# What type of mortgage is "Banks Base Linked rate"



## stefg (7 Aug 2013)

Hi All,

I'm just wondering if someone can tell me what the term "the Banks Base Linked rate" means?

I have found an old letter stating that our mortgage would automatically transfer to this after the fixed rate period expired.  Does this mean it should have been a tracker or variable rate after?

Many Thanks,
Stef


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## Brendan Burgess (7 Aug 2013)

Which lender is it?  

Is the expression not defined anywhere in the document ? 

Had you any reason to believe that you were entitled to a tracker? For example, an ad or a communication from the lender?


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## stefg (7 Aug 2013)

Hi Brendan,

The lender is AIB.

I only have the letter and it does not define the term.

I do not know about the entitlement for for a tracker.  This a mortgage my wife took out with her parents long before we were married so I am just gathering details for my records / budgeting.  Her Dad handled most of the dealings with the bank but he told me as far as he can remember the bank did not offer trackers at the time even though he enquired about it.  From the information I have seen they did offer trackers at the time (2007) and I'm just wondering if this mortgage was intended to automatically be a tracker after the fixed term?

I understand that this will most likely come to nothing but I just want to understand the situation, it is a sizeable mortgage and if it was meant to be a tracker that would have been a huge difference in the repayments.

Even if "Banks Base Linked rate" means a tracker I will need to contact the bank to see if it was explicitly changed for some reason?  At the moment I'm just curious to find out what the term means because if it means standard variable rate then there is no need to contact the bank.

Thanks,
Stef


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## stefg (2 Sep 2013)

Just in case anyone else is wondering about this, a mortgage broker informed me the "Banks Base Linked rate" is a variable rate mortgage.


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## cremeegg (3 Sep 2013)

stefg said:


> Just in case anyone else is wondering about this, a mortgage broker informed me the "Banks Base Linked rate" is a variable rate mortgage.



I dont believe that your broker is completely correct.

Usually a "variable" rate mortgage means that the bank can vary the interest as they wish. The rate you pay can be changed by the bank as they wish.

A "Banks base rate" is a calculated figure related to what it costs the bank to borrow money. The bank cannot simply to increase this as they wish.

A banks base rate mortgage is a tracker, although what it tracks is the banks base rate and not the ECB rate.

The difference could be very important, if the bank decided to increase its lending margin. They can do so at will in a variable rate but not in a base rate mortgage.

Obviously there may be more devil in the details of the contract.


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## peteb (3 Sep 2013)

stefg said:


> Just in case anyone else is wondering about this, a mortgage broker informed me the "Banks Base Linked rate" is a variable rate mortgage.


 
If it doesn't define it in the terms and conditions I'd be arguing with the bank it was unclear and looking for my tracker back.  This was the same issue i had with Ulster Bank and their "Home Loan Rate", they decided it should be an SVR.  Needless to say the Ombudsman and I thought differently!!


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## stefg (3 Sep 2013)

cremeegg said:


> A "Banks base rate" is a calculated figure related to what it costs the bank to borrow money. The bank cannot simply to increase this as they wish.
> 
> A banks base rate mortgage is a tracker, although what it tracks is the banks base rate and not the ECB rate.
> 
> ...



In that case, I think I may need to follow up with the bank on this.  Our repayments have been adjusted with the variable rate changes so it doesn't seem to be anything other than a variable rate.  Would the banks base rate be changing at the same time and amount as the banks variable rate?

I only have the letter about rate I don't have the terms and conditions so I may have to request them from the bank.

Thanks


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## andrew Hickey (4 Apr 2017)

StefG, 
May I ask what ever happened with your query ? I have the same letter and with the same bank. Any information would be appreciated. 
Regards,
Andrew.


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## stefg (5 Apr 2017)

Hi Andrew,

I had a look at the original mortgage contract which suggested the loan was variable rate and not a tracker.


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## Brendan Burgess (6 Apr 2017)

Hi Stef

In the light of the current review, this might be worth pursuing again. 

The Central Bank was very clear on Tuesday - they will be looking beyond the contract and also at correspondence and disclosure. 

I still have no idea what the "Banks Based Link rate" means. 

You have absolutely nothing to lose by dropping a letter to AIB with a copy of the letter with that expression, asking them to confirm that your are included in the tracker review.  

They will, at the very least, have to write to you justifying not giving you a tracker. 

That is all you need to do at this stage.  After you get the reply, you can see what action you can take. 
When your wife took out the mortgage, she had a reasonable expectation that the mortgage rate would rise and fall with general interest rates.  AIB's mortgage rate has departed widely from the cost of funds and the ECB rate.  I think she can claim that she expected some form of tracker. 

Brendan


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