The Irish Nationwide probably the best mortgage for many people

Update 25th May 2006. Although the Irish Nationwide could legally give windfalls to anyone who takes out a mortgage with them this year, they would be allowed to limit it to people who had mortgages for two years, so I am withdrawing this advice to switch loans to the Irish Nationwide. However, if the deal is good, it is worth taking out a new mortgage with them, more in the hope that you will get a windfall,rather than the expectation.

Brendan


A friend of mine is borrowing around €250k to buy his first house.

He used three different brokers, none of which suggested the Irish Nationwide. I told him to get a quote directly from the Irish Nationwide.

He got the best available multiple of his salary.
He got a 3.19% rate fixed for one year.
He got a 40 year loan

If the Irish Nationwide demutualises after 31 December this year, he will get a windfall - probably around €12k. Update 24 May 2006. The Ombudsman has ruled that some penalties charged by the Irish Nationwide were invalid and unlawful. This could set a precedent that other penalties they charge are unlawful. If the Financial Regulator orders them to refund people going back 20 years, the windfall could be a lot less than €12k. It could also take a few years to sort out the mess before the Society is ready to be sold.

The meeting of members to approve the resolution must be held before the 31 December 2006 for a borrower to lose out.
To achieve this the following must happen:
The government must publish the new Building Societies Bill - Say April 2006
The Dáil must pass the legislation - Say June 2006
The Society must design a conversion scheme - Say August 2006
The Society must give up to 6 months notice to IFSRA - Say December 2006
The Society must announce the scheme
The Society must give at least 21 days notice to the members of the meeting to approve the scheme
The meeting must take place before the 31 December 2006

It's just impossible to see all of this happening before 31 December 2006.

Note that for savers, they must have held their accounts for two years prior to the announcement of the scheme.


This seems like a no-brainer to me. What is the worst that can happen?
1) The Irish Nationwide demutualises before 31 December and he gets no windfall
2) The demutualisation takes place after 31 December but mortgage holders get less than €12k
3) The legislation changes the rights of borrowers.

So what, he can switch free of charge after one year to Ulster Bank, The EBS, IIB or NIB.

When he went back to the brokers, one said that they would have nothing to do with the Irish Nationwide because of its reputation. The other two told him, mistakenly, that he would have had to have the mortgage for at least two years to qualify.

Brendan

Re: The Irish Nationwide must be the best mortgage for many people

If the brokers had no dealings with INBS then they were never going to recommend them, right?

I'm not sure that I see a 40 year loan as an advantage to be honest.

Isn't INBS's past performance in terms of how they have dealt with certain customers very relevant? The worst that can happen is that they charge him more than the say they will up front.

What is their standard variable/tracker rate which, if/when inertia kicks in, he will be paying from year two onwards?

Re: The Irish Nationwide must be the best mortgage for many people

If the brokers had no dealings with INBS then they were never going to recommend them, right?

Click to expand...

Correct. But it's one huge drawback of dealing with brokers. If they don't have an agency or if they are misinformed, they won't point you to the best deal.

I'm not sure that I see a 40 year loan as an advantage to be honest.

Click to expand...

I see it as a huge advantage for a first time buyer. He can allow his financial affairs settle down for a few years and then increase his repayments as he sees fit.

Isn't INBS's past performance in terms of how they have dealt with certain customers very relevant? The worst that can happen is that they charge him more than the say they will up front.

Click to expand...

They aren't able to get away with this anymore. The rate quoted is 3.19%. If they charge more and the INBS don't fix it, then the Ombudsman will fix it.

What is their standard variable/tracker rate which, if/when inertia kicks in, he will be paying from year two onwards?

Click to expand...

They are now quoting a Standard Variable Rate which is not the best in the market, but it's not the dearest either. They did have a practice of not passing on interest rate cuts, but they will not be able to do this anymore.

Re: The Irish Nationwide must be the best mortgage for many people

Brendan said:

I see it as a huge advantage for a first time buyer. He can allow his financial affairs settle down for a few years and then increase his repayments as he sees fit.

Click to expand...

Something to bear on mind on this.

Re: The Irish Nationwide must be the best mortgage for many people

Brendan said:

A friend of mine is borrowing around €250k to buy his first house.

He used three different brokers, none of which suggested the Irish Nationwide. I told him to get a quote directly from the Irish Nationwide.

He got the best available multiple of his salary.
He got a 3.19% rate fixed for one year.
He got a 40 year loan

If the Irish Nationwide demutualises after 31 December this year, he will get a windfall - probably around €12k.

This seems like a no-brainer to me. What is the worst that can happen?
1) The Irish Nationwide demutualises before 31 December and he gets no windfall
2) The demutualisation takes place after 31 December but mortgage holders get less than €12k
3) The legislation changes the rights of borrowers.

Click to expand...

Was he an existing member of Irish Nationwide?

Re: The Irish Nationwide must be the best mortgage for many people

Quote:
Originally Posted by Brendan
A friend of mine is borrowing around €250k to buy his first house.

He used three different brokers, none of which suggested the Irish Nationwide. I told him to get a quote directly from the Irish Nationwide.

He got the best available multiple of his salary.
He got a 3.19% rate fixed for one year.
He got a 40 year loan

If the Irish Nationwide demutualises after 31 December this year, he will get a windfall - probably around €12k.

This seems like a no-brainer to me. What is the worst that can happen?
1) The Irish Nationwide demutualises before 31 December and he gets no windfall
2) The demutualisation takes place after 31 December but mortgage holders get less than €12k
3) The legislation changes the rights of borrowers.




Was he an existing member of Irish Nationwide?

Click to expand...

No he wasn't. Why do you ask?

By the way, there is no need to quote the entire post to ask a simple question.

Brendan

Re: The Irish Nationwide must be the best mortgage for many people

Brendan,
I'm not sure if he will qualify for the money
see this article - is mortgage considered a share account, and if so he may possibly have to have had the account for 2 years:
this is an article from 2004.
[broken link removed]

Re: The Irish Nationwide must be the best mortgage for many people

Question said:

Brendan,
I'm not sure if he will qualify for the money
see this article - is mortgage considered a share account, and if so he may possibly have to have had the account for 2 years:
this is an article from 2004.
[broken link removed]

Click to expand...

I'm dying to know if he qualifies for the money....please tell us!

Re: The Irish Nationwide must be the best mortgage for many people

With due respect, I am getting a little bit tired of people asking the same question again and again and quoting newspaper articles which are frankly wrong on the issue.

A share account is a share account and holders of these are members of the Society.
A borrowing member is a person who has a mortgage.
A borrower does not have to have a share account, so they are different.

Check out the FAQ for borrowers on Askaboutmoney which gives chapter and verse:



And if you still don't believe me, I can only suggest that you walk down to the Stationery Office and borrow the Building Societies Act.

Brendan

Re: The Irish Nationwide must be the best mortgage for many people

Hi

This seems well worth a punt, once there is no minimum qualification period for mortgage holders to benifit from a DM Windfall ( & from reading the above, there is, but its far shorter than the 2-years for savers so if I'm reading this correctly, it's almost a no brainer )

Cheers

Re: The Irish Nationwide must be the best mortgage for many people

Brendan said:

And if you still don't believe me, I can only suggest that you walk down to the Stationery Office and borrow the Building Societies Act.

Brendan

Click to expand...

Of course, if you live outside Dublin, or don't feel like the walk, said Act is available on-line [broken link removed]

Re: The Irish Nationwide must be the best mortgage for many people

Hi All,

I contacted Irish Nationwide to switch my mortgage and be in with a chance for a payout. They could not tell me what the rules were or if I would qualify. I checked out all of the above and it seems at face value it is worth a go. Unfortunately their rates for switching are appalling @ 4.23%. Since the legislation hasn't been passed yet is it worth hanging on till then or will they change the rules once its passed. Thanks

Re: The Irish Nationwide must be the best mortgage for many people

Does the Irish Nationwide still calculate interest annually? I seem to remember our broker telling us this. This is a real bummer when making extra repayments!

Re: The Irish Nationwide must be the best mortgage for many people

Hi all,

Just some info:

Based on advice I called into local INBS - met the manager. He told me that trackers not a great call as you need to borrow a minimum of 250k and have a LTV of less than 60%, meaning you are stumping up 166k yourself - not that viable for me as a FTB.

Secondly, I used the Karl Jeacle's mortgage calculator and in real terms it looks to me (very open to correction on this) that even if you did take an INBS variable mortgage, at current rate, the windfall from demutualisation would only barely result in the same savings as you would have from a NIB tracker at current rates and assuming that both institutions track interest rate rises in parallel which to my mind is a pretty reasonable assumption. Anyone got any ideas on this? If I'm wrong please point out to me(am neither economist or accountant)

This is very current with me as thinking about my first mortgage and need to move quickly - btw rate was no where near 3.19%, and my man is the manager..hmm maybe rates have been raised since first post in this thread??!!

Re: The Irish Nationwide must be the best mortgage for many people

Hi Orga

I think the ECB has risen at least once, since that rate was mentioned, so not at all suprissed to hear there is no mention if 3.19% (infact, if there was, there would be murder to try and get a homeloan with INBS )

If I'm reading the idea here correctly, it is that one might take their mortgage our with INBS now, on the gamle that they would qualify for their windfall when it demutualises and then .. consider the position based upon future rates.

From what I can gather, there seems to be some room to negotiate rates with various homeloan lenders these days, so perhaps it may be possible in the future to negotiate a reduction in the rate - although this comes with absolutely no guarantee.

Cheers

G>

Re: The Irish Nationwide must be the best mortgage for many people

I think what Brendan had in mind was a 1-year fixed rate, usually a teaser rate to get customers in, and clobber them thereafter. This would be a chance to reverse that

The only place i could find an INBS 1 year fixed was on Prima Finance, shown below. This was for 250K over 35 years. The rate looks reasonably good, IMO.

Just click on thumbnail to see full image.

[broken link removed]

Re: The Irish Nationwide must be the best mortgage for many people

Brendan,
With regards to switching mortgages to Irish Nationwide to avail of the windfall, would it be worth my while changing over, taking in mind the cost of legal fees etc. I'm a first-time buyer and next month, June 06, is my 3rd payment on my first mortgage. Would I qualify? And again would it be worth it after legal fees etc?

Re: The Irish Nationwide must be the best mortgage for many people

You have to do the maths - it's really that simple.

Brendan

Re: The Irish Nationwide must be the best mortgage for many people

Important update: Update 24 May 2006.

The Ombudsman has ruled that some penalties charged by the Irish Nationwide were invalid and unlawful. This could set a precedent that other penalties they charge are unlawful. If the Financial Regulator orders them to refund people going back 20 years, the windfall could be a lot less than €12k. It could also take a few years to sort out the mess before the Society is ready to be sold.

Re: The Irish Nationwide must be the best mortgage for many people

Should people who previously had a mortgage with INBS and were charged penalties do something about this or will INBS be contacting people in this regard?