Tracker or 2 year fixed?

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Petal

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Folks,

I am trying to figure out if I am better off going with the current tracker of 3.4%APR or with a 2year fixed rate of 3.8%APR. I am taking a 100% mortgage of somewhere between 350-380K. I'm wondering about this, as I keep reading about the likelyhood of the ECB increasing the rate by up to 0.75%, in which case, I'd end up with a tracker of 4.25%. It's really hard to tell what's going to happen, but has anyone got any views on this?
 
You have to think of the long term, in that what will happen when you come out of the fixed rate, if the interest rates are going up, you may find yourself paying more after your fixed rate has expired. The standard variable rate is about 1.5% above base rate, where you are being offered 1.15% above base rate for the term of the mortgage. The tracker will save you money in the long term

I wish I had a crystal ball to tell you what the interest rates will be like in a few years time :) I hope this helps
 
Thanks Cathy. I was thinking though, if I went on the 2 year fixed term and afterwards onto the tracker? Maybe my logic isn't great, I still haven't quite come to terms with this interest stuff. But let's say the fixed rate is 3.8APR and I go onto that for 2 years and when I come out of it I move onto the tracker, which might still be at 3.4% in which case the fixed term was a bad idea, or it might have gone beyond 4% in which case the fixed term was a good idea. Makes kind of sense to me, but not sure it works that way? Or am I completely off the mark with my understanding of how this works?
 
Petal said:
Thanks Cathy. I was thinking though, if I went on the 2 year fixed term and afterwards onto the tracker? Maybe my logic isn't great, I still haven't quite come to terms with this interest stuff. But let's say the fixed rate is 3.8APR and I go onto that for 2 years and when I come out of it I move onto the tracker, which might still be at 3.4% in which case the fixed term was a bad idea, or it might have gone beyond 4% in which case the fixed term was a good idea. Makes kind of sense to me, but not sure it works that way? Or am I completely off the mark with my understanding of how this works?
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The NIB still has 2-yr fixed rates at 3.29% (3.7%APR).

e.g €360K 20yr costs €5.69/thou/month.

rates from [broken link removed]

Having said that, not sure what their rates are for 100% mortgages :confused:
 
irishpancake said:
The NIB still has 2-yr fixed rates at 3.29% (3.7%APR).

e.g €360K 20yr costs €5.69/thou/month.

rates from [broken link removed]

Having said that, not sure what their rates are for 100% mortgages :confused:
Click to expand...

NIB dont do 100% finance....

Petal, if you go along with the fixed rate now and transfer to a tracker when you come out the fixed rate, most lenders have a different tracker rate for new business or existing customers, so you may find yourself being offered a higher tracker rate at this time.
 
I get what you mean, although all of the banks I've checked only ever offer one tracker rate for >250K 100%LTV, I have not come across any "new customer" or "Existing costumer" tracker rates. Or is this something they don't advertise?
 
CathyK said:
NIB dont do 100% finance....
Click to expand...

yeah, sorry about that :eek:

pity though, it's still a v. good fixed rate for 2 yrs.
 
You should also bear in mind that some lenders will not offer a tracker rate after the expiry of a fixed rate period - so your options would be limited to Standard Variable or another fixed rate.
 
Ah good point, I will keep this in mind. I'm just naive in thinking that you can just pick what you want!
 
marvin said:
You should also bear in mind that some lenders will not offer a tracker rate after the expiry of a fixed rate period - so your options would be limited to Standard Variable or another fixed rate.
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I'm not sure which lenders this applies to — I recently switched from NIB's tracker (LTV<60%, was 2.79%, now 3.04%) to a 3-year fixed rate (3.45%), but was assured that I could indeed revert at the end of the three years to whatever tracker was then available.

However, as already pointed out, NIB don't do 100% finance...
 
DrMoriarty said:
I'm not sure which lenders this applies to — I recently switched from NIB's tracker (LTV<60%, was 2.79%, now 3.04%) to a 3-year fixed rate (3.45%), but was assured that I could indeed revert at the end of the three years to whatever tracker was then available.
Click to expand...

did you get this in writing from them that you could switch in 3 years time? would the bank give such a statement in writing.....?

am in the same boat at the moment and have asked them to commit it in writing to the contract so waiting to see if they actually do it...
 
No, I didn't get it in writing. In fact, the loan agreement stipulates that once the three years are up, the loan will revert to the standard variable rate — but my branch manager assured me that of course, there's nothing to prevent me then switching to a tracker product again (current fee = €90). Note that I'm not talking about a special 'discounted' offer as mentioned here...

So when February 2009 comes around, I'll compare their standard variable with whatever tracker NIB (or indeed other lenders) have on offer at that point — and/or maybe even see what they can offer in terms of extending the fixed-rate.

My gamble in switching was of course based on the presumption that the best available tracker or variable rates in 2007/2008/2009 will be higher than 3.45% — which is looking reasonably [broken link removed].
 
do NIB give that fixed rate for 97%?
FTB currently sorting out mortgage on 340000 (330000 being the 97%).
Fixed rate from NIB sounds good. What happens after? Can you easily switch to a tracker? Or switch mortgage providers?
New to this whole thing:confused:
 
chihiro said:
do NIB give that fixed rate for 97%?
Click to expand...
Nope. Max 90% LTV, and the best tracker rate is for <60% LTV. Not too sure about the fixed.

After my three years are up, I'm told I can switch to whatever tracker they're then offering — for a €90 'administrative' fee, I think. Of course, once you're out of a fixed rate period, you can move to another lender — but of course it'll cost you to move — valuation, legal fees, etc.
 
I would have thought with all the competition in the mortgage market, there will be very few restrictions on the type of mortgage that you can revert to to when the fixed rate is up. In addition, I would also imagine that a number of the lenders out there will pick up all moving fees if you feel inclined to do that (especially as you would still have the vast majority of your term to go). Ulster bank possibly pick up the mortgage moving tab at the moment?
 
Can I ask about that administration fee to switch to a tracker after a fixed period? Does that apply to all mortgage providers? Specifically PTSB?
 
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