Will BOI know (or care) that my other property is now being rented out?

[SunnyOct8]

Hi @SunnyOct8,

Normally I would say that I don't really see why you would go for AIB's 10-year rate (3.1%) when you could fix with KBC for 10 years at 2.85%.

But it is currently taking KBC a long time to process these 'fix' requests, and they might increase their interest rates before they process yours – see this thread. Then again, AIB will probably increase their rates before you complete any switch to them. (Switching to AIB seems to take about 3 months.)


Note that KBC's 10-year fixed rate is currently 2.85%, not 3.1%.


All we can say is that if you fix with KBC and if wholesale interest rates decrease by X%, the break fee will be €Y. (If wholesale interest rates increase by any amount, the break fee will be zero.)

Unfortunately, fixing for a long period, e.g., 10 years, magnifies the effect of any decrease in wholesale interest rates, which can lead to very large break fees (thousands).

You might think of fixing for a shorter term, e.g., 5 years, with KBC in order to reduce the size of any potential break fee, but that isn't a great idea because you will be at the mercy of BOI's rates after that.

You should contact KBC and see if they will give you an estimate of how long it takes to fix with them. Overall, though, given that you are on a variable rate that will probably increase soon anyway, fixing with KBC might be the best idea.

At the same time, you can start the switch to AIB but abandon it if they increase their rates too much or if it looks like their will be a large break fee to leave KBC. Just be aware that you might be liable for solicitors' fees if you abandon the switch after having engaged the services of a solicitor.

Finally, if you think that there is a reasonable chance that you will move home in the next few years, you probably should not fix for 10 years (with any lender).

@Paul F

Thanks for getting back to me on this all those weeks ago. We got sidetracked by family illness (minor thankfully - but enough to distract!) and haven't got any forms together for switching to AIB and their rates have gone up since.

So we are thinking of going with KBC 10 year fixed - feedback from them is that it's pretty quick once forms go in.


So my question is - I have a house that I bought before I met my husband which we now rent out. The mortgage for that property was with ICS originally - and is now with BOI - on a tracker. I have a concern that if our KBC mortgage automatically transfers to them - and they find that I have 2 mortgages with them - could they question the rental property being on a tracker and backdate re-payments?

Let me know if this query should be on a different forum Thanks

 

[NoRegretsCoyote]

The mortgage for that property was with ICS originally - and is now with BOI - on a tracker.

Does the contract say that the tracker rate is only valid for a PPR? Some contracts say this, some don't.

I have a concern that if our KBC mortgage automatically transfers to them - and they find that I have 2 mortgages with them - could they question the rental property being on a tracker and backdate re-payments?

It's hard to say but I suspect that the full integration of their information systems will take a long time, if it happens at all. You would also need someone to run code on both databases to look for potential cases and these kind of matching techniques are difficult because address and name data is often not identical. Even if they found matches there would be false positives which require a lot of manual work to reject. There may also be legal issues with this. Also reputational - they don't want to end up on Liveline having sent letters to people accusing them of not living in their PPR.

So while I wouldn't rule it out I doubt that this would happen at all quickly.

 

[noproblem]

So my question is - I have a house that I bought before I met my husband which we now rent out. The mortgage for that property was with ICS originally - and is now with BOI - on a tracker. I have a concern that if our KBC mortgage automatically transfers to them - and they find that I have 2 mortgages with them - could they question the rental property being on a tracker and backdate re-payments?

The straight answer I would imagine is, Yes they could, but half the country is doing it and nothing has happened to them as far as I know. Worse situation that could happen is revenue not being told. That's a different ball game entirely if they go trawling back.

 

[SunnyOct8]

Thanks for your replies - Revenue is totally up to date and all tax paid on rental income so no issues there

 

[lff12]

The straight answer I would imagine is, Yes they could, but half the country is doing it and nothing has happened to them as far as I know. Worse situation that could happen is revenue not being told. That's a different ball game entirely if they go trawling back.

Would imagine so - its a contractual agreement but only reason I can see why this would be the case (that rates for BTL are higher than PPR) is because BTLs are seen as higher risk (when I worked at one bank circa 2014-2015 & had some interaction with the Arrears teams at work it seemed that around 50% if not more were BTL mortgages on their radar). Which in ways is surprising as its easier to repossess a non PPR than it is the "family home" (as if BTLs were not someone else's "family home").

 

[NoRegretsCoyote]

Which in ways is surprising as its easier to repossess a non PPR than it is the "family home" (as if BTLs were not someone else's "family home").

The issue is that when income is tight people will divert rental payments to service PPR mortgage and default on the BTL.