Any disadvantage of tracker vs variable

M

munster_fan

Guest
I'm with the AIB and I'm thinking of moving from a variable rate to a tracker rate. Is there any disadvantage with a tracker when compared to the variable rate?
Is there any costs incurred in moving from the variable rate to the tracker?
 
On both counts, no, there shouldn't be - but it will depend on the precise terms of your AIB variable mortgage, so check with them about associated fees/charges. Is there much of a difference in the interest rates?
 
Variable Rate: 3.3%
Tracker Rate: 2.95%

I'm also looking to increase the frequency of payment from monthly to weekly. My understanding is that this should offer (slight) savings in interest.
 
Margins are tighter on trackers.
Need to know what the maximum deviation is from Euribor.
Eg Tracker 110 is 1.1% above ECB rate.
Follows Euribor down and up .. usually in agreed time period of 7 days.

You will spend more time in the Bank queueing up to make weekly payment, not really worth it, unless you have time to spare.
 
One disadvantage I can think of is that if rates rise, the tracker rate may increase before the variable rate (but I don't know if this would actually happen in practice, or what the time lag would be). The opposite is also true though, when rates fall, banks have been slower to pass on cuts to variable rate customers.

Also, with a tracker, the rate is more 'transparent', i.e. will always be ECB base + x%, (although x can be any number).

You will spend more time in the Bank queueing up to make weekly payment, not really worth it, unless you have time to spare.

Is this the only way of making extra (weekly) payments? I was just looking at AIB Online Banking, and there doesn't seem to be any way of adding a mortgage to my profile, so that would appear to rule out online banking (for AIB anyway). But I would have thought that all you need is your mortgage account number and you could do it over the phone, or through a cheque with the account number written on the back put in the quicklodge (if you're not concerned about what has been written here
 
My (ECB +0.79%) tracker mortgage is with NIB, and I also have their Freebank current a/c. The fortnightly payment is simply debited from one to the other - no queuing, no cheques, no express lodgements. I'd imagine AIB must surely offer a similar hassle-free ('though probably not fee-free) arrangement..?
 
My mortgage is with AIB and you can access to view your mortgage account online via their banking site (once logged in you "add an account and enter your mortgage account number"), BUT you can't transfer money from your AIB or any other current account direct into the mortgage account. It can't be done over the phone either, I've tried. The only way to make extra mortgage payments is in person at the AIB branch. (Although I've never tried the 'post a cheque method' as my bank is quite close).

Note, I tried all this some 2 years ago so might be out of date.
 
Presumably if the weekly payment was to be the regular interval (and not just additional payments) then the bank could just set up your mortgage standing order to be weekly.
 
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