Our Mortgage STILL with Ulster Bank - Will it be sold to Vulture (not a split mortgage) - what rate to fix at now?

[WandaVision]

We missed a couple of payments in 2021 and so our mortgage was caragorized as "non performing" when UB sold most of their mortgage book to AIB and PTSB. We were not included in that sale and UB is not telling us where our mortgage is going.

The small arrears of 5k have been recapitalized and we've been meeting Our repayments (overpaying a little) for 12 months. I'm self employed, my husband is PAYE. Our LTV is about 91%, with 295k left to pay over 19 years.

Out fixed rate of 2.6% expires in June. I want to refix now with UB before rates go up again. We've been offered a 4 year at 3.9% or a 7 year at 4.3%. Unfortunately switching before we are sold is not an option as we have those missed payments (covid fallout) in 2021.

What would you do? What rate/term would you fix at? Any guesses as to what will happen to our mortgage,... Probably the only scenario is that oys sold to a vilture.

 

[Paul F]

@WandaVision Because it seems possible that your mortgage will be sold to a vulture fund, you should definitely re-fix. Do so ASAP. Even if your mortgage is sold to a vulture fund, you will at least have 4 or 7 years with the security of a fixed rate.

As for whether to fix for 4 or 7 years, here is how the repayments would look (approximately):

• €1,834 per month (4-year fixed at 3.9%)
• €1,896 per month (7-year fixed at 4.3%)

That extra €62 per month buys you an extra 3 years' "insurance" on a fixed rate. But your remaining balance will be about €1,500 higher after 4 years if you go for the 7-year rate (versus if you had gone for the 4-year fixed rate).

It is very difficult to say what fixed rates will be available from other lenders in 4 to 7 years' time, but at least 4% for a 5-year fixed rate seems plausible.

It should be possible for you to switch away from the vulture fund/the lender who is about to take over your mortgage in about 4 years (once 5 years have passed since the last item noted on your credit record) – but there are no guarantees, which might make the 7-year fix more appealing.

If you fix now for 7 years you might face a break fee if you try to switch after 4 years (or you might not, or it might be low). But even if the break fee is high in 4 years, you could wait and instead switch in about 6 years, at which point it will probably be a lot lower.

If the extra €62 per month feels worth it to you an extra 3 years' "insurance" on a fixed rate, fix for 7 years. But whatever you do, re-fix for either 4 or 7 years ASAP.