Key Post Should borrowers with trackers consider fixing? (General guidelines)

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Hi Precilla

I think you should switch from ptsb.

With a 64% Loan to Value, you could fix with Avant for 7 years at 2.35%

The best you could do with ptsb would be 3%.

However, I would not rely exclusively on Avant in case their rates rise before the switch goes through.

So maybe apply to AIB at the same time but the best you could do there would be 5 years at 2.45%.

Brendan
 
Hi Brendan,
I'd also love some advice on this if possible:

1) Existing tracker margin - 2.1%
2) Amount outstanding on your mortgage - 203,000
3) Remaining term - 20 years
4) Lender - PTSB
5) Value of your home - 400-425k
6) Might you trade up or overpay your mortgage? - Overpay. Our goal is to overpay by 1,000 per month starting from early 2023, but only if both of our jobs remain ok during the possible turbulent times ahead
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. - I'm in the process of changing employer so probably couldn't switch until I'm through a probation period of around 6 months
8) What rates are you considering fixing at? - Either 5 years at 2.8%, or 7 years at 3%
 
PTSB have advised me of the following:
If I stay on my tracker at 2.1%, the total interest repayable for the remaining term of the loan will be 45,687 (this rate is expected to increase though)
For the green 5 year fixed rate at 2.8% it'd be 78,547
For the 7 year fixed rate at 3% it'd be 77,350
 
They can't say authoritatively what you will pay in total interest over the lifetime of the loan when at least some of that term will involve rates that cannot be ascertained a priori.
 
ClubMan said:
They can't say authoritatively what you will pay in total interest over the lifetime of the loan when at least some of that term will involve rates that cannot be ascertained a priori.
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Yeah it's only based on the current rates, all of which are subject to change either now (tracker) or at the end of a fixed term.

I'm really confused about what to do. Already paid the majority of interest. I do want to overpay. I made a couple of overpayments for a couple of thousand in recent months. But from early 2023 I plan on making regular overpayments if possible.
 
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Newtothis2022 said:
I've had the mortgage since 2006, so I've already paid the majority of interest due on the loan.
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This is pretty much irrelevant.

A mortgage is just a string of contractual payments between today and date X. At date X you own the property unencumbered.

You can bring forward date X by overpaying if you think that is what best suits your circumstances.

But "saving interest over the lifetime of the loan" isn't a very useful objective. If you overpay you are forgoing either consumption or another saving opportunity that might have a higher return. For example aggressively paying down mortgage to zero by 45 while underfunding your pension will save you mortgage interest but probably isn't the best way of maximizing wealth over a lifetime.
 
These ptsb cases are just so hard to give advice on. They really exploit existing customers, so as a general rule you should try to switch to a fairer lender - either AIB or Avant.

Newtothis2022 said:
1) Existing tracker margin - 2.1%
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With any other lender, I would just say, ignore this tracker as it's a crazy margin. But with ptsb, it could be right to stay on it.


Newtothis2022 said:
4) Lender - PTSB
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Newtothis2022 said:
- I'm in the process of changing employer so probably couldn't switch until I'm through a probation period of around 6 months
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Have you started the process of changing mortgages? Will you have definitely changed jobs by the time of the switch? If so, you are probably stuck with ptsb.


Newtothis2022 said:
8) What rates are you considering fixing at? - Either 5 years at 2.8%, or 7 years at 3%
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With Avant you could fix for 5 years at 2.15% or 7 years at 2.25%
With AIB you could switch for 5 years at 2.35% or 7 years at 2.95%

It would just stick in my craw to fix for 5 years at 2.8%. But it could well be cheaper than ECB +2.1%

If you wait for 6 months to become permanent and then switch, you might well find that Avant's 5 year rate is above 2.8%.

Disclaimer: You are snookered being a customer of permanent tsb and this suggestion might well turn out wrong.

1) Fix for 5 years at 2.8%
2) As soon as you are free to switch mortgages, apply to whichever lender offers best value at that stage.
3) At that stage, check with permanent tsb what the break-fee is and it may well be worthwhile to switch. The break-fee should be low and might well be zero.
 
Newtothis2022 said:
Our goal is to overpay by 1,000 per month starting from early 2023, but only if both of our jobs remain ok during the possible turbulent times ahead
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There is one, and only one, aspect of the ptsb mortgage which might be relevant to you, if you are worried about the times ahead.

ptsb is unique in the way it treats overpayments. They are treated as credits - i.e. the opposite to arrears. So, while you can't get them back if you need them, if you have built up, say €14,000 in credits, and you hit a bad patch, you can stop paying your mortgage until you have used up the €14,000.

For most people it's not worth paying the much higher rates to avail of this. But it could be useful for someone who has a volatile or uncertain income.

Brendan
 
Thanks Brendan. It is a very confusing situation for me.
I just started with a new employer this week. I presume I'd have to wait 6 months to try to switch to any other lender? I hadn't started the process of switching with another lender yet. I think both mine and my partner's jobs will be safe but who really knows, especially as I just started with a new employer.
I take on board NoRegretsCoyote's view on mortgage overpayments. But for me, there is a lot to be said for owning my home outright. I know not everyone will agree with me on that.
 
Newtothis2022 said:
I take on board NoRegretsCoyote's view on mortgage overpayments. But for me, there is a lot to be said for owning my home outright. I know not everyone will agree with me on that.
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Feel free to discuss this in a separate thread, but we will keep this thread for the issue of whether people on trackers should consider fixing.

Brendan
 
Hi Brendan ,
Thanks for doing this

1) Existing tracker margin - 1.1%
2) Amount outstanding on your mortgage - 150k
3) Remaining term - 17 years
4) Lender - PTSB
5) Value of your home - 350k
6) Might you trade up or overpay your mortgage? - considering clearing mortgage in October when state savings matures.
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? - Either 5 years at 2.8%, or 7 years at 3%
Not sure if switching is a good idea or not or just clear mortgage.
Still not entirely sure on clearing mortgage yet.
 
Brendan Burgess said:
Feel free to discuss this in a separate thread, but we will keep this thread for the issue of whether people on trackers should consider fixing.

Brendan
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Will do. So you think I should fix for 5 years at 2.8% then look to switch as soon as I'm through a probation period at work and hope that I'm quoted a zero break fee?
 
Newtothis2022 said:
So you think I should fix for 5 years at 2.8% then look to switch as soon as I'm through a probation period at work and hope that I'm quoted a zero break fee?
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First ask a broker if you can switch now to AIB or Avant.

But if not, then fix as an insurance against rates going up quickly.

Brendan
 
Ford25 said:
6) Might you trade up or overpay your mortgage? - considering clearing mortgage in October when state savings matures.
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Hi Ford

If you are going to clear your mortgage in October, then you should not fix now as you could face an early repayment penalty.

So the question is whether you should clear all of it or not. This is a bigger issue so I suggest to get a comprehensive answer you should start a new post in the Money Makeover forum.

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
www.askaboutmoney.com

Brendan



Brendan
 
If I fix with PTSB now, does that mean I loose my Tracker or will the account go back to Tracker at end of fixed rate?
 
You will probably lose your tracker. But you need to read your mortgage agreement to be absolutely sure.#
Brendan
 
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