Catch 22 - Should or hold for tracker or switch to variable now..

J

Jackie D

Registered User
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83
Hi,

I have 17 months left on a 4.99% fixed mortgage of 420k.
I can switch now to a variable of 4.55% with no penalty.
If I hold out for the 17 months - it states in contract, I roll into tracker .8% above ECB rate.

Any suggestions as what would be the best option?

With the ECB dropping another .5% I stand to save approx €240pm from February.

If the ECB rate is approx 2% in 17 months (which I think it may be) that gives me a rate of 2.8% - a saving of approx €450pm!!! :confused:
 
hold on if possible is my view.tracker is a great asset in the
times we're in.as far as i know any ecb rate drop must be passed on to tracker rate mortgages.there off market last 6 months because banks were losing money with them.
F
 
Ive been told that to switch from fixed 5.15 to variable 4.6 with further reduction to 4.1 by the end of feb. I have just under 3 years left to run. the bank said there would be no penalties and would be saving 170 per month. surely there must be a catch??
 
Jackie D said:
Hi,

I have 17 months left on a 4.99% fixed mortgage of 420k.
I can switch now to a variable of 4.55% with no penalty.
If I hold out for the 17 months - it states in contract, I roll into tracker .8% above ECB rate.

Any suggestions as what would be the best option?

With the ECB dropping another .5% I stand to save approx €240pm from February.

If the ECB rate is approx 2% in 17 months (which I think it may be) that gives me a rate of 2.8% - a saving of approx €450pm!!! :confused:
Click to expand...

If you intend sticking with the mortgage for more than 5 years keep the tracker option - so long as you have a guarantee of the rate you will move onto (ECB + 0.8%).

Even if the variable rate is competitive (Say ECB + 1.5%) you should be better off on the current deal provided you keep on it for another 5 or more years
 
That works out at ...

16 months x €240pm = €3840

So the question is ... is your tracker rate worth you swopping for €3840 ??

My 2pence worth ... The current ECB Rate is 2% and was also 2% in 2005 when we did not have a crisis , I feel they will cut it again as 2% is very low but with the World in a bit of a spin I feel they still can come down more and that will still be around (low rates) in 17 months time and going onto a a trcker then will feel good trust me .
Its all a guessing game and no one really gets it right so the decision still lies with you but I personally would hold out for the tracker.

Do 1 very important thing but ......get in writing from your Lender that you will be defaulting to a tracker in 17 months , they are really pushing to stop issuing this product .

M.
 
ddmcin said:
Ive been told that to switch from fixed 5.15 to variable 4.6 with further reduction to 4.1 by the end of feb. I have just under 3 years left to run. the bank said there would be no penalties and would be saving 170 per month. surely there must be a catch??
Click to expand...
Unless you have a deal to roll onto a tracker after the fixed period I don't see any catch.
 
Thanks you all!! Really appreciate your feedback!! Would be lost without this site!!

My head says hold out for .8% tracker..
My current savings account is smiling at me saying switch to variable now!!

Chances are, I may move house in 4-5 years.. If I stay and go onto .8% tracker, then move house - do I lose the tracker as its a new mortgage?

Thanks again!!
 
Jackie,

If you are definite in moving home in 4-5yrs then i would take the extra €200+ a month that you can save by changing now rather than holding for the tracker , you will need a new mortgage when you do move so you will be restricted to whatever the rates are then , you will not be able to hold you tracker rate on a new mortgage (House)

Only if you are sure you plan to move !
 
Mixednuts said:
Jackie,

If you are definite in moving home in 4-5yrs then i would take the extra €200+ a month that you can save by changing now rather than holding for the tracker , you will need a new mortgage when you do move so you will be restricted to whatever the rates are then , you will not be able to hold you tracker rate on a new mortgage (House)

Only if you are sure you plan to move !
Click to expand...

I'd second that, the current deal is probably better only if you keep it going for 5 years or more
 
DerKaiser said:
I'd second that, the current deal is probably better only if you keep it going for 5 years or more
Click to expand...

I'll 'third' that, but as others have said if it was a long term thing I'd definitely stick with the tracker.

The facts that the bank is offering you this switch with no penalty should have been proof enough for you... just don't tell them you're not sticking with the mortgage long term!
 
Have you considered saying to the bank you'd consider moving to the variable if it were a bit lower, say 3.9% (after the latest drop)? It might give you an idea of how desperate they are to get you off the tracker.

No harm in chancing your arm.
 
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