Mortgage Rate After Coming off Fixed Rate?

M

Mortgagor

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Hello,

My lender has a favourable fixed rate which I am considering switching to for two years. It's a much lower monthly repayment than my current rate. My current rate is a discounted loyalty rate which is available to me because my salary is paid into a current account held with the mortgage bank. In the letter that the bank sent to me setting out the options that will be available to me when I come off the fixed rate, the only variable rate that they show is the standard variable rate - they do not show the "discounted loyalty rate". I called the bank and they said that I would get a letter towards the end of the two-year period to set out my options when coming off the fixed rate and that the discounted variable rate, if available at the time, would be one of the options. I asked for something in writing and he said he'd call me back to let me know if that was possible (of course it's possible :)) but I'm not holding my breath.

Does the lender legally have to offer me all of the products that they have for which I meet the criteria? If I have to move to standard variable, switching to a fixed rate for two years would not be the best financial option.

Any ideas on best course of option here? I can't find anything directly relevant on the consumer section of the Central Bank website, I could have missed it.

Thanks,
Mortgagor
 
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It's much easier if you tell us which lender you are with. I presume it's Ulster Bank?

The Ulster Bank fixed rates are great. No one knows what will happen when the two or four year fixed rate is up.

The only lender who competes on variable rates is AIB.

Brendan
 
Thanks Brendan. Yes, Ulster Bank. Can they pretty much offer me whatever they like after the fixed rate term is over?
 
Yes, but so can any lender.

You could switch to AIB for the lowest variable rate. But they could change their policy the following day and up the variable rates.

The only way to get some reassurance is to get a tracker.

Brendan
 
OK, so a few years ago I was pretty knowledgeable in this space but have stopped following closely so thanks in advance for your patience :)

My situation sounds similar to what I broadly recall as one component of the controversy around tracker rates i.e. customers not being re-offered the tracker rate when they came off fixed. Why would bank be compelled to re-offer tracker and not compelled to re-offer Loyalty rate?

I refer to the first line of this post - I've no doubt that I'm over-simplifying, so eager to understand all factors.

Thanks,
Mortgagor.
 
OK, so I see what your issue is.

You have signed up to a discounted variable rate and you are entitled to that for the life of the mortgage.
If you choose to switch to another product, you are not entitled to switch back to the discounted variable, unless your contract says so.

Most of the tracker guys had no such legal entitlement either, but the Central Bank made them give them trackers as the paperwork was not clear enough.

In particular those on trackers who fixed were not told that they would be giving up their trackers. You have been told clearly that if you fix, you will lose your discounted rate. So you have a choice - fix and followed by normal rate or stay on Discounted Variable.

You could check your contracts to see if they were so badly worded that you have a right to go back to a discounted variable rate.

Brendan
 
Actually, what I have been told (verbally) is that if the discounted variable rate is available when I am coming off my fixed rate, I will be offered it - but I don't have anything in writing to say that. It seems to me that my best course of action is:

Plan A (best) - Check contracts (either myself or ask a solicitor to do so) to check if the wording is poor and in my favour. Then I will be guaranteed discounted / loyalty variable rate.
Plan B (next best) - get something in writing to say that I will be offered a choice of all products that I am eligible for when the fixed rate ends. I would still loose out if they had discontinued the loyalty rate.

Plan A and Plan B might be reversed, depending on my appetite for litigation.

Not sure if I have any other options, apart from sticking with my existing rate?

Thanks,
Mortgagor.
 
I suppose what they are saying is that if the discounted rate is still in existence when your fixed finishes it will be offered to you if you still qualify.

Same as if when your fixed was up and you wanted to fix again but the bank was no longer doing fixed rates then you wouldn't be entitled to one.

I had this conversation so many times with people, they would ask could they fix again when the term was up and the answer was always yes if fixed terms are available, no one knows what future products will be.
 
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