Key Post I have a Permanent TSB tracker – should I consider fixing?

castle4 said:
- Have 70k in gov bond and thinking of paying lump sum
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So this is the bigger question to answer. In general, you should not borrow to invest.
The rate on your mortgage is 4.5% (ECB 3.75% +.75%)
You would need to get a gross rate of about 9% to make this worth paying.
So, assuming you don't need the money for anything else, you should pay the lump-sum off your mortgage

Brendan
 
castle4 said:
Offer letter from PTSB offering Mgr Var LTV<50% at 3.6%, 2 yr fix 4.25, 3 yr-4.05, 5 yr-4.15, 7 yr at 4.55%
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As you are currently paying 4.5%, these fixed rates look about right - in other words, it's not clear that you should fix.

I would not trust ptsb. They offered customers variable rates lower than the tracker rate to get them off trackers. They are probably doing the same here. I suspect that they will hike the variable rates at some stage. So eliminate the Managed Variable Rate.

No one knows where the ECB rate is going. But it could go down to 2% again in a year or so. Of course, it could increase.

Given that your mortgage will be down to €70k , I think you should stick with the tracker. If you keep your repayments the same as they are now, you will pay off your mortgage very quickly.

If you fix, it might be costly to overpay.

Brendan
 
Forgot to mention that the bond is not maturing until Feb 26 and if I cash in now I be losing 7k in interest but would I be saving that amount in interest payments if I cash in.
 
What sort of a bond is it? An ordinary savings cert. or a government bond? If it's a government bond quoted on the stockmarket, selling now should not matter as the price reflects the rate of return.

Brendan
 
Hi Brendan,
Thanks for any advice you can give.

1) Tracker interest rate ECB + 2.25%
ECB rate: 3.5%
Margin: 2.25%
Total rate: 5.75%
2) If you have an additional mortgage on the same property, what is the rate? N/A
3) Amount outstanding on your mortgage; €105,000
4) Remaining term: 20 years
5) Lender: PTSB
6) Value of your home: €300,000
7) Might you trade up or overpay your mortgage? Unlikely
8) Do you face any barriers to switching No
9) What rates are you considering fixing at?
Considering switching to Avant Money
5 year fixed rate. 3.65%
7 year fixed rate. 3.95%
Undecided which is wisest to fix for 5 or 7 years or if there is another lender I should also consider? Aib or Haven?
10) Does your house have a high BER rating which might qualify it for a lower rate? No
 
@InNeedofAdvice

A tracker with a margin of 2.25% above ECB is worth very little, so you should not be concerned about giving it up.

It really is a toss-up between the 5 year fixed rate and the 7 year fixed rate. No one can tell you which is better. My general preference is for 5 year rates as it's more flexible. If you find towards the end of 5 years you are in a position to pay off a lump-sum or overpay, you don't face any early repayment penalties.

It will take some months to switch to Avant, and interest rates may rise in the meantime.

So you should apply to ptsb for a fixed rate and sit on the offer. If rates rise in the meantime, ptsb usually gives those with offers about a month to avail of them.

Brendan
 
Thanks so much Brendan, appreciate your advice.
 
I was surprised to see that SVRs have not been going up in line with ECB increases. How is it possible that they are so close to the ECB rate now? Have the banks started to work as not for profit. So now we find our +2.25% tracker on our old home which is now rented is costing us a fortune compared to all other mortgage options. Even including a lot of BTL rates.

1) Existing tracker margin 2.25% Tracker
2) Amount outstanding on your mortgage €180, 000
3) Remaining term 14 years
4) Lender PTSB
5) Value of your home €260,000
6) Might you trade up or overpay your mortgage? Not likely but might need to sell
7) Do you face any barriers to switching. Maybe. We bought this house as our first home and when we needed to move we decided to keep it and let it out (negative equity had a big role to play in decision). No negative equity now but we still want to hold onto it as a boost to our pension. If we switch now would we be forced onto BTL rates which don't look attractive but seem to be lower than 6.25% we are paying now on this tracker.
8) What rates are you considering fixing at? Would love to move from PTSB but between both mortgages on rented property and home we are probably at limit of borrowing so other lenders might not be keen to take our rental property mortgage on. Plenty of equity in both properties though.
 
@Rebel9

The bigger question for you is whether you should keep the rental or sell it. I think you should start a separate thread in the Money Makeover section.

But to answer this fix or stick on tracker question.

A tracker of ECB +2.25% is not worth a lot on a family home. But it does have some value on an investment property where rates are usually higher.

Have you asked ptsb what your options are? It looks from their webpage, that they do not offer fixed rates to existing buy to let customers. So I am guessing that they would offer you the BTL SVR of 5.8%. You should not take this as when ECB rates come down, the SVR will be a lot higher than the tracker.

If they offered you a home loan rate, you could fix for 7 years at 4.9%. Again, my gut feeling is that you should stay on the tracker, as it would be cheaper in the long-term.

1) Ask ptsb what rates are available to you.
2) Then start a new thread on whether you should keep the property or sell it.

Brendan
 
Very belated thank you for this information.
 
Hi Brendan, as always your advice is very much appreciated thank you:

1) Existing tracker margin 1.68% (ECB rate +1.68%)
2) Amount outstanding on your mortgage €178,000
3) Remaining term 18 years
4) Lender PTSB
5) Value of your home €300,000
6) Might you trade up or overpay your mortgage? No plans to although I could possibly overpay in the future. I can comfortably afford the current monthly repayment.
7) Do you face any barriers to switching. No
8) What rates are you considering fixing at? I’m in 2 minds to be honest. Either stick with the tracker or fix for the remaining term with Avant at 3.95%
 
@RichieRich

A 1.68% margin tracker isn't great. After the recent rise in the ECB rate to 4.5%, you will be paying 6.18%. It's not possible to forecast ECB rates but let's say they fall eventually to 2%, you would still be paying 3.68%

So I am inclined to think that fixing at 3.95% is a good deal. You will definitely save in the short term. And you will probably save in the long-term as well.

Brendan
 
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