Can I move an AIB tracker to fund a site and build a house?

[-Gal1]

Income details
Self Net monthly Approx. €3,300: Employee US Multi National
Income history: 2 yrs 8 months with current employer
Includes BIK on Car and Health Insurance
Combined pension contributions approx. 12% with approx. €125k built up
Spouse Net monthly Approx. €1,700 : nature of income: Job Share HSE
Income history: 15+ Plus HSE
Amount of child benefit received €240 per month (Goes into An Post saving A/C directly)


Personal circumstances so we can calculate your reasonable living expenses
2 Adult + 2 Kids
Yes Have 2 cars
#1 Zero running cost as per the BIK above
#2 Low running cost, worth approx. €12k


Number of 3 years old children: 1
Number of 4 - 11 years old:1
Monthly childcare costs: Approx. €500

Home loan
Lender: AIB
Amount outstanding: €149K
Value of home: €125-150k
Interest rate: Tracker 1% (ECB+0.75)
Monthly repayment: €511
Borrowed €220k in 2006 for 35 years
Have been overpaying by €800 Per month for the last number of years (Requested bank to stop the overpayment last week)
Could rent out for approx. €500-600 per month

Investment property (Was wife’s PPR, Tax compliant, but never informed the bank that she was moving out when we got married, not sure what the contract says about the tracker if not PPR)
Lender: Ulster Bank
Amount outstanding: €150K
Value of home: €125-150k
Interest rate: 1.15% (ECB+0.9)
Monthly repayment: €675
Borrowed €195k in 2004 for 35 years (From Memory)
Monthly rent received: €850 (-Agents Fees (11%)) Recently let through agents after a difficult few years with previous tenant and the €850 is €250 more the last tenant
DD €250 per month in account to pay Maintenance Fee / Tax / Etc (with higher rent may look to reduce this going forward)

No Loans and Credit Card pay in full every month

Other savings and investments
An Post: €12K
AIB 7 Days Notice: €30K
Stock / Shares / Other: €8K


Any other relevant information
Looking to move into a bigger house over the course of the next 6-18 Months
Have seen House/Site in the preferred location that might be purchased for €50-65k (Needs total refurbishment; another €200k)
Have been following the AIB tracker move plans and believe that this would work for me.
Question I have is?
Q1 - Do I blow all savings and small family loan if required, to buy the site, then look to finance the build with current AIB tracker + 1% (€149k) and New Mortgage AIB SVR (€51k)? Plan would be to pay any extra into the SVR then once cleared, look to overpay the tracker to reduce the term back down.
Q2 - Will the €50-65k spent on the house/site count for a deposit? Or will I need to have €20k built back up, 10% of the final Loan amount.
I should be able to put €20k together in the next 18-24 months.
Q3 – Is there another way to look at this?
Does Ulster bank have a plan for trackers?
Would / Should I look for a new €200k Mortgage and rent out my current PPR?
I know that I would have a high exposure to property €500k, but both the Apt and House have very strong rental potential (Good Locations)
If I could keep the trackers that might make it add up? Total repayment at current rates would be approx. €2,250 leaving approx. €2,750 living expenses? Excluding the rent received - Expenses and Tax paid?

 

[Brendan Burgess]

Start with the Investment Property

Rental income |€9,000
Interest| €1,700

So this is very profitable and should be retained, if at all possible.

As it's in negative equity, you don't have any choice anyway.

The details of the AIB tracker mover have not been released

So it's simply not possible to answer your questions.

ptsb and UB insist that the tracker be moved within 6 months of the sale of the property. So it would not be possible to buy a site and build a house within that time-frame.

My guess is that this is not a runner.

Could you get a third mortgage of €200k?
If you could, I would not worry unduly about having too much property. The other two properties are very valuable because of their cheap trackers.

Would it be possible for a family member to buy the site and build the house?

This would be a bit messy. But you could get someone else to buy the site and build the house. When it's built, buy it from them, moving the tracker from AIB to fund the purchase.

This is risky and complicated
1) AIB may no longer be doing the tracker mover product when the house is finished. Or it may be less generous.
2) You will pay additional legal fees and stamp duty of 1%
3) Your personal circumstances may change and you might not be able to complete the purchase.
4) You would have to lend your brother the money to buy the site.

The simplest plan would be to just buy a house and not a site

You have the resources to buy another property and move your tracker. I think you should probably do that.

But wait until AIB announce their plans.

 

[-Gal1]

News from the bank today in respect to keeping the properties above and purchasing a new house is as follows

1. They are pressure testing the current home loan from 0.8% to 5% or 4.2%
2. They are pressure testing the investment property 0.9% to 7.35% or 6.4%
3. They are pressure testing the New House 4.49% to 6.49% or 2 %
4. They are also only allowing 50% of the rent received in the calculations.
Seems very haphazard and unfair that they can pressure test so much and yet only take in 50% of the rent

Looks like there is a major disconnect between local branch and head office. Confirmation from the branch in email 5 weeks ago (I spoke to the lending desk and they confirmed you can borrow 92% of €285,000 for the new property and you will not lose your tracker on existing property) now today waiting for my official letter of offer, they are telling me that head office are only willing to lend €180,000. This is despite no changes on my personal details in the last 5 weeks. Also I have paid for valuation and engineering survey and have engaged my solicitor. Wrongly I believed that having the email was good enough to get these activities started and I could not proceed to official letter of offer until I provided the said paperwork to the bank.