# AIB announcement: allowing to move with tracker



## dec1892

http://m.rte.ie/news/touch/business/2014/0307/600778-aib-tracker-mortgages/

1% on top of ECB rate for duration of mortgage


----------



## Brendan Burgess

That is great news. 

Here is some basic information on it

 


[FONT=&quot]o [/FONT]From the summer of 2014 existing AIB and EBS customers who wish to move house will be facilitated in bringing their existing tracker loan with them 
o The rate applying to this loan (i.e. the existing tracker loan transferred)  will be their existing tracker mortgage rate plus 1% for the existing duration of the tracker 
o Any additional funds they wish to borrow and are sanctioned subject to normal requirements will be advanced at prevailing new business rate 
o Available for customers trading up or down from their current residential property 

LTV 0f 92% up to €400k and 85% after 
and for negative equity its 175%.


----------



## PadKiss

Anyone over paying their mortgage who may want to move should stop and save it instead and thereby borrow less on svr terms good news though now waiting for boi to follow Padraic


----------



## Katostar

Hi Brendan
Is it possible that AIB might be agreeable to allow tracker to move  just before product launch. Have gone sale agreed on my house and in very early stages of buying another but dont think I can stretch ot out til July as vendor wants relatively quick sale.

Would it be possible to get some type of bridging loan for new house and try sell my house after june to avail of tracker deal.
Many thanks


----------



## Brendan Burgess

I would say it would be difficult.  They will be in no hurry to implement this product. 

If the figures are relatively large, you should explain the situation to both buyer and seller and tell they you may not be able to close until July and that you understand that they may well pull out.


----------



## peno

If Brendan's suggestion doesn't work you may want to reconsider the choice of the house.

While you may have your heart set on it now - after reviewing the total cost their will be a significant saving if you hold off. From experience it's hard when you set your mind on a particular house but it may be the best option in the long term?


----------



## Katostar

Hi,
Thanks for replies. i really dont want to give up on new house if can be avoided. Do you think I could possibly get a bridging loan to buy the new house first with AIB and sell my own house with tracker after June when the product is launched and get a moveable tracker on the new house?

Thanks again


----------



## Brendan Burgess

Hi Kato 

Many people who run into problems buying a house feel really dejected when they can't complete the deal. Some months later they find a much better house. 

You should have the courage to pass on this one to retain your tracker. 

Of course, speak to AIB first to see if they will allow it. 

They will not make it retrospective. If you have sold your house and repaid your tracker, they will not give you a new tracker. 

Brendan


----------



## dec1892

When getting approved for the new mortgage,what are the steps to follow and in what order?
Do you sell your house first and the bank (AIB) approve you for a new mortgage for your new home only then? Or will they approve you for a new mortgage in advance of selling your current house?Just a bit confused about the in between period between selling and buying your new home and where you stand with AIB(and the tracker) in that interim period....


----------



## Brendan Burgess

AIB has not officially launched the product, so we don't know the terms and conditions. 

It is likely that you would need Approval in Principle before you sell your home. 

If you sell your home and pay off the tracker mortgage without AiP, it's very unlikely that you will recover your tracker.


----------



## Brendan Burgess

I spoke to AIB about the product. 

They are targeting mid-late summer for the availability of this product. 

*You will not be able to apply for the product until it is launched - say end of July. *

They will not be allowing people to avail of the product retrospectively.

If you sell your house and pay off your tracker, before it's launched, you will lose your tracker and not get it back.

It is being "overlaid" on existing products.  So if you meet the criteria for a negative equity mortgage and if you meet the affordability criteria, you will be able to qualify for this mortgage. 

*Affordability criteria - for all AIB mortgages

*AIB has an [broken link removed] which shows you whether you will qualify for a mortgage or not. 

It seems very good.

*How a negative equity mortgage would work 

*I use a tracker mortgage for this example, but it applies to SVRs as well. 


Current mortgage| €300k
Value of current property| €200k
Negative equity| €100k*

Buying a new property *




Cost of new property| €300k|
8% cash required |€24k
Maximum mortgage 92%|€276
Add negative equity| €100k
Total mortgage| €376k

|
On tracker rate|€300k
New SVR mortgage|€76k  

*Why you should not overpay your existing mortgage *

You will need 8% of the purchase price of the new property, so if you have already paid it down against your mortgage, you will not be able to trade up.


----------



## secondrowdol

Hi folks,

Does anyone know if carrying your tracker has to involve purchasing another house or is there an option of buying a site and building?

Thanks


----------



## milly123

Anyone hazard a guess as to what may happen in our situation, where we want to downgrade and keep our tracker, yet we currently wouldn't qualify for a mortgage with AIB due to a change in circumstances (1 partner unemployed). We have a clean record with our tracker so far.


----------



## Mrmr

At a guess?
Having talked to them last year about a new mortgage where one person was now unemployed they basically didn't want to even speak to us/ take an application. They were very dismissive of us even actually staying afloat.
And so my guess is if you approach them, they will ask for an SFS and deem your current mortgage unsustainable.


----------



## Brendan Burgess

AIB has not announced the details of their tracker mover yet, but I  would think that they probably would like to see someone with a cheap  tracker downgrading if it meant that their mortgage was more  sustainable. 

But I suggest you start a new thread in the Case Study format to get more meaningful feedback.


----------



## Ainzy30

*Tracker mortgage plus 1% time limits*

Hi - we are in the same situation delaying sale till this product comes in. One of our biggest queries is how long will you have between selling and buying ie it's going to be so difficult to simultaneously buy and sell as no where will go sale agreed until we have contracts signed in our own house.  So there may be an overlap of 3 months between selling and buying ( not for lack of trying) - do you think they will allow you to keep the tracker until you find property to buy ( obviously within a reasonable time limit) or do you think the  buying and selling transactions need to be simultaneous? 
Tia


----------



## dec1892

Nothing further released yet from AIB regaridng the T&C's of porting the tracker to a new property?


----------



## mammyof2

Brendan Burgess said:


> o The rate applying to this loan will be their existing tracker mortgage rate plus 1% for the existing duration of the tracker
> o Any additional funds they wish to borrow and are sanctioned subject to normal requirements will be advanced at prevailing new business rate


 
Thanks Brendan, very interesting. I'm a bit confused though about the two statements above which are a bit unclear in the case of houses in positive equity.

In my case for instance, the figures would be

Current mortgage outstanding: 260k @ ECB + 0.6% (term remaining 11 years)
Value of current house: 330k (approx)
Value of house we wish to buy: 450k (approx)

Assuming we were able to keep the term the same, am I right in thinking that we would be paying ECB + 1.6% for 260k of the mortgage and the 'new business rate' for the remaining 190k (minus deposit) of borrowing (i.e. the 190k is presumed to be 'additional funds')? Or would the full amount be subject to ECB + 1.6% (i.e. the 190k is presumed to be 'this loan')?


----------



## Brendan Burgess

Hi Mammy

Sorry, I missed that post. 

You will be moving the €260k at ECB + 1.6%

Any new money will be at their New Business Rate. 

Brendan


----------



## Brendan Burgess

No.




> They are targeting mid-late summer for the availability of this product.
> 
> *You will not be able to apply for the product until it is launched - say end of July. *


----------



## escapem1

Any update on this 'end of June' theory from anyone? All I have been able to get out of AIB so far is still the party line of "over the summer".


----------



## Brendan Burgess

I asked about it at the AIB AGM this morning, and it's being launched on 1 July. Straight from the Chief Executive's mouth.

Brendan


----------



## Delboy

Here's the Indo's story in it
http://www.independent.ie/business/...-tracker-mortgage-product-duffy-30367989.html


----------



## Pinkpanter

I will be considering my options re this. Have AIB tracker mortgage
of 0.9 above ECB ie 1.15%

Current mortgage €427,000
Value of property: €230,000
Negative equity :   €197,000

Cost of new property: €350,000
Deposit:                     €35,000
New mortgage:           €315,000
Add neg equity:           €197,000
Total mortgage:  €512,000

 Mortgage at tracker rate: €427,000
Mortgage at svr :              €85,000

Am I correct with my figures. I thought just the neg equity ie 197,000 is at tracker rate!!!
Are AIB doing mortgage consultations for these mortgages yet!


----------



## Brendan Burgess

You are upgrading from a home worth €230k to a home worth €350k so you need an additional €120k

You have €35k cash, so you will need an additional mortgage of €85k at SVR.

So your figures are correct. 



> I thought just the neg equity ie 197,000 is at tracker rate!!!



I have seen others say this, but it's wrong. I think it comes from the idea that they are "transferring their negative equity". That is not the right way to look at it - you are transferring your tracker mortgage, and not just your NE.


----------



## Pinkpanter

Does this AIB offer make trading up now more affordable that waiting to pay down negative equity.


----------



## Brendan Burgess

Pinkpanter said:


> Does this AIB offer make trading up now more affordable that waiting to pay down negative equity.



It will always be cheaper to stay put and pay off a smaller mortgage than trading up and paying off an additional amount of borrowing. 

But this is a great opportunity for people with the income who can afford to pay it, to trade up. 

It will be much cheaper to trade up keeping your existing tracker than to sell your home and buy a house with a new mortgage, all at SVR


----------



## Brendan Burgess

I have summarised the product here.

Summary of AIB tracker mover product

Brendan


----------



## munstershug

According to my local AIB last week....
1. They cannot work out numbers relating to trackers - "we need to have special unit call you"
2. For affordability they calculate as follows ; Couple needs 2100 disposable income per month. Each kid adds €250 to that total. (So 2A2K requires €2600 disposable income per month after all repayments)

Repayments are calculated according to following stress test criteria
1. *Tracker repayment is stress tested at 5%* regardless of current tracker rate!!
2. New mortgage is stress tested at 6% for term of new loan

Yes, I did challenge the lack of logic there but reply was - "those are the guidelines we have been given"

Hopefully helpful in calculating estimates....(all above of course assumes the branch person knows what they are talking about  - and I was not convinced)


----------



## Brendan Burgess

> 1. *Tracker repayment is stress tested at 5%* regardless of current tracker rate!!
> 2. New mortgage is stress tested at 6% for term of new loan



Someone paying ECB + 0.85% now, will be paying 2% after they move. It's not at all unlikely that this could rise to 5%.  ECB rates would have to rise only to 3.15% for this. 

The current SVR is 4.5%. So 6% is well within sites. 

The tracker rate will definitely follow the ECB rate up

The SVR might not be increased by the full amount. 

Seems reasonable to me for what will be additional borrowing.


----------

