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  #1  
Old 04-02-2003, 11:56 PM
Elcato
 
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Default Key Post: First Active mortgage/current account

I see First Active have launched a combined mortgage and current account. 4.3% APR

Does anyone know if any of the other lenders are planning to do the same?

I don't want to go to all the trouble of re-mortgaging if my current mortgage provider is about to launch a similar product.


Stephen
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  #2  
Old 04-02-2003, 11:57 PM
rainyday
 
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Default Re: First Active mortgage/current account

Hi SD - Just a suggestion - Make sure you ask your current lender. They will only introduce such products if they perceive significant demand - If you don't ask, you won't get!
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  #3  
Old 05-02-2003, 04:56 AM
Mark McG
 
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Default Re: First Active mortgage/current account

I would be very interested in the boards view of these types of products. I am not sure if I fully appreciate the benefits and risks of such an account.

Mark.
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  #4  
Old 05-02-2003, 05:14 PM
rainyday
 
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Default Re: First Active mortgage/current account

Here's the details from the First Active website
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  #5  
Old 05-02-2003, 05:45 PM
saver
 
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Default First Active mortgage/current account

Sorry, I'm a bit lost on the mechanics of this, I hope this doesn't sound foolish...

Right...

2 Accounts: A Loan account & A Facility account

I presume that there is a fixed monthly repayment transferred from the facility account to the loan account just like a standard mortgage and current account?

The benefit though still being that interest is charged on the balance of the loan account minus the balance on the facility account?

I think where I'm lost is on how this could reduce the term of mortgage? Interest savings?

Or is the monthly repayment based on any excess above a certain amount in the facility account?

Sorry if this sounds like nonsense...

Any thoughts?

saver
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  #6  
Old 05-02-2003, 05:51 PM
ClubMan ClubMan is offline
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Default Re: First Active mortgage/current account

My understanding of "mortgage accounts" in general (whatever about the specifics of the FA product) is that monthly repayments are made as normal (or maybe into the mortgage account?) and then additional funds may be deposited in the mortgage account which are offset against the outstanding principal. Because interest is calculated on a daily basis having "excess" funds (over and above the normal repayment schedule) on deposit means that the outstanding principal is effectively reduced thus also reducing the daily interest charges - even if those funds are subsequently withdrawn at some future date. I guess the main difference between the mortgage account and accelerated (monthly or lump sum) repayment of a "normal" (variable rate annuity) mortgage is that with a mortgage account the funds used for accelerated repayment are still available if required while for a "normal" mortgage they are not?
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  #7  
Old 05-02-2003, 06:17 PM
saver
 
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Default First Active mortgage/current account

Hmmm...

I think I'm expecting it to be more complicated than it is. My question possibly also relates to the specifics of the FA product.

Now I'm thinking that it's obvious that if you had a regular excess at the end of the month, it just builds up in the Facility account. You receive the benefit of reducing your interest costs, but it's still available to you. If this builds up a significant amount it's obviously up to you wether it goes into the loan account or not as with a "normal" mortgage.

For some reason I was expecting that excess building up would be automatically transferred to the loan account somehow, but now that seems stupid.

I think that answers my own question.

We apologise for the interruption and now return to normal viewing!

Unless someone wants to tell me that I'm still confused.

Anyway,
Thanks,
saver
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  #8  
Old 05-02-2003, 07:02 PM
rainyday
 
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Default Re: First Active mortgage/current account

I read a report in the Irish Times today which said that any spare funds in the current account at the end of each month would be automatically transferred to the mortgage account. Seems a bit drastic to me!
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  #9  
Old 05-02-2003, 07:11 PM
saver
 
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Default First Active mortgage/current account

So that would mean that building up say an annual car insurance payment of say 2K would require a seperate account! That's a bit mad!

But it does answer the other thing I was wondering about: without that being the case, you would be able to build a reserve in the Facility account that could effectively be an unchecked borrowing reserve at mortgage rates. Particularly if you picked a 35 year mortgage instead of a 30 year or 25 year one but paid the higher repayments.

Anyway, answers my question.

Thanks!
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  #10  
Old 05-02-2003, 11:40 PM
SD
 
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Default Solictor needed?

If I transfer my mortgage to First Active what solicitor's fees would I need to pay?

Last time around, my solicitor would have performed title search, dealt with land registry, collected cheque for financial institution etc.

Were these one offs, or does these processes have to be repeated again (for a similar cost)?

First Active have a panel of solicitors - I don't have to use any of them. The charge would be 969


Stephen
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  #11  
Old 05-02-2003, 11:57 PM
ClubMan ClubMan is offline
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Default Re: Solictor needed?

As far as I know the conveyancing job normally has to be done from scratch each time a a property changes hands or is remortgaged. However I'm open to correction on this.
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  #12  
Old 05-02-2003, 11:57 PM
Sarah Wellband
 
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Default Re: Solictor needed?

Hi Stephen,

You'd incur all the legal fees and outlays in transferring your mortgage to First Active - their inhouse package is good value and as they are using title insurance on remortgages (whereby the new mortgage can close before the deeds are released by the existing lender on the basis that the original solicitor did everything correctly on the purchase) the process should be much faster than normal.

For what it's worth I think this is a stonking product!

Regards,

Sarah

www.rea.ie
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  #13  
Old 06-02-2003, 12:18 AM
suzie
 
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Default Re: Solictor needed?

What is the interest rate for this type of account? I assume it has to be > variable rate? If one has a mortgage with First Active, would it be straight forward to transfer (without incurring costs)?

Thanks

S.
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  #14  
Old 06-02-2003, 12:25 AM
SD
 
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Default Interest rate

Interest is same as standard variable rate. Currently 4.24% This is guaranteed to be never > 1.5% above ECB base rate.

Fixed rate mortgage is not possible.


Stephen
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  #15  
Old 06-02-2003, 01:07 AM
US
 
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Default .

4.24% ???

That's a huge interest rate to pay. UB only charge 3.6% for their tracker, if you have an account with them.

This must be one of the most expensive rates on the market. Am I right ?
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  #16  
Old 06-02-2003, 02:09 AM
ClubMan ClubMan is offline
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Posts: 44,869
Default Re: .

According to PrimaFinance.ie Ulster Bank charge 3.9% (4% APR) for their tracker mortgage. Maybe that's not completely up to date and/or you get an additional rate bonus if you also bank with them? Is the FA 4.26% an APR or nominal rate? If it does turn out to be one of the pricier variable rates (notwithstanding the ECB+1.5% cap guarantee) surely it somewhat negates the advantages of the mortgage account and sticking with a cheaper standard variable rate and accelerated repayments when possible may be a better bet after all....?
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  #17  
Old 06-02-2003, 02:56 AM
euroDilbert
 
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Default New Account

While this type of account is very good in pronciple and long-overdue in Ireland, there are a few problems with this particular one :

(1) The mortgage interest rate is pretty high

(2) The current account part of the deal seems VERY limited.
i.e. no Laser card (until July).
No chequebook (only cheques 'supplied by your branch').

I would guess that few normal services other than the very basic ones are available. So, not really a replacement for a 'real' current account.

Hopefully, it will stimulate other institutions into producing some better versions.
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  #18  
Old 06-02-2003, 04:24 AM
DM
 
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Default First Active Mortgage account

This looks like a good product to me and at least provides an innovative option in the market place. The interest rate will vary over time (like everybodies) and my reckoning is that FA are about mid table generally when it comes to variable mortgage rates. The lack of a cheque book (if this is the case) is a major drawback.
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  #19  
Old 06-02-2003, 04:04 PM
saver
 
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Default First Active Mortgage account

If Rainyday is right in saying that any excess left in your facility account is transferred to the loan account at the end of the month, it sounds to me like you'd need another account anyway for the kind of month to month "informal" savings that you'd normally build up.

If that's the case, I suppose you could open an account with some of the missing facilities; cheque book etc.

It's all extra hassle though... Then again, if you're dead set on putting every spare cent straight to your mortgage, maybe it's worth it?

saver
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  #20  
Old 06-02-2003, 04:16 PM
Sarah Wellband
 
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Default Re: First Active Mortgage account

Hi Saver,

Whilst any funds in the facility account are credited to the loan account the money remains available to be drawn by way of ATM, direct debits, Laser (from June) or cheques drawn in the branch network. Think of it as an almighty overdraft with a limit equal to your original mortgage balance......

Sarah

www.rea.ie
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