Key Post I have a Bank of Ireland tracker – should I consider fixing?

Mayfield05

New Member
Messages
9
Moderator's note: If you want to ask whether you should fix or not (or switch to another lender), please provide the following information:
1) Existing tracker margin. (This is set in your mortgage contract.)
  • If your tracker margin is 1%, please state it in the following format to avoid confusion: ECB + 1%
2) If you have an additional mortgage on the same property, what is the rate?
  • E.g., "Fixed at 2% with three and a half years of the fixed-rate period remaining."
3) Amount outstanding on your mortgage
  • If you have both a tracker and a second mortgage on the property, specify the amount outstanding on each
4) Remaining term
5) Lender
6) Value of your home
7) Might you trade up or overpay your mortgage?
8) Do you face any barriers to switching? E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property.
9) What rates are you considering fixing at?
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.




Hi there,
We are looking to make a decision on whether to fix or not our mortgage. It's a tracker rate and we've not long left. Any guidance to help our research would be most appreciated.

1) Existing tracker margin
Split mortgage: tracker ECB + 1.10%. Second one is tracker ECB + 1.3%
2) Amount outstanding on your mortgage
€34,791 & €85,008 respectively.
3) Remaining term
7 years on both
4) Lender
BOI
5) Value of your home
€500, 000
6) Might you trade up or overpay your mortgage?
Possibly overpay. We won't trade up.
7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage.
No
8) What rates are you considering fixing at?
The best rate I can find.
9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.
No
Current rate as of 25/7/22 is 1.600% and 1.800% respectively.
 
Last edited by a moderator:

Brendan Burgess

Founder
Messages
47,801
The general advice to BoI customers would be to switch, but with €120k and only 7 years left, it's probably not worth the cost and the hassle.

For ease of calculations let's say you have €120k at 1.25%
Based on an ECB rate of 2%, that would put you on 3.25%

You can't avail of the rates on offer to new customers. So these are your options:

1662636312084.png

I can't forecast mortgage rates, but everyone seems to be saying that ECB rates will exceed 2% quite soon.

Losing your tracker is not an issue as you will have so few years left at the end of the fixed rate period.

So, all in all, probably fix for 5 years at 3%.

After the 5 years, your balance will be down to €37,000 so even if BoI is still charging an extortionate rate, it won't matter too much.

1662636540341.png
 

Mayfield05

New Member
Messages
9
That's very helpful, thank you. BOI have offered us a 5 year fixed rate at 3% so we will go with that. Given the ECB rate has gone up again today by .75bps I think it's the most prudent think to do. Even if the rates don't increase again the next 5 years we won't lose out a huge amount. We are slightly overpaying monthly and she said we can keep that over payment penalty free.
Thanks again
 

BigPineapple

Registered User
Messages
35
I'm trying to help my parents make a decision on whether to fix or not their mortgage. It's a tracker rate and not long left. During the 2008 downturn they had to restructure to lower repayment as the work hours was cut. That recovered slightly over time but my mother had medical issue in the past few years and she was forced to retire earlier than expected thus losing a portion of income.

I'm just looking for options (In case I miss something) to see what is the best foot forward.

1) Existing tracker margin
Split mortgage:
- First: Tracker ECB + 1.25%. (Currently at the time of writing 2.50%)
- Second (Interest only): Tracker ECB + 1.25% (Currently at the time of writing 2.50%)

2) Amount outstanding on your mortgage
- First: Approx. €22,300
- Second (Interest only): Approx. €75,000

3) Remaining term
4 years 7 months.

4) Lender
BOI

5) Value of your home
Estimate approx. €260,000-€270,000

6) Might you trade up or overpay your mortgage?
There won't be any trade up. Overpayment is not possible from the parent's point of view. I have been helping them overpay by €1,000 a month for the past 3 months. Expecting the keep the same for the foreseeable future (I'm aware of the limit of gift allowance, between myself and my wife, we can give €12,000 so just right at the limit).

7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage.
Not that I'm aware of from credit record/warehouse point of view.
They may face difficulty possibly due to age (Both are 66 years old), years left remaining (4 years and 7 months) and pension/low income (Both pensioner. Father still work 3 days a week).

Taking into consideration that if switching and when converting the Interest only portion to Fixed, the monthly repayment will shoot up to approximately €1,350 per month for that portion (which their income will not be able to support), On paper (in my mind, it looks like the bank may deem them as a risk due to low income.

8) What rates are you considering fixing at?
Their tracker on the face of it looks good previously. However ECB rate increases (and a big jump too at that) and indication of more to come doesn't make it attractive. I have to admit I was a bit surprise the increases comes in such a very short space of time, much quicker than I anticipated.

So yes, the best rate I can find.

9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.
No



All in all, it is a mix of unfortunate circumstances and they didn't plan it out properly. I'm left to pick up the pieces but luckily I can afford to help so it is OK from that perspective. At this point it is all about minimizing the pain. So realistically, is 3% whether fixed at 3/5 years the only option available to take?? (Taking into account of further ECB rate rise expected). Looks like there will be quite a lot of pain in the short term if they stick with the tracker.
 

Brendan Burgess

Founder
Messages
47,801
Hi Pineapple

1) They will not be able to switch to another lender so they are stuck with Bank of Ireland.
2) If we assume an ECB rate of 2%, they would be paying 3.3% on the bigger loan
3) They could fix with Bank of Ireland at 3% for 5 years.
4) The difference of .2% would increase the interest charge by €200. (€100k @.2%)
5) They would get protection against ECB rates rising to more than 2%.

Conclusion: It really is a toss up. Given that you are overpaying, then the flexibility of a tracker rate seems to outweigh the other considerations.
 

Brendan Burgess

Founder
Messages
47,801
Hi Pineapple

Let's look at the bigger picture here.
Your parents have a loan of €100k on a house worth €270k with 4 years and 7 months left on it.

They are probably worried about what will happen when the 4 years and 7 months is up and they think that they might lose their home.

The interest cost of this loan is about €3k a year. So as long as they are paying €3k, then they are reducing the balance on the mortgage.

If they get to the end of the term and there is still a balance, BoI will not take any action apart from sending them letters which they have to do under the Central Bank regulations. BoI will mention legal action, but they have no intention of taking legal action.

You mention gifting them €12,000 a year. I think you should specify that this is a loan and not a gift. So that when they die and sell the house, you get a loan repaid rather than an inheritance.

Brendan
 

PebbleBeach2020

Registered User
Messages
503
1) Existing tracker margin ECB + 1.20%
2) Amount outstanding on your mortgage 120k
3) Remaining term 10yrs
4) Lender BOI
5) Value of your home 300k
6) Might you trade up or overpay your mortgage? No, but considering selling (its' a BTL now)
7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage. No, but as it's now a BTL, much higher rates so not really an option
8) What rates are you considering fixing at? 5 yr fixed 3.00% (if keeping the property, bit spooked by SF rhetoric about not being allow evict a tenant to sell the property, but would they really enforce such a drastic action if they got into government in 2025? Would FF permit them to do it, if they went in with them? Would SF not need FG or FF to form a government?)
9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. No

Was ingrained into me "not to give up the tracker mortgage" but the way the ECB is going, it's 1.25% at the moment, I think it'll be 2% before the end of the year and maybe go upto 2.50% at least in Q1 2023 if not earlier.
 

Brendan Burgess

Founder
Messages
47,801
1) Existing tracker margin ECB + 1.20%

No, but considering selling (its' a BTL now)

I would not fix. I think that there is a risk that they might deem it a buy to let and you could end up with much higher rates.

And if you fix it, you might face a penalty if you decide to sell it.

So stay flexible.

An ECB rate of 2% would be a rate to you of 3.2% so not that much saved by fixing. Of course, the ECB rate could go higher or lower.

Brendan
 

NJ1000

New Member
Messages
2
Hi Brendan,

Trying to decide between 5 or 10 year fixed rate. Most likely too late to switch now.

1) Existing tracker margin. (This is set in your mortgage contract.)
ECB +2.25
3) Amount outstanding on your mortgage
107000
4) Remaining term
20 years
5) Lender
BOI
6) Value of your home
240000
7) Might you trade up or overpay your mortgage?
Overpaying on current tracker
8) Do you face any barriers to switching?
No
9) What rates are you considering fixing at?
Deciding between the 2 BOI offered rates below
10 year 3.3
5 year 3

10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.
No
 

Brendan Burgess

Founder
Messages
47,801
4) Remaining term
20 years

@NJ1000

With 20 years left I would take the pain now and get out from under BoI's predatory lending rates and discrimination against existing customers. If you don't you will face the same problem when your fixed rate ends.

Switch to AIB or Avant. It's quite possible that they will raise their rates before you effect the switch, but it might not be much more than the 3% BoI is charging. But it's hard to know.

Brendan
 

NJ1000

New Member
Messages
2
Thanks Brendan,

I'm currently overpaying 200 euro each month. BOI will allow the overpayment to remain with the fixed rate.
All going well I can continue the overpayment and If not i can return to standard repayment amount.
With Overpayment:
After 5 years at 3% my remaining balance will be roughly 72000

Is this a good position to be in when looking for a new rate in 5 years? Obviously depending on rates at that time.
Or as you say try and switch to AIB or Avant now.
 

Brendan Burgess

Founder
Messages
47,801
@NJ1000

With a balance of €72k, the saving from switching might not justify the cost and hassle of switching. And some lenders will not be interested in small mortgages with short remaining terms.
So you will be a prisoner of BoI's special rates for existing customers.

You can fix with AIB now for 2.35% and this would be ideal. However, by the time you are ready to draw down, this rate and the BoI rate may have risen. That is why I strongly recommend to people to avoid predatory lenders like Bank of Ireland and ptsb.

If you were an AIB customer, your decision would be to fix or not at today's rates. As a BoI customer, it's a much more uncertain and complex decision.

Brendan
 

Maus83

New Member
Messages
3
Existing tracker margin. ECB + 1.15%
2) If you have an additional mortgage on the same property, what is the rate? No additional
3) Amount outstanding on your mortgage Approx 190k
4) Remaining term 20 years
5) Lender BOI
6) Value of your home Estimate 325K
7) Might you trade up or overpay your mortgage? Yes considering trade up within next 5 years. Had only being over pay by 100 (to round up) as rates were so low up to now and thought I might have availed of a tracker switcher product. I had initially thought I'd move sooner.
8) Do you face any barriers to switching? Moved jobs during the summer so not finished probation period
9) What rates are you considering fixing at? Perhaps 3% 5 yr Unsure if I'd be able to avail of the lower fixed rates shortly ?
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. Houses sold in estate recently seem to be C3

I'm not sure if I should hold on to the tracker for now if I am likely to move home within the next 5 years ? Up to now I haven't actively overpaid the mortgage as I felt it was cheap money and I was better paying for car etc from savings. I had also been saving towards a trade up ( 50k saved) so not sure if I should now pay some of this against the tracker? My initial thoughts was to hold it as cash and avail of a tracker switcher product which won't make sense now.
 

Brendan Burgess

Founder
Messages
47,801
If you are planning to trade up, it's probably best to avoid a fixed rate.
Bank of Ireland's fixed rates are high, so fixing is not likely to save you much money.

Let's say you fixed at 2.9%. That would mean an ECB rate of 1.75% which we are probably going to hit soon enough.

Switching is not a good idea either as you might not recover the costs in the time until you move.

There isn't much in it either way but probably retain flexibility by staying on the tracker rate.

When you trade up, make sure to move to a fairer lender.

Brendan
 

Maus83

New Member
Messages
3
If you are planning to trade up, it's probably best to avoid a fixed rate.
Bank of Ireland's fixed rates are high, so fixing is not likely to save you much money.

Let's say you fixed at 2.9%. That would mean an ECB rate of 1.75% which we are probably going to hit soon enough.

Switching is not a good idea either as you might not recover the costs in the time until you move.

There isn't much in it either way but probably retain flexibility by staying on the tracker rate.

When you trade up, make sure to move to a fairer lender.

Brendan
Thanks Brendan that's helpful, considering inflation is it better to pay some of the savings off the mortgage currently ?
 
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