Potential problem if try to leave current morgage provider

Hi Guys,
I hope someone can help me. Mr. Bear and I are currently on a fixed rate mortgage with Bank of Scotland (Ireland). We have about a year to go, until we move to a variable rate...

I was looking at BOSI rates yesterday and they are very high - the ltv <80% is 4.3, a 1 year fixed is 6.1. I spoke to my broker and they told me that BOSI do not want business. This is why the rates are so high.

We purchased our home about 4 years ago and have a mortgage of about 368K - and the value of our home - well that could be from €5 to anything with the current market.

This means Mr. Bear and I are somewhat stuck as we wouldn't have 20% equity in our home and could potentially be forced to fix at 6.1%, as most banks may refuse us as the value of homes have come down conciderably..

We have some savings (€8k) and no loans - would anyone within the industry have some advise???
Cheers P..

First thing to do would be to get your house valued, if your loan to value is less than 92% then you should try to switch now just in case property prices fall further.
There may be a breakage penalty from BOSI and legal fees for the switch but this could be a small price to pay to get a variable rate of around 2.65% instead of a fixed rate of 6.1% or variable of 4.3%.
You should have a proper mortgage valuation carried out - should be about €130. Make sure the valuer is on the approved panel of all the lenders and has professional indemnity.
If your LTV is >92% then I'm afraid you will be stuck with BOSI.

Could BOSI force us into a fixed rate of 6.1% or worse still if we have to stay with them if we do not have atleast 20% equity they could make us pay any interest rate and potentially financially cripple us!
We are not in a position to move as the penelty clauses would be huge. The reality is they do not want my business - but may not let us go!..
Cheers P..

With a year to go, your penalty should not be huge. Have you asked BOSI what the penalty will be?

Check your loan offer. I presume it says you move to a variable rate when your fixed term ends regardless of LTV.

No I haven't contacted them - I'll try during lunch - cheers - I was worried that they could try and force us into an impossible situation, due to what is going on right now.

pinkyBear said:

No I haven't contacted them - I'll try during lunch - cheers - I was worried that they could try and force us into an impossible situation, due to what is going on right now.

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most likely to be put on a variable rate at the end of the fixed period. Try reading your contract, you might be able to figure it out for yourself

DerKaiser said:

most likely to be put on a variable rate at the end of the fixed period. Try reading your contract, you might be able to figure it out for yourself

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I think pb is making the point that because they will have no equity in the property that, at the end of the fixed rate, they won't be able to shop around for good value re-mortgage and will have no choice but to stay with current mortgage provider who will , presumably, only offer them their own current prevailing rate. Which appears to be quite high.

mf

Hi Guys,
I contacted BOSI about our contract - basically when we finish our fixed rate we will move on to a different variable rate (the standard variable rate) of 2.55 (no brilliant but better than what we are on now..) This rate is not advertised however it is in our contract - and did I have a sigh of relief!
So panic over...
Cheers for the help guys...