Is LTV the same as SVR?

A

AlastairSC

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Advice appreciated from the wiser heads here:

We're on 4.2% SVR with KBC (I know, I know). Repayments €945, currently overpaying at €1400 p.m. Mortgage outstanding €113k, valuation €255k so 45% LTV. Asked about lowering our rate and they said no problem, offering 3.2% or 3% if I switched current account.

They call this an LTV mortgage. Will I be stuck with this rate once I'm on it and rates are lowered elsewhere? I see a clause that seems to say this. Isn't it the same as variable?

Should I try for AIBs 2.75% rate? This means switching banks. Joint mortgage; ages 55 and 56; currently 13 years to run though paying it down fast; public service and self-employed.

Thanks in advance.
 
LTV = loan to value.
50k loan on 100k house is 50% loan to value.
90k loan on 100k house is 90% loan to value.
SVR = standard variable rate i.e. the interest rate on the loan.

When you have a lower LTV you're a safer proposition for the bank (more skin in the game) and thus you'll get a lower SVR rate.
 
LTV is a variable rate, so if bank reduces it, you will benefit.

Switching is straight forward in your case except AIB don't like extending beyond 65. This is changing with other lenders, and AIB might consider on a case by case basis, but you'd need to check with them. Otherwise you'd need to commit to a shorter term.

They pay 2k towards legal fees for switching (expect legal fees around 1100).
 
RedOnion said:
LTV is a variable rate, so if bank reduces it, you will benefit.
Click to expand...

With KBC, only if you apply for it.

Alastair is on 4.2% whereas new customers are paying 3.2%.

AIB, by contrast, passes on the rate cuts automatically to existing customers.

However, AIB does not allow you to drop to a lower LTV band, if you reduce your LTV.

If Alastair took out an SVR mortgage with AIB he would be on their 3.15% SVR rate from 1 November, automatically. SVR customers can switch to LTV so he could get the 2.75% rate.

With €113k outstanding, 2% is just €2,000 while AIB pays €2k to switchers.

So yes, switching to AIB is likely to be in your best long term interest.

Brendan
 
Thanks for those helpful replies.

Clause 33: "You are only entitled to the New Business PDH LTV rates available at the date on which the new interest rate is applied to your mortgage account. Once this interest rate has been applied to your mortgage account no variations in the New Business PDH LTV rates that we may introduce thereafter will be applicable to your mortgage account. You may however re-apply for the Option at any time"

(my underline) Am I new business? This is from the form they gave me to switch rates. I don't understand it.
 
Ah, sorry I thought KBC were changing their policy.

SVR is not available to new customers in AIB.
 
SVR customers can switch to LTV - Brendan
SVR is not available to new customers in AIB. - RedOnion

Both posters seem to draw a distinction between SVR and LTV which was my first question. What is the difference?



AIB does not allow you to drop to a lower LTV band, if you reduce your LTV. - Brendan
Wouldn't we be starting on the <50% band if we switched to them after 1 November?
 
AlastairSC said:
SVR customers can switch to LTV - Brendan
SVR is not available to new customers in AIB. - RedOnion

Both posters seem to draw a distinction between SVR and LTV which was my first question. What is the difference?



AIB does not allow you to drop to a lower LTV band, if you reduce your LTV. - Brendan
Wouldn't we be starting on the <50% band if we switched to them after 1 November?
Click to expand...

This:
SVR customers can switch to LTV - Brendan

Should be this:
SVR customers can switch to lower SVR if their LTV decreases.
 
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