Key Post I have an AIB tracker – should I consider fixing?

Hi I would be grateful for any advice based on the following information.

1) Existing tracker margin. ECB plus 1.1%
2) If you have an additional mortgage on the same property, what is the rate? N/A

3) Amount outstanding on your mortgage: €110,000

4) Remaining term: 7 years
5) Lender: AIB
6) Value of your home: €350,000
7) Might you trade up or overpay your mortgage? Overpay yes.
8) Do you face any barriers to switching? E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property. No
9) What rates are you considering fixing at? AIB 3 Yr 2.95%, Green 5 yr, Avant 2.25% best I can get allied to interest in paying off early.
10) Does your house have a high BER rating which might qualify it for a lower rate? House is currently C1 but have have been advised by BER inspector that simple addition (which I have done) of a chimney balloon would bring it to B3.

Relevant context for our position is that my wife will retire in 3 years and I intend to retire by 2027. We are currently maxing out on pension contributions and now have the potential to significantly increase mortgage payments (which we didnt have before). Pre the interest rise our plan had been to save hard over the next three years and potentially pay off the mortgage with these savings/and or pension lump sum but that our focus was on saving not the mortgage. We are now changing tack and are keen to pay off the mortgage. While the recent rises point to fixing the only doubt in my mind is the benefit of the flexibility to vary/and overpay the tracker mortgage depending on month by month circumstances. A basic question I have also is that if a fixed mortgage is adverstised as 5 year say for example the AIB Green 5 year - are you stuck with five years or can you negotiate with them on the basis that I can now afford to pay it in four years?

Any advice appreciated.
 
Hi Brendan,

We are considering whether to keep our tracker, or to fix, and would really value your expert advice on the matter. Our details are below.


1) Existing tracker margin. ECB + 2.1% (we moved with our tracker which resulted in a margin increase of 1% from our original tracker margin).
2) If you have an additional mortgage on the same property, what is the rate? N/A
3) Amount outstanding on your mortgage. € 246,000
4) Remaining term. 20 Years
5) Lender. AIB
6) Value of your home. € 495,000
7) Might you trade up or overpay your mortgage? No
8) Do you face any barriers to switching? No
9) What rates are you considering fixing at? 3.1% for Five Years
10) Does your house have a high BER rating which might qualify it for a lower rate? B3

What percentage fixed rate/term would be worth switching for, if any?

Are the banks still buying back Tracker mortgages or is this now a thing of the past?
 
Nigel73 said:
1) Existing tracker margin. ECB + 2.1%
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@Nigel73

A margin like that is of very little value.

With ECB rates at 2% and possibly going to 3%, you will be paying 5.1%

Fixing at 3.1% seems like better value.

You could fix for longer, but the rates are so much higher, that the Green rate of 3.1% seems right.

Brendan
 
Brendan Burgess said:
@Nigel73

A margin like that is of very little value.

With ECB rates at 2% and possibly going to 3%, you will be paying 5.1%

Fixing at 3.1% seems like better value.

You could fix for longer, but the rates are so much higher, that the Green rate of 3.1% seems right.

Brendan
Click to expand...
Thank you very much Brendan. That does seem like the best course of action.
 
Brendan Burgess said:
Hi @Kramer

AIB treats existing customers fairly, so you are right to stay with them.
Fixing at 2.35% seems right.
You are giving up a tracker of ECB +.9% which will be about 2.9% when ECB rates hit 2%. ECB rates may come down again, but I doubt that they will come down to the 0% level we have been used to.

But it's close. If the fixed rate is not available, then stick with your tracker.

Not sure that topping up for a renovation has any implications. AIB will allow you borrow at their best rates for this top up. If you were with ptsb you would be stuck with their top up rate of 3.95% variable.

Brendan
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Hi Brendan,
Thanks for the advice, we managed to fix at 2.35% & are happy with the decision and the guarantee for the next 5 years
Cheers
John
 
@GingerH

Sorry, I missed this at the time.

GingerH said:
Pre the interest rise our plan had been to save hard over the next three years and potentially pay off the mortgage with these savings/
Click to expand...

While this made no sense before the interest rate rises, it makes even less sense now. Saving at 0% while paying 3.1% on your mortgage is not a good use of money. The sooner you pay down a mortgage the more interest you save.

GingerH said:
While the recent rises point to fixing the only doubt in my mind is the benefit of the flexibility to vary/and overpay the tracker mortgage depending on month by month circumstances.
Click to expand...

As you have a lot of surplus income and will be overpaying your mortgage, it is simpler to leave it on the tracker. You can then pay it off without any worries about early repayment penalties.

GingerH said:
if a fixed mortgage is adverstised as 5 year say for example the AIB Green 5 year - are you stuck with five years or can you negotiate with them on the basis that I can now afford to pay it in four years?
Click to expand...

You can pay any fixed rate mortgage off early, in whole or in part, but there may be an early repayment penalty.

Avant 2.25% is not really a runner. It would cost you €1,500 to switch and it would take a few months and a lot of hassle and they might not be interested in a short term mortgage for a small amount. So stick with AIB.

Having said all that, is there any point in fixing for the AIB Green 3.15%?

The ECB rate is currently 2% so you are paying 3.1%. If the ECB rate rises to 3%, you will be paying 4.1%

So you would save 1%. But then ECB rates may well come down again - no one knows.

On balance, given that you are overpaying, just stay as you are.

Brendan
 
HI Brendan

Thanks so much for taking the time to advise us on all on this. I'm kind of sorry now we didn't try to fix earlier even though we are on a "good margin" tracker - who knew the ECB rates would go up the way they have - here is our state of affairs:



On a tracker mortage with AIB: ECB + 0.75%

2) Amount outstanding on your mortgage
€144k on the tracker (also €99k on fixed rate of 2.15 for 4 years)

3) Remaining term 16yrs on tracker (14 years on fixed)

4) Lender AIB

5) Value of your home 650k

6) Might you trade up or overpay your mortgage? No

7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage. No. Note, am AIB staff

8) What rates are you considering fixing at? Not sure....all fixed rates are now so high.

9) Does your house have a high BER rating which might qualify it for a lower rate? No
 
@Rose11

The best value fix is 5 years at 3.35%

If ECB rates rise from the current 2% to 3%, you will be paying 3.75% - not a lot higher than 3.35%.

After the 5 years, anything might happen.

0.75% is a great margin. Stay on it.

Brendan
 
Hello Brendan, would hugely appreciate any advice on this scenario, currently on a tracker as follows:

On a tracker mortage with AIB: ECB +1%

2) Amount outstanding on your mortgage
121k

3) Remaining term 12yrs 11 mnt

4) Lender AIB

5) Value of your home 285k

6) Might you trade up or overpay your mortgage? No

7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage. Yes (I have long term health condition.)

8) What rates are you considering fixing at? AIB options include 10 year fixed @ 3.6%

9) Does your house have a high BER rating which might qualify it for a lower rate? No, C2
 
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@dan rather

The AIB website is hard to navigate, but these are the rates I am getting for <50% LTV
1671613946717.png
The 10 year rate appears to be 4.1% not 3.6% but as I say their website is confusing. So where are you getting this rate?

Assuming the above rates are correct, the best value rate seems to be 3.35% for 5 years.

The ECB rate is now 2.5% , so you will be paying 3.5% shortly.

It is expected that rates will rise further but really no one knows. Assume an average ECB rate of 3% over the next 5 years, and you will be paying 4.1%.

So fixing at 3.35% seems like a good idea.
You will lose your tracker at the end of the 5 years, but I would not worry about this too much. AIB has had fair mortgage pricing practices for some years now and anyway, the balance on your mortgage will be a lot lower in 5 years so even if the rate will be higher than it would have been on the tracker, then it won't cost you too much more.

If a rise in ECB rates beyond 2.5% would cause you problems, then definitely fix.

If you might overpay your mortgage or make a capital repayment within the next 5 years, then probably stay on the tracker to avoid early repayment penalties.

Brendan
 
Many thanks Brendan
Brendan Burgess said:
@dan rather

The AIB website is hard to navigate, but these are the rates I am getting for <50% LTV
View attachment 6954
The 10 year rate appears to be 4.1% not 3.6% but as I say their website is confusing. So where are you getting this rate?

Assuming the above rates are correct, the best value rate seems to be 3.35% for 5 years.

The ECB rate is now 2.5% , so you will be paying 3.5% shortly.

It is expected that rates will rise further but really no one knows. Assume an average ECB rate of 3% over the next 5 years, and you will be paying 4.1%.

So fixing at 3.35% seems like a good idea.
You will lose your tracker at the end of the 5 years, but I would not worry about this too much. AIB has had fair mortgage pricing practices for some years now and anyway, the balance on your mortgage will be a lot lower in 5 years so even if the rate will be higher than it would have been on the tracker, then it won't cost you too much more.

If a rise in ECB rates beyond 2.5% would cause you problems, then definitely fix.

If you might overpay your mortgage or make a capital repayment within the next 5 years, then probably stay on the tracker to avoid early repayment penalties.

Brendan
Click to expand...
 
@dan rather
AIB recently increased their 10 year rate by 0.5% (i.e. from 3.6% to 4.1%). However, if you have a rate options letter from them, it should have a 'valid to' date on it, so you might still be able to avail of the old rate. Can you confirm if you can avail of the 3.6% rate?

There's a huge comfort in fixing long term, especially as you've indicated you've a long term health condition.
 
RedOnion said:
@dan rather
AIB recently increased their 10 year rate by 0.5% (i.e. from 3.6% to 4.1%). However, if you have a rate options letter from them, it should have a 'valid to' date on it, so you might still be able to avail of the old rate. Can you confirm if you can avail of the 3.6% rate?

There's a huge comfort in fixing long term, especially as you've indicated you've a long term health condition.
Click to expand...
no I dont have a letter, I was just not up-to-date Red. tks
 
Hi Brendan,

Just wondering what you think of the following and if i should stay as is or look to fix.

Existing tracker margin
1.1%
2) Amount outstanding on your mortgage
€82k
3) Remaining term
4 years 9 months
4) Lender
AIB
5) Value of your home
€300k
6) Might you trade up or overpay your mortgage?
Possibly could overpay by a couple of hundred per month. Not trading up. Also have 30k savings which I could use to reduce amount owed but it's my rainy day fund.
7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage.
No
8) What rates are you considering fixing at? Best I can find. Property is currently let.
9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. c2

Would appreciate your feedback.

Thanks
 
@buzzybee said:
Just wondering what you think of the following and if i should stay as is or look to fix.
Click to expand...

@buzybee Stay as you are.

If you try to fix your rate with AIB, they might realise that you are renting out the property and charge you buy-to-let rates. In any case, your term remaining is less than 5 years and your margin is good, so you couldn't save much anyway.
 
Paul F said:
@buzybee Stay as you are.

If you try to fix your rate with AIB, they might realise that you are renting out the property and charge you buy-to-let rates. In any case, your term remaining is less than 5 years and your margin is good, so you couldn't save much anyway.
Click to expand...
Hi Brendan,

Thanks for that. And as regards the savings am I better off hanging onto them? I just feel like their value is being eroded by inflation?

Thanks
 
Hi Brendan, looking for thoughts whether to fix now or stick with Tracker ?

1) Existing tracker margin ECB +0.75%
2) Amount outstanding on your mortgage 275k
3) Remaining term 14yrs
4) Lender AIB
5) Value of your home 570k
6) Might you trade up or overpay your mortgage? No
7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage. No
8) What rates are you considering fixing at?
9) Does your house have a high BER rating which might qualify it for a lower rate ? No
 
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