then up the payment into what will eventually be a variable rate portion of the mortgage.

Worth using an app called simple mortgage calculator to work out the total cost of every option available and run the figures a few times.

Yes. time and balance has to be factored, but with rate difference between tracker + 1% extra and general available rates now miniscule compared to 3 or 4 years ago, the broker's advice that the moving of the 1.25% tracker at an extra 1% is not as attractive as it may seem and would lock you into that institution is very good advice.

Ulster bank 5 year fixed for mortgage over 300k 80%ltv is 2.2% - lower that the tracker mover rate for the poster.

kippy

Darc19 wrote: »

Yes. time and balance has to be factored, but with rate difference between tracker + 1% extra and general available rates now miniscule compared to 3 or 4 years ago, the broker's advice that the moving of the 1.25% tracker at an extra 1% is not as attractive as it may seem and would lock you into that institution is very good advice.

Ulster bank 5 year fixed for mortgage over 300k 80%ltv is 2.2% - lower that the tracker mover rate for the poster.

You are still looking at the headline rate of the full mortgage over a relatively small timeframe.
Without knowing the full details there's not enough information to provide a proper analysis.

JustAThought

sillysocks wrote: »

Could I hijack on this thread as in a similar position to the OP, have approx 125k left on a mortgage that’s on a tracker of +1.25 at the moment and would have 1% added if we move to a new house. Current mortgage has 20 years but new might be 25.

Haven’t met our broker yet to fully discuss it but in passing he mentioned that there may not be a big advantage to keeping that tracker.

I don’t fully understand all the rates and variable loans etc, and wondering if there’s any expertise you could add? If we go for variable and rates increase can the bank essentially increase that indefinitely where the tracker is set to ecb so more stable? Or am I misunderstanding?

If your broker dosn’t think there is a value in keeping your tracker s/he is
:

filthy rich
delusional
insane


Unless your tracker starting level is 6% or something like that which is extremely unlikely. The difference per percent can be a couple of hundred a month depending on the amount and term. Having a tracker is like having a shared winning lotto ticket - don’t let anyone talk you casually into giving it up.


So for example if my tracker on my borrowed amount is set at 0.2% and tracking (so basicLly I’m only currently paying 0.2% interest at the moment) and many variables are at 3.5% or more thats the difference of about 500 or 700 or so extra in interest you pay per month - compared to barely anything.

Even of the cariable is fixed at say 4% for 6 years the risk is when that term for that variable runs out you’ll have to accept what the banks offer you then - which will most likely be higher - the tracter will always track the ECB (I think) rate which would be very unlikely to jump that much (thou not entirely impossible - but most unlikely). In fiftteen years + and two huge crisises my tracker has only ever tracked up about 1.5% for a while and then tracked back down again. If that makes sense?

The J Stands for Jay

JustAThought wrote: »

If your broker dosn’t think there is a value in keeping your tracker s/he is
:

filthy rich
delusional
insane

Always follow the money. It gives a 4th answer which is more plausible than your three:

Ditching the tracker gives the broker more commission than sticking with it.

Having said that, the broker may be genuinely looking at the costs and determining the tracker is not the way to go.

JustAThought

McGaggs wrote: »

Always follow the money. It gives a 4th answer which is more plausible than your three:

Ditching the tracker gives the broker more commission than sticking with it.

Having said that, the broker may be genuinely looking at the costs and determining the tracker is not the way to go.

MYbe for them but not for the homeowner - trackers are typically at least 3.5% BELOW any variable - even the lowest of vaiables - its going to be a lose for the borrower.

I know some banks will - or used- let you keep
your tracker for 5 years after you sell & remortgage to buy another house - but to give up a tracker and choose a variable - expensive madness.

sillysocks

McGaggs wrote: »

Always follow the money. It gives a 4th answer which is more plausible than your three:

Ditching the tracker gives the broker more commission than sticking with it.

Having said that, the broker may be genuinely looking at the costs and determining the tracker is not the way to go.

Grateful to all for the opinions! I did wonder re the commissions for both banks.
Avant- is the one he recommends I think. So they do have very low rates right now but wary of the smaller newcomers like Avant compared with staying with TSB and keeping the tracker. Maybe I’m being naive but would favour staying with tsb and keeping the tracker. Even just for half the new mortgage to stay more predictable. Who knows what Avant might do on their variable rates in the future.

Darc19

kippy wrote: »

You are still looking at the headline rate of the full mortgage over a relatively small timeframe.
Without knowing the full details there's not enough information to provide a proper analysis.

I'm looking at it correctly.
Current balance 125k, 20 years left. (Sillysocks poster - not the op)
Mortgage is probably just under €600/month.

Moving that and paying extra 1% on that portion over the 20 years will see current payment increase by €55 per month for the 125k transferred amount.

So total extra is €55 X months left. Poster says 20 years, so 240 X 55 = €13200

Darc19

sillysocks wrote: »

Grateful to all for the opinions! I did wonder re the commissions for both banks.
Avant- is the one he recommends I think. So they do have very low rates right now but wary of the smaller newcomers like Avant compared with staying with TSB and keeping the tracker. Maybe I’m being naive but would favour staying with tsb and keeping the tracker. Even just for half the new mortgage to stay more predictable. Who knows what Avant might do on their variable rates in the future.

Avant is huge. Part of bankinter in Spain.
If you can go with Avant, I'd jump at it. Even taking into account the tracker mover, they are cheaper than PTSB and PTSB have the highest roll off rate in the market

Broker probably will charge a fee as Avant pay a small fee rather than commission to the broker.

Darc19

JustAThought wrote: »

MYbe for them but not for the homeowner - trackers are typically at least 3.5% BELOW any variable - even the lowest of vaiables - its going to be a lose for the borrower.

I know some banks will - or used- let you keep
your tracker for 5 years after you sell & remortgage to buy another house - but to give up a tracker and choose a variable - expensive madness.

I don't think you fully follow the market or understood sillysocks post.

Currently variable rates run from 2.7% to 4.5%
PTSB and Bank of Ireland are the highest.

The posters mover tracker is 2.25% on balance of 150k over 20years.

They can probably get 7 year fixed from Avant at 1.95% on the entire amount they want.

That's LOWER than the mover tracker they are being offered.

There's a specialist forum called askaboutmoney.com - plenty of expertise there that will answer all sorts of financial questions. (Irish site)

sillysocks

From looking at Avant website with our Ltv it looks like 2.3% fixed for 7 years vs the tracker on half our new mortgage at 2.25%.
As someone said our current tracker has us paying 600pm and it never changed a whole lot over the last few years.

I guess trying to guess what will happen rates in the future is the gamble. My feeling is the tracker is at least tied to the ecb rate, where with a variable there’s no real tie to a base rate and the bank can do as they please within reason. I’m not sure if I’m right on that though?

We still do need to talk tothe broker and will do once we have all the million docs ready but it’s great to get some opinions here so thanks to everyone!

Darc19

sillysocks wrote: »

From looking at Avant website with our Ltv it looks like 2.3% fixed for 7 years vs the tracker on half our new mortgage at 2.25%.
As someone said our current tracker has us paying 600pm and it never changed a whole lot over the last few years.

I guess trying to guess what will happen rates in the future is the gamble. My feeling is the tracker is at least tied to the ecb rate, where with a variable there’s no real tie to a base rate and the bank can do as they please within reason. I’m not sure if I’m right on that though?

We still do need to talk tothe broker and will do once we have all the million docs ready but it’s great to get some opinions here so thanks to everyone!

Get PTSB to give you this rate - and the tracker mover and its as good as the avant deal. Let them know that you have applied to Avant to be sure they give you this

4 Year Fixed Rate New Business - greater than 60% and less than or equal to 80% LTV - 2.25%

Darc19

Calculation has changed again.

Avant are now offering 2.25% 10 year fixed with current roll off rate of 2.5%

This is possiblity a better option.

To give an idea of cost, €300,000 over 20 years on LTV of 70% will cost €1553 per month. Fixed for 10 years.

I'm assuming 70% LTV and 20 years as if you have a tracker, you have had current mortgage for about 15 years, so a 20year term is probably the best option.

Finance Ireland have a 20 year fixed rate of 2.75% giving monthly payments of €1626 and never ever changing.