Key Post Should borrowers with trackers consider fixing? (General guidelines)

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Savvy said:
Keep Tracker(Average Payment)
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This is where you are going wrong.

You must look at the interest rate and the interest charge and not the interest payment.

Don't take this thread off topic with yet another discussion of this issue.

It is explained here, where you are welcome to discuss the matter further.

Key Post - How to evaluate if it's worth switching or breaking out of a fixed rate

Almost every post on this topic is wrong. No matter how often it is pointed out, people look at the wrong figures. They use mortgage calculators when they don't need them. Most of the time, you can do the figures in your head. Do not look at the monthly repayments - they are misleading Do...
www.askaboutmoney.com

Alternatively, redo your calculations using the interest charged.

Brendan
 
Hi Brendan,
Would very much appreciate your advice. Please bear in mind I’m pretty clueless about this..
1) Existing tracker margin - tracker 1.05%
2) Amount outstanding on your mortgage - 117,000
3) Remaining term - 12years
4) Lender - Ulster Bank
5) Value of your home - 340,000
6) Might you trade up or overpay your mortgage? - we might overpay in the future
No barrier to switch
8) What rates are you considering fixing at? - I don't know? I'm looking for a better value.

Thanks in advance
 
Hi

Let's say you fix with Ulster Bank for 5 years at 2.35%

After that, you would be subject to Permanent TSB's very high rates. And you will have lost your right to a tracker.

Your mortgage balance will be down to €72k , so it won't really pay you to switch to another lender for the last 7 years.

You could switch to Avant for 7 years at 2.25%

You will get the lower rate for a bit longer.
And, if current policies continue as they are at the moment, Avant should be cheaper than ptsb.

It's a close call. I think you should start the process of switching to Avant. It will take a few months and when you are ready to sign on the dotted line, make a decision then based on where rates are.

Brendan
 
Brendan Burgess said:
Hi

Let's say you fix with Ulster Bank for 5 years at 2.35%

After that, you would be subject to Permanent TSB's very high rates. And you will have lost your right to a tracker.

Your mortgage balance will be down to €72k , so it won't really pay you to switch to another lender for the last 7 years.

You could switch to Avant for 7 years at 2.25%

You will get the lower rate for a bit longer.
And, if current policies continue as they are at the moment, Avant should be cheaper than ptsb.

It's a close call. I think you should start the process of switching to Avant. It will take a few months and when you are ready to sign on the dotted line, make a decision then based on where rates are.

Brendan
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Thank you. Much appreciated
 
Hi Brendan, I would really appreciate your advice on this as well as I am clueless.
1) Existing tracker margin - 1.55
2) Amount outstanding on your mortgage - 147,000
3) Remaining term - 15 years
4) Lender- AIB
5) Value of your home 350000
6) Might you trade up or overpay your mortgage?. No
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? Not sure but would like to stay with AIB to avoid hassle of switching. I think the fixed rate is 3.1 for 10 years.


Thanks a million for all your help.
 
Hi

I’m clueless with these things…
1. Current tracker rate - ECB + 1.1%
2. Amount outstanding - approx €165k
3. Remaining term - 11 years
4. Lender - BOI
5. Value of home - approx €900K
6. Might be in a position to overpay
7. No barriers to switching (except dependents and reduced salary for one person but increased for the other to balance)
8. No idea of best options - just panicked by the idea of interest rate hikes.

Thanks
 
Lily52 said:
1) Existing tracker margin - 1.55
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Lily52 said:
3) Remaining term - 15 years
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Here are the options from AIB as you don't want to switch.

1654802538951.png
It's a tough call.

You don't have a very cheap tracker so you should certainly consider fixing.

10 years at 3.1% seems very high - Avant 10 years is 2.4% . That is a difference of 0.7% or about €1,000 a year.

The 5 years fixed seems like better value. You will pay €1,000 less interest a year for the first 5 years. Of course, rates for the next 5 years could be higher. But they could also be lower.

As I say, it's a tough call. If you don't want to switch to Avant, fix for 5 years at 2.35%.

Pay the €5,000 "saved" off your mortgage.

Brendan
 
Loopylou said:
1. Current tracker rate - ECB + 1.1%
2. Amount outstanding - approx €165k
3. Remaining term - 11 years
4. Lender - BOI
Click to expand...

Bank of Ireland rates for existing customers are very high. Fixing for ten years would be 3.3%. Switching to Avant would be 2.4% .

So either switch to Avant or hold onto your tracker.

With 11 years left, you are paying down the capital quickly - about €14,000 a year.

So interest rates later in the period won't impact you as much.

So start the process of switching to Avant. It will take a few months. When you have to make a decision, make it based on the latest information.

It might well be that you just stick with your tracker and overpay it if you can.

Brendan
 
Brendan Burgess said:
Here are the options from AIB as you don't want to switch.

View attachment 6309
It's a tough call.

You don't have a very cheap tracker so you should certainly consider fixing.

10 years at 3.1% seems very high - Avant 10 years is 2.4% . That is a difference of 0.7% or about €1,000 a year.

The 5 years fixed seems like better value. You will pay €1,000 less interest a year for the first 5 years. Of course, rates for the next 5 years could be higher. But they could also be lower.

As I say, it's a tough call. If you don't want to switch to Avant, fix for 5 years at 2.35%.

Pay the €5,000 "saved" off your mortgage.

Brendan
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Hi Brendan, thanks so much for the advice. Really appreciate you taking the time to reply, Lily
 
Brendan Burgess said:
Folks

To make it easier for people facing this decision, I have summarised the issues in one or two posts.

I have tidied up the thread by deleting most of the other posts, which are included in the summary.

Are there other factors to be considered?
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Hi Brendan,
We are on a 3.25%tracker with ptsb, have 14yrs left and 140000 left. We have been offered a 7year fix at 3%. Considering switching to this, any thoughts
 
Hi Brendan,

I appreciate your help on this topic.

1) Existing tracker margin: 1.25%
2) Amount outstanding on your mortgage: €208,000
3) Remaining term: 15 years
4) Lender: PTSB
5) Value of your home: €360,000
6) Might you trade up or overpay your mortgage? Unlikely but maybe overpay
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? I would like to fix around 3% or less for as long as possible.
thanks for your help!
regards
 
Michael S said:
3.25%tracker with ptsb,
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ptsb has terrible rates for existing customers and can only attract new customers by fooling them with cash back.

You should switch to another lender.

If you don't want to switch the best of the options is 7 years at 3% . That is better than their variable rate.

Brendan
 
Hello,

Very appreciative of any help someone can offer - want to make the right decision!

MortgageRate
€145,191.001.75 Tracker
€184,924.002.15
€50,364.002.15
€380,479.00

Above is a breakdown of our Mortgage with AIB. A portion on the 1.75 tracker and the remaining 2 amounts 1 year into a 5 year fixed "green rate"

We have 22 years left on our mortgage and the current value is approx €530.
We would like the option to overpay in the future.
Any guidance on whether to fix the tracker portion appreciated.

Thanks
 
Hi Laura

The tracker rate is not good. It will go up to 2% next month when the ECB implements yesterday's announcement.

The 2.1% rate is comparatively good. So I would just give up the tracker and switch to the Green rate.

Brendan
 
Thanks Brendan, that's what i was leaning towards. Am nervous of where we will be at the end of our fixed period then...any advice on that?
 
Hi Brendan
I'd really appreciate your advice on this.

1)Tracker of ECB +1.15%
2) €196,000
3) 15 years
4) Ulster Bank
5) €309,000
6) Don't intend to trade up. If we were able to overpay it would be well within the 10% allowed with the fixed rate mortgage
7) Yes. Reduced income since we took out the mortgage. Since the recession, we've had quite a few years where we could only pay interest only and eventually got back to paying the full amount. Paying the full amount since 2018 and we've also paid some small lump sums.
8) Considering 10 year fixed with Ulster Bank as I don't think we'd be able to switch. Due to having a reduced income since we applied for the mortgage, we'd be afraid the ECB would go up too much if we stayed with the tracker. I'm also thinking that with the ECB rate going up, fixed rates below 3% won't be available for much longer.
Thanks very much
 
So you have a 64% LTV

The realistic options are
Fix for 7 years or 10 years at 2.95%

You have to exclude shorter fixed rate periods, as by then you will be a captive customer of permanent tsb who has much higher rates for existing customers than new customers. And from time to time, they don't offer fixed rates to existing customers.

Correction: ptsb is not taking over Ulster Bank's trackers. AIB is.

loulou123 said:
1)Tracker of ECB +1.15%
2) €196,000
3) 15 years
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Normally, I would say switch to another lender, but you can't.
Then, I would say, stick with the tracker at 1.15% margin, but

As your repayment capacity is tight, the fixed rate will give you peace of mind.


€196k @2.15% - the minimum increase we are expecting will give you repayments of about €1,300 per month

Fixing at 2.95% will increase it to €1,350, so maybe it's worth paying the extra for the insurance.

I think you should fix for 10 years.

At the end of 10 years, your mortgage will be down to €75k so even if rates are higher, it won't hurt you too much.

Brendan
 
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Brendan Burgess said:
So you have a 64% LTV

The realistic options are
Fix for 7 years or 10 years at 2.95%

You have to exclude shorter fixed rate periods, as by then you will be a captive customer of permanent tsb who has much higher rates for existing customers than new customers. And from time to time, they don't offer fixed rates to existing customers.



Normally, I would say switch to another lender, but you can't.
Then, I would say, stick with the tracker at 1.15% margin, but

As your repayment capacity is tight, the fixed rate will give you peace of mind.


€196k @2.15% - the minimum increase we are expecting will give you repayments of about €1,300 per month

Fixing at 2.95% will increase it to €1,350, so maybe it's worth paying the extra for the insurance.

I think you should fix for 10 years.

At the end of 10 years, your mortgage will be down to €75k so even if rates are higher, it won't hurt you too much.

Brendan
Click to expand...
Thanks very much Brendan
I do think the 10 year fixed is the only option to go with as we could manage that amount but if the ECB rate went much higher we would really struggle to pay. I'm sure AIB will take over Ulster Bank's tracker mortgages and not Permanent TSB but their current rates are also higher than Ulster Bank. Nobody knows how high they'll be in 4-5 years so we definitely need to avoid the shorter term fixed rates. The last thing we need is the constant worry every time we hear the ECB are increasing so we'll go with the 10 year fixed.

Thanks again for all your great advice.
 
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