Tracker mortgage?

M

mollie69

Guest
Our bank phoned to advise us, we could make some savings by switching to a tracker mortgage. DH asked them could they send us some info as we "HONESTLY" don't know what a tracker mortgage is!!!!

They didn't send us any info but an application form stating the rate will never be more than 1.35% above the ECB rate, which currently stands at 4.25%. Our current rate (after last increase) is 5.79%. Other than the ECB rate, we know nothing else about trackers. Are there any hidden costs? Are we tied into this indefinitely? What's in it for them, is my cynical question? Sounds too good to be true!!! Any advice, gratefully appreciated!!
 
Re: Tracker mortgage??

No tricks, but it depends on your Loan To Value rate (LTV).
eg from : [broken link removed]

Lowest Tracker Rates Ireland
LTV under 50% - NIB : Rate is ECB plus 0.9% (5.15)
LTV 60% NIB : Rate is ECB plus 1% (5.25)
LTV 65% NIB : Rate is ECB plus 1.05% (5.3%)
LTV 70% NIB and Halifax joint cheapest: Rate ECB plus 1.1% (5.35%)
LTV 75% A bit more complicated - Halifax rate is the lowest at ECB plus 1.1% but if you want up to €1000 contribution to legal fees the Halifax rate is slightly higher but still a good ECB plus 1.15% . AIB and NIB also have ECB plus 1.15 for 75% LTV. BOI also have ecb + 1.15% for loans over 500k with max 1000 euro towards switchers legal fees .
LTV 80% - AIB has the lowest tracker for this LTV of ECB plus 1.15. BOI is the same but only if you borrow over 5ooK. BOI will contribute up to 1k in legal fees and if the loan is under 500k the rate is ecb plus 1.2% for an LTV of 80%.
 
For definitions, see here, from the people who popularised the expression "I don't know what a tracker mortgage is."
 
Ok, I've found out that loan value remaining is roughly 117k, value of house (based on houses for sale in our estate) is around 349k - so does that make an LTV of 33.5%?. Sorry, but I'm no good at this at all!!! If so, what does that mean to us? Even if they were charging, ECB plus 1.35%, our repayments would still be lower than they are at present at the rate of 5.79%, wouldn't they? So where does the LTV come in to it?
 
Some lenders offer lower tracker margins for lower LTVs (loan as a percentage of the market value of the property).
 
mollie69 said:
so does that make an LTV of 33.5%?.
Click to expand...

Yes, which means you qualify for this:
Lowest Tracker Rates Ireland
LTV under 50% - NIB : Rate is ECB plus 0.9% (5.15)

So 1.35% is very had value. If you switched to a tracker last year you could have got .5 off NIB and .6 off AIB etc
 
Mollie.
As Towger says with a LTV of 33% you will qualify for a tracker rate of ECB + 0.9% = 5.15%.
At the moment you are on a rate of 5.79%.
Whatever way you look at it, it would be better to be on the lower rate of 5.15%. My advice is ignore what your bank is asking you to do (unless they wish to match the 5.15% rate!) and give National Irish Bank a call to switch your mortgage to them.
The costs incurred in this will be legal fees of about E1000 and maybe a valuation fee of E130. This E1130 will be recouped pretty quickly on the monthly savings you will make by switching rates. For example if your mortgage is over 20 years then switching rates will save you about E10000 over the life of the mortgage.
 
We're thinking of extending our house. Our current mortgage is with Ulster Bank but (according to their web site), their tracker rate is now ECB +1.85% so we'd have to pay this rate for a top-up. I've gone to the NIB site and used their LTV calculator. The calculator tells me I currently have an LTV of 8.24% and the rate it displays is 5.28% i.e ECB + 1.03%. Where do you see / how can I get the ECB + 0.9%??

We're currently paying ECB +0.75% but if we have to pay ECB +1.85% on the top up, I've calculated that it'd be cheaper to move to NIB (even at ECB + 1.03%).
 
Looks like the 5.28% is the APR not the actual rate.

If you go to advanced calculation you will see the customer rate as 5.15% i.e ECB + 0.9%.
 
I'd like to see the introduction of a new tracker product that tracks the banks' economists rate predictions. Let 'em walk the walk!
 
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