Should I take on extra debt on top of losing my tracker rate?

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netopia

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I divorced in 2021 and was awarded the family house along with the 2 mortgages, both beautiful trackers with BOI. One will thankfully be finished in 3 more payments and the other has about €97K remaining and 12 years left. As I am now the sole owner I will need to get my own mortgage. I am thinking of building a very modest extension / sunroom which I have been quoted €46.5K for. I think one way or the other I am going to get screwed moneywise.

I reconciled myself to the fact that my tracker rate will be gone and if I borrow the extra to fund the extension that I will also need to add 3 years (on top of the money) to my mortgage. Looking online and before and rate rises in earnest I am likely to be paying at least €950 a month (as opposed to €705+€340 on the current 2 mortgage payments).

Which financial institutions will even lend to build an extension? Am I stuck with the dearer end of the mortgage market? e.g. BOI & AIB? If that's the case the monthly payment will probably go over €1,000 and I really don't think its worth adding on the extra expense of the extension on top of every other rising price at the moment. I'd be better off borrow to repay the existing mortgage and perhaps reduce the term to 10 years.
 
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Why would you lose your tracker rate?

A "Top-up" mortgage is not really a "top-up", it's a new and separate loan. For convenience banks add the two payments together and tend to create the same ending date, but it's a separate stand-alone loan.

What you are looking for is a house improvement loan on the 46k as they won't give a mortgage for that

Avant do a 5.9% home improvement loan rate which seems to be the best on the market. €490/month over 10 years
 
I will lose my tracker as I now have to take the mortgage into my own name.

Thanks for your response but if I was concerned at adding another €250 to my monthly payment its a definite no to paying almost double that.
 
You are mixing up two separate issues here.

1) You need to get the mortgage into your own name. Let's assume, for the moment, that you lose your tracker.

You will have a mortgage of €97k @ 3% instead of 1%. So it's a difference of about €2,000 in the first year, and reducing after that as you repay the capital. Not good, but not the end of the world either.

2) Are you sure that you will lose the tracker? Have you asked BoI? If you can afford it on your own, they may allow you to keep the tracker.

3) If they refuse to allow you to keep the tracker, would your ex-wife allow her name to stay on the mortgage? Then BoI doesn't need to know. You just keep paying the mortgage.

4) Sort all that out first and then worry about the extension. If it's not urgent, then postpone it until you see how you are getting on with the higher mortgage repayments.

5) If your ex does agree to allow her name to stay on the mortgage, presumably she will object to having her name on an increase in the mortgage.
 
This thread suggest that if you get talking to the right person in BOI, you can keep the tracker. Its a few years old, but worth investigating

and this thread shows another option with a legal agreement between both parties but may be subject to the ex being in agreement
 
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