Buying new house and keeping tracker

[mainie]

My husband and I have put a holding deposit on a new build. We're planning to sell our current house (currently valued at around 300k) and BOI will let us keep our tracker rate (+1%) on the outstanding balance which is around 240k. The new build won't be ready until end of October and we haven't put our house on the market yet.

Our solicitor has now received the contracts for the new build (if we want white goods included we need to sign within 21 days but i won't be pushing to do this for the white goods). We were hoping to buy and sell at in one go but it sounds like this is fraught with difficulty. I believe that the bank will give us a mortgage without selling our house - we'll talk to them about it tomorrow but what i was wondering is, if we go ahead with signing the contracts without selling and then sell the house before the new house is ready, would we still be able to keep the tracker rate? I presume we'd just need a new loan offer at that stage?

 

[Brendan Burgess]

What is your current tracker rate. If your tracker is ECB +0.5%, then it's clearly worth keeping as the new rate would be ECB +1.5%.

But if your rate is ECB +1.25%, then while it's still worth keeping, ECB +2.25% is not as valuable.

How many years are left on your mortgage? 20 years to go is well worth keeping. 5 years left is less so.

It is very difficult to buy and sell in the one go. Possible, but difficult.

If the builder is flexible, then it would be possible. But if you agree to sell your house in June with a closing date of October and the new build is not ready, what happens then?

The usual procedure for keeping a tracker is as follows.

1) Sell your own house and pay off the tracker.
2) Buy the new house within 6 months and get a new mortgage with the increased tracker rate.

I don't know the terms of the BoI mover's mortgage, but it's likely to require you to sell first and buy within 6 months.

If on the other hand you buy first, it's unlikely that they will allow you to port the tracker.

If you have the means to buy now without selling, have you considered keeping your existing home as an investment? I am not recommending it. I think you should just do the maths and see if it's worth doing.

It saves a lot of hassle. You buy the new house when it's ready. You take your time in moving. And then you let out your old house when it's ready.

Brendan

 

[mainie]

Thanks for responding. Tracker is ECB+1.1%. 17 years left on the mortgage.

We did think about holding on to our current property but are concerned it would leave us exposed.

I think that 6 month rule sounds like it may be the case. Would it be possible for us to accept a loan offer based on keeping our current property and then change it if we sold it before the sale completed? I.e. before end of Oct