Should I fix an Ulster Bank offset mortgage?

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Teddy2627

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Hi Brendan, could you review my details below and suggest what you would do in my circumstances.

My mortgage is with Ulster Bank but it's an old First Active offset mortgage, my savings is used to calculate the interest paid. Currently have 70k in savings.


1) Existing tracker margin. (This is set in your mortgage contract. ECB + 1.15% - current rate I'm paying is 3.15%

2) If you have an additional mortgage on the same property, what is the rate? No

3) Amount outstanding on your mortgage €94k

4) Remaining term 19 1/2 years

5) Lender Ulster Bank - previously First Active - It's an offset mortgage

6) Value of your home €170k

7) Might you trade up or overpay your mortgage? Potentially could overpay on mortgage

8) 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, you are now renting out the property. No

9) What rates are you considering fixing at? Open to all options - switching to Fixed with UB or switching to new bank

10) Does your house have a high BER rating Possibly, house fully renovated 5 years ago, need to get certified
 
@Teddy2627

Let's start by looking at a €94k mortgage at ECB + 1.15% and forget about the offset for the moment.

You can fix for 5 years at 2.35% compared to paying 3.15% at present and probably more.

So, at first glance, you should fix your rate for 5 years.

7 years at 2.8% is too high, so 5 years seems about right.

But after 5 years you will have lost your tracker. Ulster Bank will no longer be open to new business, and so might push up the non-tracker rates to encourage people to switch their offset mortgages to a new lender.

Or your mortgage may be sold to Pepper which will be the same thing - no incentive to offer you a decent rate.

So, on balance, I think you should stick to your tracker.

Brendan
 
Does the fact that it is an offset mortgage change anything?

For example, if you fix your mortgage rate, might you lose your offset facility? I don't know, but I would triple-check before doing so.

Teddy2627 said:
3) Amount outstanding on your mortgage €94k
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Teddy2627 said:
Currently have 70k in savings.
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So, in reality you have a mortgage of €24k. Is that correct?

What is the plan for the savings?
Do you intend to withdraw your savings?
Do you intend to add to your savings and to reduce your net mortgage further?
 
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Teddy2627 said:
  • Open to all options - switching to Fixed with UB or switching to new bank
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You definitely should not switch to another lender.

  1. The offset mortgages are a real headache for Ulster Bank and they might incentivise you to clear the mortgage early.
  2. The offset mortgage is very valuable, so you should not give it up
  3. The costs of switching a €94k mortgage would take some time to recover if you did get a cheaper rate.
 
For example, in the other thread you look at the possibility of buying an investment property.

With an offset mortgage you can withdraw your savings - which sort of means that you would be borrowing at ECB+1.15% to buy an investment property. This would be a very good rate (although you would not get tax relief on the money so used.)

You might also want to contribute more to your pension. Again, you would be effectively borrowing at ECB +1.15% to max your pension, which would seem to be worthwhile.

Brendan
 
While I assume it's just a technicality/administrative issue for UB you can't actually fix the rate on an Offset, the mortgage type would have to be changed to standard annuity so new account set up as opposed to how easy it is to fix an existing annuity.
 
Brendan Burgess said:
Does the fact that it is an offset mortgage change anything?

For example, if you fix your mortgage rate, might you lose your offset facility? I don't know, but I would triple-check before doing so.





So, in reality you have a mortgage of €24k. Is that correct?

What is the plan for the savings?
Do you intend to withdraw your savings?
Do you intend to add to your savings and to reduce your net mortgage further?
Click to expand...
Thanks Brendan for your reply, apologies for the delay in coming back to you.

I do intend on spending about 5-6k that's in my savings in the next month or so to do work around my yard and install electric gates.

I previously asked about an investment property but have since decided not to go ahead with this following advice on here as well as family members.

I do plan on paying the full 25% in my pension for 2022 I currently have only paid in 8% & plan to continue to pay the full 25% in for 2023.
 
Hi, just came across this thread and looking for advice.

Mortgage Home
1) Existing offset (old FA ) ECBR + 0.75%
2) Amount outstanding on your mortgage €171,000
3) Remaining term 12 years
4) Lender UB
5) Value of your home 360,000 ?
6) Might you trade up or overpay your mortgage? No
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? Not entirely sure. I would have fixed ages ago but was half hoping the would be a hair cut off on the Offset. With this pushed out to July I'm wondering if it's just time to bite the bullet fix and lose the offset. Haven't made any use of the Offset really, although just started putting €500 per month in there before Xmas.
 
@Rodney115

Ulster Bank fixed rates are still great value as they have not pushed them up as quickly as the rest, but could do so at any stage.

After the ECB rate was increased to 3% yesterday, you will be paying 3.75% and probably 4.25% in a couple of months.

You can fix for 4 years at 3.1% and you will lose your tracker for the last 8 years. Is that worth it? Very hard to know. If you were using the offset facility, you should definitely keep it. But if you have no plans to use it, then probably do give it up.

So 4 years at 3.1% or 7 years at 3.55%?

Very hard to know. I think I would go for the 4 years.

Brendan
 
Rodney115 said:
Hi, just came across this thread and looking for advice.

Mortgage Home
1) Existing offset (old FA ) ECBR + 0.75%
2) Amount outstanding on your mortgage €171,000
3) Remaining term 12 years
4) Lender UB
5) Value of your home 360,000 ?
6) Might you trade up or overpay your mortgage? No
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? Not entirely sure. I would have fixed ages ago but was half hoping the would be a hair cut off on the Offset. With this pushed out to July I'm wondering if it's just time to bite the bullet fix and lose the offset. Haven't made any use of the Offset really, although just started putting €500 per month in there before Xmas.
Click to expand...
Hi Rodney.
What did you decide on. The offset is a fantastic mortgage but only if you use the facility. If you have savings anywhere else that are not doing much then put them into this account. Your repayments will unfortunately keep going up but you can potentially take years off your mortgage saving thousands against other products.

Try Barclays offset mortgage calculator. Put your figures in there and see for your own situation.
 
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