changing mortgage from ge money??

O

orwell

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Just looking for some advice..
We have our mortgage with Ge Money (long story) 285k at 6.2% fixed until april 2010... balance remaining of 280k.
Penalty for leaving GE while on fixed rate is 6 months interest= E8000.
BOI have just approved us for loan of 290k Variable rateof 3.75% (balance of mortgage and the 8k to get away from GE money).

I know in the long run it is costing me a few thousand to break away from GE Money but I think that it would be worth it for the security of knowing we are back with a prime lender and a lower rate..We are also going to overpay new mortgage by 400 per month, paying what we pay at the moment each month.

Just looking for advice really..should we move now or waittil 2010??
 
I have taken a 25 year term for comparison:
€290K BOI @ 3.75% is €1490.38
€285K GE @ 6.2% is €1871.68
€381.30 difference over 16 months is €6100.80.

€8k to break. When you include the cost of moving it will be closer to €9,500 in total. (legals, life cover and valuation).

However that's not the whole story. You have to allow for the over payment for the 16 months and the interest that will save. I don't have a calculator to work that out unfortunately. Perhaps some one else has.

Also, depending on the refinancing conditions in 2010 and the value of your home, you may not be able to refinance. There is no € measure I can put on that. For example, in 2010 your house could be worth 10/15% less and banks might only be giving refinance for 50% LTV. BOI may not be as generous in 16 months time.

I would go for it if I were you because in the long term it will be certainly the better option.
 
If you do decide to switch, one piece of advice is to see if BOI will allow you to run the extra 10k you are borrowing over a shorter term. Thus you will be running the original mortgage over the original term and the extra 10k will be akin to a term loan.

No point paying the 10k over say 25 years when you could have this paid off earlier.

One other point, the penalty is 8000 but you are taking on an extra 10,000? I guess this is to pay for legal fees etc?

To switch is really costing you €10000, use jeacle.ie to see if the savings you make on the lower rate until April 2010 add up to around €1000. If not then maybe it would be better to stay where you are. I understand the relief that will come with moving to a prime lender but you have to weigh this up with the overall financial cost of switching.

There is also opportunity cost in moving now, maybe you will not be able to at the end of your term. Decisions decisions.
 
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Thanks guys..
Regarding the extra 10,000 when I was applying to BOI I just filled out the 290k online before I knew my penalties so ideallily I just want 288k to cover balance due on mortgage and the 8k for breaking out of fixed..Re legal fees just got a quote from my solicitor of E1137f or remortgaging..BOI will pay E1000 towards this..
Thanks to poster for advice re seeing if BOI will let me take out the E8k as term loan..hadn't thought of that..
I really think I should go for it as in Jan/Feb 2010 who knows what kind of mortgage offer if any I'll get..
 
I would definitely move away from a specialist lender as fast as I could. It will become increasingly harder to move away from Subprime in the next few years as banks look to write the cleanest business they can. Also Specialist lenders will not necessarily pass along rate reductions where as BOI generally will.

In my opinion the penalty interest is an easy choice.
 
Orwell - check in to your life policy now and wrap that up as soon as possible. There is nothing worse than paying for legals etc. and then finding out you cannot extend your life cover by €3K to cover the new €288K mortgage. Shop around because your current provider may not offer the best option this time.
Getting the €1K for legals certainly sweetens the deal.
Best of luck with it.
 
does anyone know the approx costs (legal etc) of remortgaging with another financial institution? do you need to go to a solicitor?
 
Orwell, how long since you checked with GE. I think they are letting people out now with no penalty.
 
Plus, afaik, GE are not doing very well, so perhaops playing a "little" hardball with them may turn up a result?
 
Society said:
does anyone know the approx costs (legal etc) of remortgaging with another financial institution? do you need to go to a solicitor?
Click to expand...

The figure I have seen mostly when it comes to this is in or around the €1200 mark.
 
Society said:
does anyone know the approx costs (legal etc) of remortgaging with another financial institution? do you need to go to a solicitor?
Click to expand...

Yes you do. As PaddyW says, factor in around €1,200 for legal costs and €130 for a valuation.
 
GE have pulled out of the mortgage market in Ireland. Since Jan 09 I think. They have stopped writing personal loans since last August.

As Kine said, it could be worth trying for the discount.
 
yeah heard they pulled out of the market for Mortgages, must give them a buzz see what they can do
 
Came home today to a letter from GE, our mortgage was reduced by 0.85% so in the last month alone its gone down 1.5%
 
carrielou said:
Orwell, how long since you checked with GE. I think they are letting people out now with no penalty.
Click to expand...

Carrielou, where did you get this information, that GE are now letting customers out without penalty. I am with them and eager to find this out.
 
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