# Tracker mortgage and switching, advice needed on options



## diver (13 Jan 2019)

Hi all

I'm currently reflecting on where I'd like to live in a few years time. I'd like to move house to a better area some time in the next couple of years and I'm not sure how to approach a move without losing a valuable tracker.

I have 2 tracker mortgages:

Current residential house: tracker of 0.75% over ECB with the former Bank of Scotland Ireland, now Pepper. No option to move my tracker to another property as they are only now servicing existing mortgages.

Investment property: smaller property, rented out since I moved to my current house. Interest only investment tracker of 1.15% over ECB with Ulster Bank, 10 years left on mortgage.

What are my options if I were to sell my current PPR and move but use my UB tracker to switch? Do UB allow switching of an investment tracker?

Would I have to physically move back in to my investment property, apply to have it converted back to a residential tracker and then consider moving after a couple of years? Would I even get a residential tracker with UB?

All advice gratefully received, many thanks.


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## Brendan Burgess (13 Jan 2019)

You should give all the relevant information to get a proper answer 

Value of home
Amount outstanding on mortgage 
Interest margin 
Remaining term. 

Value of property you would like to buy
Amount you will need to borrow (so we can calculate LTV) 

Value of RIP
Amount of mortgage 
Interest margin 
Rent received and rough expenses

Brendan


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## luckystar (13 Jan 2019)

UB tracker. I presume if you took it out as an investment mortgage then there is probably no option to carry the tracker to another property. 
All tracker ports add an additional 1% so the UB one would be 2.15% 
Depending on LTV you could get a rate not much higher than that. 
Shame about ppr tracker but don't let it stop you making plans. Your home is very important


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## diver (13 Jan 2019)

Thanks Brendan

I've no specific house in mind, just toying with where I need to be if moving in the future.

Information below:

Annual gross income: 90,000 +/- bonuses from time to time

Value of home       approx 360,000
Amount outstanding on mortgage    approx 194,000
Interest margin  0.7% tracker over ECB
Remaining term. 16 years left

Value of property you would like to buy  450,000-500,000
Amount you will need to borrow (so we can calculate LTV) 

Value of RIP  260,000
Amount of mortgage 194,000 interest only, 10 years left
Interest margin 1.15% tracker over ECB
Rent received and rough expenses: monthly rent of 1,250, annual tax bill of approx 5k


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## Brendan Burgess (14 Jan 2019)

First of all, how much is the tracker worth on your family home?

You have a mortgage of €194k @0.75% with 16 years left.



If you move in 4 years, your mortgage will be down to €140,000 as most of your monthly repayment goes to capital.

Let's say that the same rates apply in 4 years time as are available today.

If you take out a fresh mortgage with Ulster Bank and fix for two years, it will be at 2.3%

So, in the first year you will pay an extra  €2,200 a year in interest.   ( €140k @ 2.3% -.07%)

Over the remaining 12 years, this will work out at a total of about €12k. ( The €2,200 per year will fall as the capital falls.)

So, it's just not a factor in the overall calculations. 

When you are ready to move, just sell your current home and take out a mortgage wherever it is cheapest. 

And you should ignore the tracker in making the decision to trade up. If you want to trade up now, do so and give up your tracker. 

Brendan


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## Brendan Burgess (14 Jan 2019)

diver said:


> Value of RIP 260,000
> Amount of mortgage 194,000 interest only, 10 years left
> Interest margin 1.15% tracker over ECB
> Rent received and rough expenses: monthly rent of 1,250, annual tax bill of approx 5k



Should you sell the Buy to Let so that you borrow less to buy the new house?

It doesn't look like it now.  You would release about €60k in equity which would save you about €1,500 a year in mortgage interest on your home.

By keeping it, you are making a profit of
Rental income after expenses: €12,000
Interest: €2,000
Tax: €5,000
Profit after tax: €5,000

So you are far better off keeping the property than selling it.

When you are ready to move, you must do these calculations again. 

For example, the loss of a good tenant, a fall in rent combined with increased interest rates and a property price rise may tilt the balance towards selling it. And, of course, if these variables move in the opposite direction, it will be even more correct to keep it.

If you trade up and retain your buy to let, you should review the decision every couple of years.  

Brendan


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## elcato (14 Jan 2019)

diver said:


> Value of RIP 260,000
> Amount of mortgage 194,000 interest only, 10 years left
> Interest margin 1.15% tracker over ECB


Can you explain this one as I'm confused ? You are paying interest only ? What is the 10 years left ? Is it that in 10 years you have to pay capital as well ?


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## diver (14 Jan 2019)

Thank you Brendan for your detailed response, much appreciated. I think a couple of years more paying down my current home mortgage before I move would change things in terms of LTV etc. I don't "need" to move so I can wait.

Agreed re investment property. I have a good longterm RAS tenant insitu and rental income is steady so I've no need to sell.

Thanks again.


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## diver (14 Jan 2019)

elcato said:


> Can you explain this one as I'm confused ? You are paying interest only ? What is the 10 years left ? Is it that in 10 years you have to pay capital as well ?



I have an interest only mortgage for the lifetime of the loan. The remaining term is 10 years. Once the 10 years is up, I will need to repay the full capital by whatever means......sell most likely.


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