Fixed or Variable Rate?

M

moran13

Guest
Hi,

Just wondering if someone could help me make a decision. I'm not good on financial matters and don't know which way to go. Basically i bought a house 3 yrs ago (at peak price ofcourse). Anyway i was on fixed morgage for the last 3 years at 4. something percent? I was paying way above the odds on this. Anyway its time for me to fix it again or leave it. The option i got from my bank are as follows:

TRACKER VARIABLE ECB + 1.25% = 2.250%
Existing Variable LTV Rate PDH = 2.700%
2 Year Fixed (PDH) = 3.150%
3 Year Fixed = 3.600%
5 Year Fixed (PDH) = 4.250%

I pay the morgage on my own and work in the public sector. i suffered big wage cuts recently so just as well my fixed rate is up. I was thinking of going on the TRACKER Variable as it seems the best?
However I don't know what LTV rate is or what does PDH stand for?

Any help in guiding me in the right direction would really be appreciated?
 
Re: Help - Morgage Advice Needed!!

PDH stands for "Primary Dwelling House" and the LTV is the loan to value i.e. the loan amount as a percentage of the value of your house.

The tracker variable would be my first choice however be prepared for interest rates to increase and obviously the tracker will increase in line with the ECB rate increases. Perhaps if you do choose this rate and given the considerable difference in your repayments you may want to set a side a bit of money each month in preparation for the rates going up over the medium term.

I hope this helps a little.
 
Re: Help - Morgage Advice Needed!!

Agree fully with Cooper7 - go for the tracker .
 
Re: Help - Morgage Advice Needed!!

Thanks for advice,
if i go for tracker, can the bank increase their own rate of 1.25% on top of the ECB rate or is it just the ECB rate that can go up?
 
No - the 1.25% on top of ECB is fixed for the life of the mortgage.
 
Thanks. Is 1.25% a good rate? How high is the ECB rate likely to go over the next 3 years?
Also i thought banks weren't giving out tracker rates anymore?
 
moran13 said:
Thanks. Is 1.25% a good rate? How high is the ECB rate likely to go over the next 3 years?
Also i thought banks weren't giving out tracker rates anymore?
Click to expand...

Tracker is only availabe to existing mortgage customers who draw down their mtg. when it was available.
It is a great product and you should bag it straight away wherever available.
So you got sort of lucky in int. payments but not so in term of principal, well seems like banks dont want to offer it anymore as it will choke their margin but hey they dont want to squeeze the life out of those souls who brought during the boom. If that makes sense anyways we are contributing towards NAMA.

No one can say what will be ECB rate in next 3 years time but as far as history goes central banks rates more or less remains minimal during bust times and as far as word on the street goes we will still be in bad position in next 3-5 years. It will increase though but may be 2-2.5% max. from current 1%.
 
Thanks to everyone for all the help here. I've made up my mind to go with tracker and hopefully ECB won't go crazy over the next 3 years! Again thanks for explaining all these terms of LTV etc...
 
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