Ulster Bank tracker offer and moving costs

[pippa175]

Hi,

We have a tracker mortgage since 2008 at ECB + 0.75%. We would like to move but Ulster Bank have withdrawn their original offer to move with the tracker and now offering 5 year tracker (+1% I think) then move to standard variable.

We are currently living in city centre and family houses like ours here are selling well. Moving further out of the city. While I realise that trackers are very valuable, I am wondering at what point would it be worth selling up given high prices of houses in the city right now?

I understand (vaguely) that you pay mostly interest in the early part of the mortgage then increasing more off the capital. Is this true? I recall seeing a online calculator with good visuals/graphics/plots of the interest and capital paid over the years but can't find it now. Does anyone know of where we can calculate and view such information?

I realise it will cost us to move and there is no way of knowing how interest rates will go but I would like to estimate upper and lower bounds if at all possible.

Thanks

 

[Brendan Burgess]

Hi Pippa

I wrote this piece last week to help people to approach this decision in a systematic way.

Cheap tracker - trade up now or wait?

I would be very interested in getting your feedback on the thread.

Does it clarify the issue for you?
Does it explain it clearly?
Do you have other questions not answered by the thread.

Brendan

 

[pippa175]

Hi Brendan,

Great thread, thanks. This helps in a general way regarding the pros and cons of waiting. Regarding our situation from your advice we should probably wait to see if Ulster Bank improve their offer.

>The longer you keep the tracker, the lower the interest on your mortgage. Because the interest is so low, you are paying huge chunks off the principal and thus reducing the negative equity.


Is this because you pay more interest than capital earlier in the life of a mortgage and towards the end it is mostly capital? If this is true then at some point interest rates become less important. I would like to understand more about the distribution of interest vs capital payments throughout the life of the mortgage to figure out where the tipping point is regarding importance of interest rates. Is there an relatively straightforward way to calculate this or better still visualise the distribution of payments over the lifetime (a lot to ask!).

Thanks