Key Post I have a tracker managed by Pepper – should I keep it or switch lender?

[Kiwigirl]

Forgot to mention that we have 20 years left on our mortgage & a balance of 180,000

 

[RedOnion]

That's a margin of 3.25%?
No, it's not worth keeping. But, depending on your payment history you might have trouble switching.
Definitely worth a chat with a broker. Remember, no broker deals directly with AIB, only Haven which is a broker arm of EBS and offers different rates to AIB.

 

[Brendan Burgess]

Our mortgage was previously with Ptsb, we were paying interest only for a period of time.

When was your mortgage sold to Pepper?
They only sold non-performing loans.
So I would guess that your loan is classified as non-performing, and if so, you would not be able to switch.

Contact a broker immediately and try to switch before the increased interest rates push you into arrears.

Brendan

 

[jasper2021]

HI Brendan, please see the following information:
1) Existing tracker margin. (This is set in your mortgage contract.)

• tracker margin is ECB + 1.4% with Pepper (orig halifax / BofS). Payments gone from €1237 month in jan 21 to €1350 in sep 22 but that only up to ecb at 1.25% so with latest announced figures expecting current repayments to go up to €1463 ish before anymore ECB increases. On same deal since we took mortgage out in 2008 and original fixed rate finished in 2010.

2) If you have an additional mortgage on the same property, what is the rate?

• N/A

3) Amount outstanding on your mortgage

• If you have both a tracker and a second mortgage on the property, specify the amount outstanding on each

4) Remaining term - April 2038 so nearly 15 years
5) Lender - Pepper
6) Value of your home - approx 300k
7) Might you trade up or overpay your mortgage - no
8) Do you face any barriers to switching? no
9) What rates are you considering fixing at? - BofI 2.95% assuming can get BER cert like neighbour with same house at B3. 5 YEAR or more?
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. estimate B3 like neighbour.

Thanks for any advice/thoughts.

ps in these cases would i be liable for any legal fees to switch, BER cert, house valuation etc?

 

[Brendan Burgess]

Have you about €200k outstanding on your mortgage? So an LTV of 66%

1.4% +2.5% = 3.9% which you will be paying shortly.
This could rise.

But there is some value in a margin of 1.4% for the life of the loan.

So you get BoI's 5 year fixed rate at 3.25% less .3% Green discount for the first 5 years, to bring it to 2.95%.

So fixing with Bank of Ireland at 2.95% seems attractive. But what will happen when the 5 years is up?

BoI is good value at the moment, but has a long history of exploiting existing customers with very high rates to fund the cash back offer.

So it's not as clear cut as it looks at first sight. You will get about €4,000 cash back but spend about €1,500 on legal fees.

And the other problem is that by the time you get approval from BoI, their rates may have increased.

You could fix with AIB for 3.15% for 5 years green mortgage. And it is likely that you would be better off for the 10 years remaining after the 5 years is up. AIB pays switchers €2,000.

And AIB is ahead of BoI on increasing rates in this cycle, so it's less likely that their rates will have increased.

There is no right answer as we are speculating on future ECB rates and future strategies of banks, but this is what I would do

Avoid Bank of Ireland
Apply to AIB
When you are ready to draw down, make the final decision based on rates at that time.

Brendan

 

[jasper2021]

Have you about €200k outstanding on your mortgage? So an LTV of 66%

1.4% +2.5% = 3.9% which you will be paying shortly.
This could rise.

But there is some value in a margin of 1.4% for the life of the loan.

So you get BoI's 5 year fixed rate at 3.25% less .3% Green discount for the first 5 years, to bring it to 2.95%.

So fixing with Bank of Ireland at 2.95% seems attractive. But what will happen when the 5 years is up?

BoI is good value at the moment, but has a long history of exploiting existing customers with very high rates to fund the cash back offer.

So it's not as clear cut as it looks at first sight. You will get about €4,000 cash back but spend about €1,500 on legal fees.

And the other problem is that by the time you get approval from BoI, their rates may have increased.

You could fix with AIB for 3.15% for 5 years green mortgage. And it is likely that you would be better off for the 10 years remaining after the 5 years is up. AIB pays switchers €2,000.

And AIB is ahead of BoI on increasing rates in this cycle, so it's less likely that their rates will have increased.

There is no right answer as we are speculating on future ECB rates and future strategies of banks, but this is what I would do

Avoid Bank of Ireland
Apply to AIB
When you are ready to draw down, make the final decision based on rates at that time.

Brendan

Thanks a million Brendan for prompt response. Yes c204k balance on current mortgage.

 

[Kilkenny Lass]

Hi Brendan

Would appreciate your advice on our mortgage:

1) Existing tracker margin. (This is set in your mortgage contract.)

• ECB + 0.5%

2) If you have an additional mortgage on the same property, what is the rate?

• No additional mortgage

3) Amount outstanding on your mortgage

• €70,000

4) Remaining term 4.5 Years
5) Lender Pepper
6) Value of your home: €600,000
7) Might you trade up or overpay your mortgage? No - possibly trade down in 5+ years
8) Do you face any barriers to switching? E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property. No
9) What rates are you considering fixing at? Haven't looked at any rates yet.
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. Don't know exactly but shouldn't be too low.

 

[Brendan Burgess]

@Kilkenny Lass

Sorry for the delay in responding.

I don't think you need to do anything in your situation.

1) The margin is low - .5%
2) The balance is low -€70k
3) The remaining term is short 4.5 years.

Even if the ECB rate rises to 4.5%, you will be paying "only" 5%.

Your total interest will be €8,300


If you switched to another lender at 4% fixed, you would pay €6,600 interest, so the saving of €1,900 is not worth the legal fees and hassle.

Brendan

 

[Nano2023]

Hi Brendan,
Just looking for your thoughts on the below please and if we should go to a fixed rate?

1) Existing tracker margin. (This is set in your mortgage contract.)

• ECB + 0.6%

2) If you have an additional mortgage on the same property, what is the rate?

• No additional mortgage

3) Amount outstanding on your mortgage

• €68,000

4) Remaining term 7 Years
5) Lender: Pepper
6) Value of your home: €450,000
7) Might you trade up or overpay your mortgage? No
8) Do you face any barriers to switching? E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property. No
9) What rates are you considering fixing at? Haven't looked at any rates yet.

10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. Don't know exactly but shouldn't be too low as house built in 2007.

Just concerned now with constant 0.5% ecb increases, should we stick with pepper or look to fix maybe with AIB?

Thanks for any advice

 

[Brendan Burgess]

@Nano2023

1) There is no option to fix with Pepper, so you would have to switch.
2) You could switch to AIB for 5 years at 3.45%
3) With the ECB Rate after today's announcement at 3%, you will be paying 3.6%
4) In two months, you will probably be paying 4.1%
5) After that, it's anyone's guess. Rates could go up or down.
6) I don't think it's worth the hassle and cost of switching €68,000 with 7 years left
7) Even if you save 0.5% and there is no guarantee that would, you would save "only" about €2,000 in interest over the next 7 years.
8) I don't know if AIB will give a mortgage of €68,000 for 7 years. I suspect not. I doubt that they would pay the €2,000 switcher incentive for such a loan.

Stay where you are.

 

[Nano2023]

@Nano2023

1) There is no option to fix with Pepper, so you would have to switch.
2) You could switch to AIB for 5 years at 3.45%
3) With the ECB Rate after today's announcement at 3%, you will be paying 3.6%
4) In two months, you will probably be paying 4.1%
5) After that, it's anyone's guess. Rates could go up or down.
6) I don't think it's worth the hassle and cost of switching €68,000 with 7 years left
7) Even if you save 0.5% and there is no guarantee that would, you would save "only" about €2,000 in interest over the next 7 years.
8) I don't know if AIB will give a mortgage of €68,000 for 7 years. I suspect not. I doubt that they would pay the €2,000 switcher incentive for such a loan.

Stay where you are.

Thanks Brendan- appreciate the response.

 

[Bulmers32]

hi Brendan,

Bit late to start looking into this, but this is our situation Pepper tracker. From checking on bonkers, looks ptsb is best option with 4 yr / 3.15% fixes but reading your other replies, this may not be best idea given their previous treatment of customers. AIB also good but prob their rates going up today. From you're other posts, we still have value in the 1% and given ~9yrs left, still could gain if rates drop.


1) Existing tracker margin. (This is set in your mortgage contract.)

- ECB + 1%

2) If you have an additional mortgage on the same property, what is the rate?

-NA

3) Amount outstanding on your mortgage

- €75, 333

4) Remaining term

- 8 yrs, 11 months

5) Lender

- Pepper ( BoS )

6) Value of your home

- approx €310k

7) Might you trade up or overpay your mortgage?

- No plans as yet.

8) Do you face any barriers to switching?

- No

9) What rates are you considering fixing at?

- check on bonkers showing fixed 4yr ptsb 3.15%

10) Does your house have a high BER rating which might qualify it for a lower rate?

- BER C2


cheers

B

 

[Brendan Burgess]

@Bulmers32

I wouldn't touch ptsb unless you are fixing for the entire remaining period so that you are not vulnerable to their exploitative practices.

With €75k and 9 years left, and a reasonably low margin, I think you should stay where you are.

You could switch to AIB and get the €2,000 switching fee. I am not sure that they are interested in small mortgages with short terms remaining.

But maybe start the process and when you are ready to press the button see how the AIB fixed rates compare with the then current tracker rates.

Brendan

 

[Bulmers32]

tks @Brendan Burgess , will kick off the aib application.

One other thing we're thinking - we're looking into if we could pay off the balance ins say 4 yrs, then the best option would be to take the best fix option available now ( even ptsb - 4 yr ) and then clear the balance - in this case would be best to fix for 4 and then clear balance?

 

[Brendan Burgess]

we're looking into if we could pay off the balance ins say 4 yrs,

That is why fixing might not be the right idea for you.

If you think you might be paying it off in 4 years, why not 3 or 5?

Most of us can't plan our finances like that as the future is uncertain. Flexibility is key.

If you had something very definite e.g. retiring in exactly 4 years and getting a lump sum, then it might make sense to fix for 4 years.

Brendan

 

[Track2023]

Hi Brendan

Trying to understand what our best option is:

1) Existing tracker margin. (This is set in your mortgage contract.)

• ECB + 1.5%
• 2) If you have an additional mortgage on the same property, what is the rate? None
• E.g., "Fixed at 2% with three and a half years of the fixed-rate period remaining."

3) Amount outstanding on your mortgage

• 220k
• 
  
• 4) Remaining term: 20 years

5) Lender Pepper (BOSI)
6) Value of your home 370k
7) Might you trade up or overpay your mortgage? No immediate plans
8) Do you face any barriers to switching? No

E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property.
9) What rates are you considering fixing at?
Was looking at 7 year rates around 4%

10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. B3 BER
11) How well could you handle a further 2% rise in the ECB rate? Should be ok

 

[Brendan Burgess]

1) You are now paying 3% + 1.5% = 4.5%
2) While forecasting interest rates is very unreliable, it does look as if the ECB rate will rise to 4% in the short term and so you will be paying 5.5%
3) It will probably settle in a few years at around 2.5% - so your long term expectation would be about 4%

4) You could fix with AIB for 7 years at 4.4% which would be a good one to compare it with.

In the short-term you will definitely pay more on your tracker than if you fix at 4.4%.
However, with 20 years left on your mortgage, the margin of 1.5% is worth something. And it could be worth a lot.

On balance, as you can handle the rate rise, then stay with the tracker. But it's a close decision.

Brendan

 

[Brendan Burgess]

3) Amount outstanding on your mortgage

• 220k
• 
  
• 4) Remaining term: 20 years

5) Lender Pepper (BOSI)

Is this an interest only loan by any chance?

If it is and you switch to another lender, your repayments would rise as you would have to replace the interest only with a repayment mortgage.

That is not necessarily a bad thing. If it's an interest-only mortgage you should be either repaying it or building up a fund to repay it when the term ends.

Brendan

 

[Track2023]

Is this an interest only loan by any chance?

If it is and you switch to another lender, your repayments would rise as you would have to replace the interest only with a repayment mortgage.

That is not necessarily a bad thing. If it's an interest-only mortgage you should be either repaying it or building up a fund to repay it when the term ends.

Brendan

Hey Brendan

Not interest only-was a 100% mortgage back in 2007-not the soundest financial decision we made!

Thanks

 

[Track2023]

1) You are now paying 3% + 1.5% = 4.5%
2) While forecasting interest rates is very unreliable, it does look as if the ECB rate will rise to 4% in the short term and so you will be paying 5.5%
3) It will probably settle in a few years at around 2.5% - so your long term expectation would be about 4%

4) You could fix with AIB for 7 years at 4.4% which would be a good one to compare it with.

In the short-term you will definitely pay more on your tracker than if you fix at 4.4%.
However, with 20 years left on your mortgage, the margin of 1.5% is worth something. And it could be worth a lot.

On balance, as you can handle the rate rise, then stay with the tracker. But it's a close decision.

Brendan

Thanks! That was my inkling-short term pain may be best to take the hit now.

Thanks for your response and time -much appreciated