Key Post I have an Ulster Bank tracker – should I consider fixing?

[Brendan Burgess]

@KarrieK

It's very marginal either way.
With 25 years left and no intention of overpaying, then I would probably stick with the tracker.

You could fix for 5 years at 2.45% and you would more than likely have lower repayments for the next 5 years, but anything could happen for the 20 years after that.

Brendan

 

[KarrieK]

@KarrieK

It's very marginal either way.
With 25 years left and no intention of overpaying, then I would probably stick with the tracker.

You could fix for 5 years at 2.45% and you would more than likely have lower repayments for the next 5 years, but anything could happen for the 20 years after that.

Brendan

Thanks Brendan

 

[Ben2022]

Hi Brendan - I am looking for a steer on whether or not to fix my tracker. Details are as below:

1) Existing tracker margin (often referred to here as "ECB + X%") ECB + 1%
2) Amount outstanding on your mortgage 365k
3) Remaining term 18 years
4) Lender Ulsterbank
5) Value of your home 935k
6) Might you trade up or overpay your mortgage? Possibly in the longer term
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? Swapping tracker for 2.2% 5 year fixed or 2.8% 10 year fixed both with UB
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. Yes B1 rating

Thanks
Ben2022

 

[Brendan Burgess]

@Ben2022

ECB + 1%

18 years

These two factors make it marginal.

Based on an ECB rate of 2%, you would be paying 3%
Based on an ECB rate of 3%, you would be paying 4%.

So fixing at 2.8% for 10 years looks attractive.
I don't think you should fix for 5 years as you would lose your tracker for 13 years after that.
By fixing for 10 years, you lose your tracker for "only" 8 years after that. At the end of the 10 years, your balance will be down to €185k

Might ECB rates fall below 1.8% after the current crisis? They might well do.

On balance, and it's very close, I would pay the insurance and fix for ten years at 2.8%.

Might you trade up or overpay your mortgage? Possibly in the longer term

If you have no intention of overpaying or trading up in the next 5 years or so, then fixing for ten years is probably right.
If you trade up after 6 years, you could face a break fee but with only 4 years of the fix left, it should not be too high.

This is factor you should give a lot of thought to. If, on reflection, trading up or overpaying is more likely, then fixing for 5 years would be better.

Brendan

 

[Paul F]

If you have no intention of overpaying or trading up in the next 5 years or so, then fixing for ten years is probably right.
If you trade up after 6 years, you could face a break fee but with only 4 years of the fix left, it should not be too high.

This is factor you should give a lot of thought to. If, on reflection, trading up or overpaying is more likely, then fixing for 5 years would be better.

@Ben2022 Ulster Bank put a cap of six months' interest on any break fee that you may face if you move home in the future, and AIB will have to honour that cap when they take over your mortgage. That means that even if you fix for 10 years at 2.8%, the maximum possible break fee you would face would be about €5,060 (regardless of when over the next ten years you move home). The break fee could of course be lower.

 

[Ubankmove]

If you want to ask whether you should fix or not, please provide the following information:
1) Existing tracker margin. (This is set in your mortgage contract.)

• If your tracker margin is 1%, please state it in the following format to avoid confusion: ECB + 1%

2) If you have an additional mortgage on the same property, what is the rate?

• E.g., "Fixed at 2% with three and a half years of the fixed-rate period remaining."

3) Amount outstanding on your mortgage

• If you have both a tracker and a second mortgage on the property, specify the amount outstanding on each

4) Remaining term
5) Lender
6) Value of your home
7) Might you trade up or overpay your mortgage?
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.
9) What rates are you considering fixing at?
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.

1) Existing tracker margin. ECB + .85%
2) Additional mortgage? Not applicable
3) Amount outstanding on your mortgage 66000
4) Remaining term 10y
5) Lender Ulster bank
6) Value of your home 330000
7) Might you trade up or overpay your mortgage? No
8) Do you face any barriers to switching? Yes diminished income
9) What rates are you considering fixing at?5 year fixed @ 2.55%
But can I avail of better ltv ratio...? Original ltv was 90%
Would I qualify for <60% now 5 yr fixed @2.35 (in which case would it involve getting a valuation?)

10) Does your house have a high BER rating which might qualify it for a lower rate?  no

Many thanks for viewing

 

[Brendan Burgess]

@Ubankmove

Yes, I think you should fix for 5 years if you get the 2.35% rate.

Not sure if they require a valuation or if they would use the original house value which would have only had to be €110k to get the <60% valuation.

Brendan

 

[Ubankmove]

Correction I'm not sure re answer 1)
Mortgage statement says
Initial/former product name ECBR+.85%
Current interest rate 1.35%

@Ubankmove

Yes, I think you should fix for 5 years if you get the 2.35% rate.

Not sure if they require a valuation or if they would use the original house value which would have only had to be €110k to get the <60% valuation.

Brendan

Thanks Brendan
Original house value was 191000 loan value 165000

 

[TurningGreen]

Hi Brendan, could you please throw your eyes over this for me. I am thinking I will stay put with the tracker as it's a rental and I am overpaying by €117 p/m. All going to plan I also possibly might have €15K to pay off the mortgage end of the year, bringing it down to €22K - would the savings in interest be worth doing it. Would fixing hit me with a early repayment. Thanks in advance.

1) Existing tracker margin: ECB + 1.15
2) Amount outstanding on your mortgage €36947
3) Remaining term 10 Yr 10 Mth
4) Lender Ulster Bank
5) Value of your home 147K
6) Might you trade up or overpay your mortgage? No / YES overpaying by €117 p/m
7) Do you face any barriers to switching? No
8) What rates are you considering fixing at? Don't know - Just starting to look at what options available
9) Does your house have a high BER rating which might qualify it for a lower rate? No

 

[Brendan Burgess]

Initial/former product name ECBR+.85%
Current interest rate 1.35%

@Ubankmove
The 1.35% rate reflects the ECB rate of 0.5%.

It doesn't change it that much. But if you don't get to fix at 2.55% due to some administrative slowness, don't worry too much about it. A margin of .85% is good.

Brendan

 

[Brendan Burgess]

I am thinking I will stay put with the tracker as it's a rental

@TurningGreen

Correct. As it's a rental, stay put. If you try to fix, you will do so at their BTL rates which will be much higher than the home rates.

And as you have such a low mortgage and might overpay it, then a tracker is much more flexible than a fixed rate.

Brendan

 

[Ben2022]

@Ben2022





These two factors make it marginal.

Based on an ECB rate of 2%, you would be paying 3%
Based on an ECB rate of 3%, you would be paying 4%.

So fixing at 2.8% for 10 years looks attractive.
I don't think you should fix for 5 years as you would lose your tracker for 13 years after that.
By fixing for 10 years, you lose your tracker for "only" 8 years after that. At the end of the 10 years, your balance will be down to €185k

Might ECB rates fall below 1.8% after the current crisis? They might well do.

On balance, and it's very close, I would pay the insurance and fix for ten years at 2.8%.



If you have no intention of overpaying or trading up in the next 5 years or so, then fixing for ten years is probably right.
If you trade up after 6 years, you could face a break fee but with only 4 years of the fix left, it should not be too high.

This is factor you should give a lot of thought to. If, on reflection, trading up or overpaying is more likely, then fixing for 5 years would be better.

Brendan

Thanks so much for this Brendan - really helpful and squares with our thinking. On the break fee, the literature from UB makes the 6-month cap clear which is good. All the best!

 

[SMGD15]

I've read all the replies but still torn... hope you can help?

1) Existing tracker margin ECB +2.15%
2) Amount outstanding on your mortgage 243k
3) Remaining term 20yrs
4) Lender Ulster Bank
5) Value of your home 380K
6) Might you trade up or overpay your mortgage? Maybe in future (potential inheritance from parent)
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. Reduced Income
8) What rates are you considering fixing at? Debating which: 5 year or 10 year fixed - currently at 61% LTV.
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. No

 

[Brendan Burgess]

@SMGD15

1) A tracker with a margin of 2.1% is not worth very much. So fixing is the right idea,
2) No need to switch as you will be moving to AIB so their lending rates are fair compared to BoI or PTSB.
3) You can fix for 5 years at 2.45%
4) You can fix for 7 years or 10 years at 2.95%

No one knows the right answer.
If you have a reduced income and could not handle a big increase when the 5 years is up, then maybe go for the reassurance of a 10 year fixed rate.

If it's a purely financial decision, and at the end of 5 years, you could handle an increase, I would tend to fix for 5 years.

But the big decision is that you should do one or the other today. Don't put it off due to indecision. These rates could go up at any time.

Brendan

 

[SMGD15]

Thanks Brendan - I appreciate your insight...

 

[MaryOC]

Hi. could you please advise on our situation?

1) Mortgage Rate: Tracker ECB + 1.85%
2) Amount outstanding on your mortgage: 173K
3) Remaining term: 16yrs 0 mths
4) Lender: Ulster Bank,
5) Value of your home: 489k
6) Might you trade up or overpay your mortgage? Not at present
7) Do you face any barriers to switching: No.
8) Waiting on call back from UB to see what our options are …. should we fix at 5yrs or 10 yrs
9) High BER – No

Many thanks for your advice.

 

[Brendan Burgess]

1) Mortgage Rate: Tracker ECB + 1.85%

This is not worth very much.
You should write to Ulster Bank and fix for 5 years.
Don't wait for them to call you back as interest rates may have risen in the meantime.
You should note in your letter that you tried to do it online, but were unable to do so and that you called them but got no call back.

Brendan

 

[MaryOC]

This is not worth very much.
You should write to Ulster Bank and fix for 5 years.
Don't wait for them to call you back as interest rates may have risen in the meantime.
You should note in your letter that you tried to do it online, but were unable to do so and that you called them but got no call back.

Brendan

Thanks for the advice Brendan.

 

[Skyler White]

Hi, grateful for assistance with this.

1) Current new rate is 2.40% as of 21 October 2022
2) Amount outstanding on your mortgage 117k (rental). Other mortgage on PPR, 210k remaining, fixed rate with BOI
3) Remaining term on rental property 16 years 4 months
4) Lender Ulsterbank
5) Value 175-200k approx.
6) Might you trade up or overpay your mortgage? No, we could overpay in future if in a better position financially.
7) Do you face any barriers to switching? Possibly, I cannot get life cover due to medical issues.
8) What rates are you considering fixing at? Unsure what to do rate wise, would like some certainty going forward. Would prefer to sell property but concerned about potential tax implications
9) Does your house have a high BER rating which might qualify it for a lower rate? No (apartment built 2004)

 

[Brendan Burgess]

@Skyler White

1) Current new rate is 2.40% as of 21 October 2022

rental property

As it's a rental, you would probably be fixing at the rental rates which are much higher. So stay as you are.

PPR, 210k remaining,

Would prefer to sell property

Again, another argument of staying on a tracker as there won't be any early repayment fee if you clear your mortgage.

May overpay in 5 or so years

If you are overpaying, it might be better to overpay the PPR mortgage as you get tax relief on the buy to let