Moving from Tracker to Fixed

tamara25

I rang 3 brokers before Xmas & hopefully will hear back from them next week when most people are back to work. One of them mentioned logging onto essential credit register to get our credit history to forward onto them. We are not in arrears but we’re paying interest only on our mortgage for a period of time. I hope this doesn’t go against us when switching to another lender? Was it mentioned on another thread that if you give up your tracker you cannot get it back at a later stage?

walterking

https://www.boards.ie/discussion/comment/120045555#Comment_120045555

6 months is a long time in finance terms these days.

Even after Russia invaded Ukraine, no-one expected the ECB to be at 2.5% today.

Even in June it was not expected.

Then it swung dramatically the other way and some thought 3% by Christmas.

The next ECB rate meeting seems to be 2nd Feb and then 16th March followed by 4th May.

February commentary will be eagerly listened to.

Q&A

https://www.boards.ie/discussion/comment/120046818#Comment_120046818

I know some performing mortgages were transferred from PTSB to Pepper but if there was arrears in the past all is not lost if you can show a good track record in the recent past. Interest only/reduced payments will raise concerns for other lenders. If you're not meeting your contractual repayments at one lender others are unlikely to offer you a mortgage.

Some lenders may offer the ability to revert to a tracker if you fix but from what I've seen those fixed rates are uncompetitive and in your case Pepper don't offer fixed rates so it doesn't matter. You definitely won't be able to retain the tracker If you switch providers.

To see where you stand get a copy of your credit history from the CCR and take it from there. If you can switch it might be beneficial. There is no point holding on to the tracker if it endangers your ability to keep your home at the same time if you have to stay with Pepper the tracker has value.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120045081#Comment_120045081

It's up to you really, personally I don't see any disadvantages to paying off your mortgage balance assuming there isn't a better use for the money (like paying off other debts)

It's worth saying we're not in a recession, yet. Inflation is positive which means the economy is going up, the problem is wage growth isn't keeping pace so your money doesn't go as far as it did

You don't have to put all your savings towards paying off the mortgage, in fact it would probably be a bad idea to do that

walterking

https://www.boards.ie/discussion/comment/120046818#Comment_120046818

Yes, that is true. If you give up a tracker, you cannot go back.

What is your tracker margin - eg what % over ecb?

+ what is the balance + how many years left.

ECB has stated that interest rates will be neutral to inflation and target inflation is 1.5-2% and they expect to be there in 2024. So interest rates will likely come back to 1.5%-2%

If your tracker is 1.25% or less I would not contemplate moving.

tamara25

our interest rate will rise to 5.75% this month. Our balance is 180,000 & we have roughly 20 years left on it. Our heads are wrecked trying to decide what is the best option for us…

dotsman

https://www.boards.ie/discussion/comment/120054095#Comment_120054095

Who is your loan with? Interest rates are typically in the 3-4% with some still below 3%

tamara25

Were with Pepper

walterking

https://www.boards.ie/discussion/comment/120054095#Comment_120054095

Your tracker is utterly worthless then and I can see why you would be concerned.

Your have a tracker of 3.25% which is an utter rip-off - most trackers were 0.75%-1.25%

PTSB did have a tracker after you ended a fixed rate of 3.25% and you seem to be on this. It was the subject of an ombudmans complaint, but they sided with PTSB. If I remember it was a discounted tracker and it was circa late 2007/early 2008 - the problem is they never stated what the pre-discount tracker was and when the discount ended the crap had hit the fan and tracker rates were pulled. PTSB came up with 3.25 as the prevailing rate at that time (which was correct) - but the argument is that the prevailing tracker margin at the time of drawdown should have been used and that argument was lost.

As the media and others harped on about "never give up your tracker" - they forgot to say "if its under 1.5%" and people thought they had a good deal - in reality your deal was utter crap.

If your combined income is over €50,000 (ideally closer to 60k) and the house has a value of 250k+ and you have been in good financial standing for the last 3 years, you should be able to move to a better bank. A broker will be able to check most institutions, but AIB don't deal with brokers, so talk to them directly. Bank of Ireland is probably the one that will say yes if you can show that any past financial issues are well behind you.

But your tracker at 3.25% over ECB has and always has had zero value to it.

walterking

https://www.boards.ie/discussion/comment/120054095#Comment_120054095

If bank of Ireland offered you a mortgage, then their 3.55% 10 year fixed is a great option for you.

180k over 20 years would give you a payment of 1043 per month and guaranteed to stay at that level for 10 years.

the_amazing_raisin

https://www.boards.ie/discussion/comment/120054095#Comment_120054095

Jesus, yeah I kinda agree with others that you're on the worst end of trackers and it's probably not worth keeping

I would say the question at this point is, why would you keep the tracker? ECB probably doesn't want to get back to the days of negative interest rates, so they're going to do their best to keep it around 2%, which keeps you around 5% interest

You should easily be able to beat that switching to another mortgage provider

Yeah maybe you'll miss out on a lower rate with a tracker, but that could be anywhere between 6 months to a few years away, at some point you have to ask if it's worth keeping it

It's also worth bearing in mind that mortgage rates respond to interest rates anyway. Variable rates go up and down with interest rates, they're just not tied together like a tracker

Fixing the rate now does mean that if rates go down then you might lose out, but equally you're insured against any further increases

Thekeencyclist

https://www.boards.ie/discussion/comment/120054095#Comment_120054095

Get in touch with your bank requesting what fixed rates are available to you (If not already done). They should send you a letter with all mortgage rates available that you can choose from. The letter should also contain a deadline with which if you wish to change, the letter must be back with the bank by this date etc (as the rates may change after that date). Again this is only an expression of interest letter with available options that you can review. You dont have to accept any of the options on the letter.

At least this will give you a better picture of what your payments are now V's what they could be on other mortgage rates offered to you on the letter etc.

I was on a tracker until recently and with the the ECB hikes, i did the above just to see what was out there (as I am also a Ulster Bank customer and changing to god knows who is anyone's guess!!) so I wanted to see what my options were. As a result i changed to a 7 year Fixed rate. I am now paying approx 25 euro a month more than what I was paying before any of the ECB hikes. However if i hadnt changed, I would now be paying approx an additional 80 euro a month on top of that 25 euro.

Am I glad I switched - Yes, as I have some peace of mind, and I honestly cant ever see the ECB reducing back to a rate of what they were giving us before the hikes started last year.

I also hope to make an additional/optional top up payment monthly based on my above saving.

tamara25

Thanks for everyone’s replies, I really appreciate it!

walterking

https://www.boards.ie/discussion/comment/120059052#Comment_120059052

The poster is with Pepper finance - they don't have a fixed rate list. It was a mortgage transferred by ptsb. This may be part of a central bank enquiry as the CB pushed for ptsb to sell any mortgage with an issue. People were assured that terms would not change. They should be able to access any deal ptsb has for their customers and up to recently this included a 3% 7 year fixed rate.