Tracker mortgages

M

MrsJ

Guest
Hi there,

We're just in the process of buying our first house, and I'm trying to get the best deal from Bank of Ireland on the mortgage.

The thing is, they are offering a much reduced rate for the first year, but it then rolls to the standard variable rate. If we want to opt for the 125 tracker we won't get quite the same low rate for the first year, and if we want to go with the 110 tracker we have to go with the full rate from day one.

So, should we go ahead and sign the offer letter for the much reduced rate, and then change from the standard variable rate to a tracker rate towards the end of the first year? Is it probable that banks in general, and Bank of Ireland in particular, will be offering the same type of tracker rates a year from now?

All advice appreciated!
 
Don't be mislead by one year introductory discount offers especially if they involve higher than normal rates from year two onwards. Choose the rate that will offer the best long term value - from day one all things being equal. If in doubt crunch the numbers (e.g. with Karl Jeacle's mortgage calculator) to see which works out best. Also make sure that you are dealing with the most competitive lender in the first place. See .
 
Trackers, viewed dispassionately and crudely work thus.

Base rate today = 2.5% so whats the diff ?

Great Tracker 0.8% to 1.0 over base (typically 60% mortgage )
Good Tracker 1.0 to 1.2 over base (typically 80 or 90% mortgage)
Not Good Tracker 1.2% or higher over base ....thats where variable tends to be in the past few years.

This differential is called the "spread" .

A 3.7% tracker (1.2% over base) is not great because the bank may not always pass base rate rises on the rate upswing like we are in now but MUST if its a tracker. The variable may well be less than a tracker rate for much of the next few years . The cuts in base rates are passed on quicker of course on the downswing

A 1.1% tracker rate on a 90%-100% mortgage looks good to me to be honest .

Many people take a discount variable in year one and then hustle a tracker afterwards , you simply ring BoI and threaten to leave and p00f = tracker not variable. It costs nothing bar a phone call and does not require a remortgage .

Trackers, while only about 3 or 4 years old in Ireland, are here to stay .
 
Thanks for the help.

I think the 1.1% tracker is my best option - but is it likely that this will still be an option in a year, and that I could simply switch from the standard variable rate to this tracker then? That way I could have the lower rate for the first year, and still get a good deal on the tracker.
 
It really all depends on your LTV (Loan to Value) ratio, and the amount you wish to borrow.

But generally, I would agree with Clubman regarding introductory rates, be they 1 year or 2 year. The APR usually gives the game away.

For example, with BoI, their 1-year introductory rate is

1 Year Discount Tracker ECB + 0.85%, rolling to ECB + 1.25% 3.35% 3.8% (APR)

Much better to look at other Banks, as outlined in the link CM provides to key posts.

Finally, look at what is available fom National Irish Bank, outlined in this post from another similar thread.
 
2Pack said:
Great Tracker 0.8% to 1.0 over base (typically 60% mortgage )
Good Tracker 1.0 to 1.2 over base (typically 80 or 90% mortgage)
Not Good Tracker 1.2% or higher over base ....thats where variable tends to be in the past few years.
Click to expand...

So NIB's <60% at 3.29% 3.30% (APR) +0.79 over ECB is a great great tracker :D
 
Tis a mighty tracker if you own 40% of the house by value (not the bank) and if your income is about 1/4 of the mortgage you want. No 5x or 6x the main income for NIB :D
 
Hi there, I have been offered a tracker mortgage on a [selfbuild ]at 3.29 or intrest only 3.59 and bridging at 3.99 until house is finished. Intrest only will free extra cash and discount rate for mortgage life of .4 percent
Advice appreciated
 
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