Have a good tracker offer - should I take the cash now, not needed until next year?

Don_08

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Not sure if this is the right forum, but we are currently buying a holiday home which will be finished next year. As part of the process we are switching our current mortgage on our PPR, and topping this up by €60k to put towards the cost of the new house, and then get an investment mortgage for the balance. The plan was not to access the €60k until the new build was completed and the money required sometime in summer 09.

Our mortgage offer is the old AIB rates ( thank LDFerguson), of a tracker of +0.45% for one year and +0.75% thereafter, but we have to draw down within 6 months to get these rates.

Was thinking we might be better off taking the money out now, and sticking it in a one year term savings account to take advantage of these rates. Shopped around, and seems I could get 5.25% gross which would be about 4.2% net, so would be making a small loss, but would the overall benefit be worth it??
 
Re: Have a good tracker offer - should I take the cash now, not needed until next yea

Shopped around, and seems I could get 5.25% gross which would be about 4.2% net, so would be making a small loss, but would the overall benefit be worth it??
Borrowing to save/invest often (usually?) does not make sense. When you are making a loss it makes no sense at all in my opinion! You would probably also have the additional cost of mortgage protection life assurance premiums to cover the borrowed amount which would exacerbate the loss here.
 
Re: Have a good tracker offer - should I take the cash now, not needed until next yea

Yeah I realise that - but its more that it seems ( from the media etc) that it would be unlikely to get a tracker of +0.75% next year, if trackers are being phased out. So would the small loss be worth the benefit of getting the +0.75% for the next 20 years?
 
Re: Have a good tracker offer - should I take the cash now, not needed until next yea

My opinion would be to take the mortgage now - because you will more than likely not get such a good offer again. (Unless your Loan to Value is under 75% - you could get a lower tracker rate from NIB - but these could well be rising in the next few months (as well as the ECB).
 
Re: Have a good tracker offer - should I take the cash now, not needed until next yea

At least wait until the end of the 6 month timeframe to draw down. You never know what could happen between now and then, but you option to draw down at the better rates will be held.
 
Re: Have a good tracker offer - should I take the cash now, not needed until next yea

Hi just a follow up on this and looking for more advice,

We drew down in Sep last year and the holiday home had fallen through, so we stuck it into a one year fixed term account at 6.0%. Have a two year interest only mortgage of ECB plus 0.75% ( will increase from 0.45% in Oct).

So worked out ok - don;t think we will be looking at buying a house in the next few years now. So husband wants to just pay the 60k off.

However, given the environment and husband working in building - I would prefer to pay off 40k and keep 20k for a buffer for the next year of the interest only.

Any opinions on this?
 
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