New Mortgage - 1st yr discount tracker

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podgerodge

Registered User
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Hi
Quick question - a colleague is buying an apartment and has secured mortgage approval with a 1st year discount tracker rate of 0.6% above ECB. The bank then states (under current market conditions) that this "would" revert to 1.1% above ECB after a year.

My question is - as none of us knows what the situation will be in a year with trackers could my colleague end up on a far worse rate in a year - and be better off going onto the 1.1% above ECB now and foregoing the 1st year discount?

(mortgage €180000 - discount repayment of €900, ordinary repayment €960 - so a loss of €720 if he opted to go straight onto the 1.1 above ECB)

Thanks.
 
I don't understand. If the offer (presumably subject to review any time before draw down?) is ECB + 0.6% for year one and ECB + 1.1% thereafter how would they be better off going ECB + 1.1% from year one?!!? Or are you asking if the ECB + 1.1% rate from year two is somehow provisional and subject to review? In which case the documentation really should say for sure.

Also - is ECB + 1.1% the best that they can get on the market right now?
 
ClubMan said:
Or are you asking if the ECB + 1.1% rate from year two is somehow provisional and subject to review? In which case the documentation really should say for sure.
Click to expand...
that's what i was getting at but could not see it specified in the documentation (only references to moving from fixed rates to variable after the fixed period)


(he may get better value elsewhere but this is a done deal and he didn't shop around!)

edit - I'm inclined to think it's ok as the 1.1% rate is also quoted in the "particulars of offer of mortgage loan"
 
Ask them to confirm in writing that the tracker margin from year 2 is definitely 1.1%.
 
Sounds like a Halifax rate? If it is - the website clearly states ECB plus 1.1% after 1 year. No harm in double checking with lender too - as Clubman said.
 
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