fixed/variable/tracker??/ terms

hi

sorry but i'm so confused bout this...

had put in offer which was accepted on house 1 (2bed house) - 260k, 3 mths ago, it was accepted and the bank ok'd the mortgage and sent me letter of approval at the time. it went all the way through to contracts and then fell through cos there was huge issues that came up with the planning on it.

i've now found house 2 (4bed house) my offer has been accepted on this again for 260k. i've paid holding deposit. contracts are at my solicitors at the moment and this is so far straighforward, can't see any probs with it completing.

i went to bank, he changed the house details and said no probs. my parents are kicking in 100k on this for me and i will then pay off as much as i can of their payments directly to them.

my wages would be e1700 a month. i am thinking of taking in students which would pay maybe E180 a week.

the bank (tsb) quoted me on 160k for 40 years at e800 fixed for 5 years after trs. i don't know if i'm doing the right thing, should i reduce the term?? . or am i better going for variable??

any advice would be appreciated

thanks

Was there a reason you chose the PTSB offer? Did you try anywhere else or get any other mortgage offers? There are better rates out there that the 5 yr fix from PTSB (5.5%) . You could get 4.63 from NIB or 4.75 from AIB or Halifax. At those rates - the repayments would be less than 840 a month before trs over 30 years (not 40).

Just did a quick calc : are you sure of those PTSB figures because according to my calculation the repayments would be 825 before TRS and 679 after TRS.

hi

thanks for the reply.

i'm completely clueless. everyones is saying different things. my brothers says his is better, his is variable, my mother says go fixed .....

my parents are taking the 100k against their own house with tsb. thats the only reason i was going to tsb. the advisor there told me i'd have to take a 40yr term in order to get the full e160. if i took a shorter term, he could only get me possibly e145-150k

i'm trying to get appointment with nib and aib today to see what they can do.

thanks again

sorry, i think it was 679, i just added on for the life cover, mortgage protection etc etc. i had it in my mind that everything together including insurances is a little less than E800 pm

thanks

The tracker rates with NIB , AIB and Halifax are the rates I mentioned - . They are variable but tied to the European Central Bank rates.
My information is based on you borrowing 160k on a 260k house (i.e the 100k deposit from your parents is not being treated as part of your mortgage)

"You could get 4.63 from NIB or 4.75 from AIB or Halifax. At those rates - the repayments would be less than 840 a month before trs over 30 years (not 40)"

where did you get those rates from, i just had a look at their websites, its shows 5.20 on the aib website with5.34apr and 5.65 with 5.73%apr on the nib site. i'm lost....

Me again! Just realised AIB are putting up rates this week - so the rate from them will probably be around 5.15 now ...

just posted and saw your answer... the advisor said that tracker rates were probably going to go up and if i wanted to be sure of what i pay each month, that fixed would be better. from what i saw aib has the cheapest fixed but i'm not sure would they give me the full 160k due to my wages... must check that later today

thanks

Sorry - I didn't pay enough attention to your salary figure and the fact that you will have to rent a room(s) to help with the mortgage. I don't think NIB will take room rental into consideration but you can only ask.. The NIB rates can be found on their website under the links to "LTV Mortgage" - you have to use the calculator on their site.
Try Halifax too.
Tracker rates may well rise in the next month or two - so going fixed is a gamble that may or may not pay off. Nice to know your outgoings will not change though .

Get a fixed rate for €80k and a tracker on the other €80k.
It cushions the ESB rate changes.

thanks for the updates on those. will have a good look at everything over the weekend and see what i can get on monday

thanks again

Something that you should be aware of that has been happening over the last few months is that the bank sends a loan pack with a rate and then when it comes to draw down you get an annoncement from the bank that the offer has been withdrawn and it goes to variable. You are put in a position where you feel like you can't change because the Solicitor has requested the cheque and there are fees etc. Bank of Scotland removed their fixed rate overnight, IIB have changed theres a few times i.e. if you don't draw down within 3 days you lose rates, EBS have also done it, Haven Mortgages, First Active stopped there 1 year fixed no notice whatsoever, Bank of ireland have also changed there fixed rate, few days notice only. These has all been happening while ECB rate has been the same so it has noting to do with thiat. In my view this activity is causing utter chaos to people, you agree an offer and then they pull it putting you in an awful prediciment. AIB are changing aswell but at least they are giving notice. I would, if I were dealing with a broker, not just ask who has the best rates but also who has not changed there rates at very short notice lately, I think it is now important as the rate you agree to should be the same rate at drawdown.

As a first time buyer, you are entitled to mortgage interest tax relief on up to €10,000 of interest @ 20%. e.g. €2000 / €166 per month for 7 years.

However with a €160k mortgage @ 5.25%, your interest will be in the region of €8,000 and decreasing every year by a 2/3 hundred euro, so mortgage tax relief will be in region of €130 and will reduce (not by much) as the amount of ineterest paid reduces.

IMO, a tracker rate may be best. AIB offer a tracker of 1.25 over ECB (today's new rate) and therefore is currently 5.25%. Cost to you €872 over 30 years less €130. Net = €742

The ECB has hinted that rates will increase by 0.25% in July. Not certain that they will, but they have also hinted that this will be a one off increase if it happens.

Most commentators expect rates to move down from early next year, and possibly settle at 3% - 3.5%.

The advantage of a tracker is that it will drop immediately ECB rates drop - but disadvantage is it will rise immediately when ECB rises.

A final softening blow if your rate does increase, so will your tax relief as you will not have hit the ceiling limit. So a 0.25% rate increase will in effect only be a 0.20% increase in monetary terms for you.

My humble opinion is tracker rate at max of 1.25% over ECB.

Addition to above

NIB still have a 0.79% tracker for 60% value of the property, this equates to 156K loan. If you can get them to give you this, you'll be on the pigs back for the life of your loan. Cost is €799 on 156k over 30 years, less €125 tax relief. Net = €674.

I think the main problem the original poster has is getting the full 160k loan on an income of 1700 a month.
PS - isn't the NIB rate for 60% LTV actually 4.6% not 4.79 ?

irishlinks said:

I think the main problem the original poster has is getting the full 160k loan on an income of 1700 a month.
PS - isn't the NIB rate for 60% LTV actually 4.6% not 4.79 ?

Click to expand...

Their rate chart give 4.79 as the rate, but the rate calculator give 4.6. If 4.6, its superb.

Banks tend not to be overly concerned with income if the loan to value is at this level.

The NIB rate is definitely 4.6% for LTV 60% - on their "LTV Mortgage". They do confuse people by having a different rate on their "standard" mortgage.
Mcaul - you say they will not be "overly concerned about income" with 60% LTV .. but the original poster will have repayments of 821 euro over 30 yrs with NIB - which is about half her salary (not sure if the salary figure she gave was net or gross) . No sensible lender would allow repayments of 50% of income. Also they have to do a stress test to see if borrowers can afford repayments if rates go up to ecb plus 2.75%.

The salary criteria are more strict with NIB also for the LTV product. The great rate is designed to be matched to low risk customer (lower LTV and good income) In this case it wouldn't be a runner.