new mortgage rate is too high

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acer120

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I received a letter today from my bank to say that our two year fixed rate option on our mortgage has ended.

Myself and my wife bought an apartment two years ago for 265,000 over 35 years. The repayments up to now have been 1068.54 p/m

The following options are available:

-Traker Variable rate Currrently: 5.93% 1489.97p/m
-Standard variable rate 5.94% 1491.68p/m
-2 year fixed 6.35% 1562.32p/m
-5 year fixed 5.99% 1519.09p/m
-7 year fixed 6.10% 1519.09p/m
-10 year fixed 6.10% 1519.09p/m


This does not include TRS which is currently 193.05 on our current repayments.

We are a single income household of 550 after tax. I dont know how we are going to manage with the increase.

At the time when we took out the mortage we had no bills and both of us were working. Illness has forced my wife to give up work. What options are open to us?
 
its a very unfortunate situation, i can see the repayments will be about 70% of your wages and so un-liveable. If i was you i wouldn't go fixed as they are predicting that the ECB will drop their rates again, if they dropped by another .5% that would help your situation but not a whole lot.

The only advice i can give is to contact mabs (www.mabs.ie) they are a non-profit org which helps people in financial difficulties. They will be able to give better advice than anyone on a internet forum. Mabs recommends that people contact them now if they think they will be in trouble down the road, dont wait and contact them when your already in trouble.
Best of luck.
 
Hey there Acer120,

Thats a big shock for sure.

Just wondering if you are in a position to change mortgage providers as for example AIB's standard variable is 5.0%, which would make your repayments €1335 per month before mortgage relief.

As well as this rates will probably come down more over the next period of time as there is talk of the ECB dropping their rate by .5% at christmas, which could result in variables dropping some more.
 
Southfacing - Why would you think AIB or any other bank is going to take on this debt? Based on €550 p/w, the OP would be paying 48% of the salary monthly. (€1335 - TRS OF €195 / €2383). Thats before you stress test the repayment.

I have seen this many times on AAM. Posters seem to think they have an entitlement to the very lowest rate. That is not the case. There's the small matter of lending terms and conditions and risk adjusted return on capital. Banks can offer cheaper rates than others becasue they pick the lowest risk.

Acer120 - I genuinely feel sorry for your situation. You should speak to the bank and see if you can move on to interest only for a while. I stress, this is not a long term solution but will help keep you up to date on the mortgage payments. I would then follow Senna's advice and speak to MABS.
Will your wife be able to return to work in the near future?
 
acer120 said:
-Traker Variable rate Currrently: 5.93% 1489.97p/m
-Standard variable rate 5.94% 1491.68p/m
Click to expand...

I would agree with the previous poster in that you should contact mabs.

If you can still get the tracker rate then take it. Short term it may look expensive but in the future it will be worth it.
The fact that all lenders are withdrawing them or trying to get customers to come off them by offering what look like cheap fixed rates is evidence of this.
 
acer120 said:
The following options are available:

-Traker Variable rate Currrently: 5.93% 1489.97p/m
-Standard variable rate 5.94% 1491.68p/m
-2 year fixed 6.35% 1562.32p/m
-5 year fixed 5.99% 1519.09p/m
-7 year fixed 6.10% 1519.09p/m
-10 year fixed 6.10% 1519.09p/m
Click to expand...

Double check that these are the best options your bank offers. AIB and a few others like to send out a form when a fixed rate is over, listing a 'selection' rates and expecting you to tick one. However they manage to 'forget' to list their best rates.
 
Wonder could you go interest only for a while?
Could you take in a lodger?
Could your wife claim anything from social welfare?
Could you get a higher paid job or a part-time / weekend job to tide you over?
 
Also maybe try a mortgage broker to see if they could get you a better deal on the mortgage?
 
Thank you all for you replies. I will go to a local mortage broker this morning to see if they can offer be a better rate without incurring legal fees. Also I will contact my bank to see if they can do better than the rates they are currently offering.

My wife is currently doing work experience two days a week with a company that she hopes will offer her employment in the new year. Disability benifit for her is in the region of 250p/m
 
also check the insurance policy(s) you took out at the time you took out the mortgage. Sometimes, lenders/brokers sold (critical) illness and/or mortgage protection policy as well as the mortgage protection policy. If you have any of these add ons, then you might get some benefite from insurer.
 
Suggest rather than missing repayments that you ring your lender and explain your circumstances. You may be able to come to some sort of arrangement of reduced repayments in the short term which might help until things pick up for you.

Best of luck.
 
I am sorry vor if my input is part of some AAM poster group that displeases you.

I didi not say that acer120 was entitles to the mortgage example I gave. I was just 'wondering' if they were in a position to switch to this as they might depending on the LTV and whether their circumstances might change in the future while also highlighting that there are alot better mortgage rates available than those of their lender and that mortgage rates are comming down, which if not now but in the near future could be a possibility thus offering hope that there is this potential and hope that they might only have to service these high rates for a short period of time.
 
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