Trading up with tracker mover - timing?

[pennywise]

Hi

We are looking at selling our apartment and buying a house next spring. Here are some details on our situation

Current property: tracker mortgage with PTSB, 22 y left, 190k left. Property currently worth circa 270 - 280k.
We have 100k to go towards a new property, fees included. Our higher limit is 350k. Plenty of properties selling at that price where we are looking
We have planned for the increase in rate, as the tracker will increase by 1%.

So finances are not the issue (well, I hope not!) but we need to start planning so that we have the timing right. Is now too early to start the process? We are not fixated on selling in the spring, but with 2 young children, it would be easier if everything could be done and the move completed by next summer holidays.

Thanks a lot

 

[Dave_Curry_IMC]

Your approval in principle will only last for 6 months, after which you would need to start the application process again. If you can maintain your finances in very good order for the coming months, I would recommend waiting to apply until much closer to the time that you are planning to put your apartment on the market and start looking for a new home, as it might take a few months to find a property.

PTSB have a comprehensive guide to moving your tracker: [broken link removed]

Best regards,
Dave Curry (broker)
https://www.linkedin.com/in/davecurryirl

 

[Brendan Burgess]

What rate are you paying on your tracker at present?

If, for example, you are paying 1.5%, you would be moving to a tracker of 2.5% and any balance would be at ptsb's very high rates.

Do the maths. Might the Ulster Bank rate on the full amount be less than the ptsb compound rate? It's unlikely, but check it out.

Brendan

 

[pennywise]

Thank you both for your answers. Our current rate is 1.1%.

Another question, still related to timing. I understand from reading various threads here that chain buying is notoriously difficult. We'll need to get sale agreed and contracts signed on our property before being in a position to bid on a house. My fear is to fall between the gap and not being in a position to buy before having to move out. With a child with special needs in a unit, we cannot afford this. Nor can we rent or move in with family. I wonder whether the 100k we will use as deposit and which are immediately available can increase our chances to start bidding earlier?

 

[Brendan Burgess]

We have 100k to go towards a new property, fees included. Our higher limit is 350k.

Are you planning to buy a house for €350k or €450k?

If you are buying a house for €350k, you will need a mortgage of €250k.

You might be able to get a lender to give you a mortgage without selling your own home first. Of course, you would lose your tracker, but as your priority seems to be continuity for your child, then you will have to live with that.

With Ulster Bank you can borrow for 4 years at 2.6%. Compared to 2.1% from ptsb if you move your tracker, that is a cost of 0.5% or €1,000 a year for the first 4 years.

With mortgage rates too high in Ireland, I am not sure that a tracker of ECB +2.1% is that valuable. If I could keep it, I would. But if I had to give it up, I wouldn't be that worried.

Brendan

 

[pennywise]

Are you planning to buy a house for €350k or €450k?

Only 350k, we are not too demanding and there is plenty of choice at that price. The thought of getting another mortgage for 250k crossed my mind, knowing that we would sell the apartment later on anyway. Thanks a lot for your advice, as indeed the loss of the tracker is not the end of the world, we can sustain an increase in repayments and the safety of the move is more important to us than the tracker.

Now to see if the bank will lend us that much, we'll have to try, I guess.

 

[RedOnion]

Another question, still related to timing. I understand from reading various threads here that chain buying is notoriously difficult.

It can be difficult, but it depends on how bouyant the market is in your area.
I'm currently between properties, but it was planned as we knew it's be too difficult to close a sale and purchase the same day, and coincide with school changes. However, although a gap was planned, it's turned out to be longer as our first purchase fell through.

Of the people I've spoken to that moved, the most ideal scenario I have seen is a family who sold their apartment to a cash buyer investor who was happy to rent to them on a short term basis after they closed to allow them time to close their purchase and move. However, the majority of people have ended up moving in with family for a short time.

Once your own place is for sale, you can start bidding. However, if a seller has to accept an offer, they are more likely to go for a bidder without a chain unless you've an unconditional signed contract.

Even in the very best scenario, buying and selling will be stressful, so I'd be taking the time now to reduce that stress for your family. I'd start the process soon of selecting an agent to sell your apartment, and start the process of decluttering - it's amazing the amount of stuff you'll put in storage and ultimately get rid of afterwards!

The idea of a 2nd mortgage would reduce stress if you can get it. You're lucky to have equity in your apartment - a bank might lend to you on the condition that your apartment is sold or rented out, but will depend on salaries.

 

[Brendan Burgess]

Now to see if the bank will lend us that much, we'll have to try, I guess.

Don't forget that you are not tied to ptsb. So try all the lenders including Pepper. Pepper might be the most flexible. Then when you sell your existing house, you reduce your mortgage and move to a standard, cheaper lender.

It is also worth talking to ptsb about your particular circumstances to see if they would allow you to move the tracker after you have sold your house.

Brendan

 

[Brendan Burgess]

the most ideal scenario I have seen is a family who sold their apartment to a cash buyer investor who was happy to rent to them on a short term basis after they closed to allow them time to close their purchase and move.

That is a really great idea. Apparently a lot of the buyers are cash buyers. The estate agent could prioritise cash buyers and make it a condition of the sale to rent it back at a set rent for up to 6 months.

But selling first and buying later is also very risky. Prices could shoot up in the meantime. You have the financial flexibility to handle this.

Our higher limit is 350k. Plenty of properties selling at that price where we are looking

I wouldn't rely on that. It's amazing how things suddenly change. A house might be on the market for a year, and then when you bid on it, a few other bidders suddenly appear.

Brendan

 

[pennywise]

Thank you for this valuable advice. I've discussed our option with my husband, we are going to try borrowing. The option suggested by Red Onion is also very appealing and we might ask the estate agent if that's feasible. The one I contacted already said the type of apartment we own is very much in demand at the moment due to its size and location. And as luck would have it our neighbours just put theirs up for sale so we'll see how long it takes.