Case study Success! - I transferred my UB tracker to a new house

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Murt2006

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Summary - prepared by Brendan based on numbers provided by Murt

Purchase price of new home|330k |
Funded by|
Surplus on sale of old home|€102k | €173k sale - €71k mortgage
Savings| €74k
New mortgage |€154k|€71k tracker retained {br} New €81k SVR

Murt managed to close both the sale of the old home and the purchase of the new home on the one day.
 
Hi Brendan,

i am currently talking to UB about this trading up with this offer,

luckily we are not in negative equity, we signed up to a tracker with UB in 2002 at ECB +0.85% (so currently at 1.85%). As you suggested, and as far as i understand from talking to the UB!! i would

-keeping paying the tracker rate on the existing mortgage for the rest of that mortgage term (9 years left ).
-take out a new mortgage for the trade up at a existing standard variable/fixed rate for the agree term (20 years etc.) etc., (we also have savings to put towards this).

Hence the repayments are on both mortgages for the first 9 years until the tracker mortgage is cleared and then for the remaining 11 years we would be paying off the "new" mortgage. This frontloads the amount of repayments for the first 9 years (making it a bit expensive).

When i saw what the repayments were going to be i went and spoke to AIB about a new mortgage with them (given that i think? they have the best variable rates on the market). They will give me a mortage for the trade up based on the fact that i clear the mortgage with UB, and take a new mortage from them. The repayments are more "averaged" across the 20 years, but the overall cost i think would be greather than UB (i know this is very much reliant on interest rates etc. but all things being equal, i.e. they both pass on similar interest rate hikes etc.).

The benefit i see with the UB deal though is that if the ECB drops it's rates again then they will at least have to pass that on the cut for the tracker mortgage.....there's no guarantee that this will happen for either a UB or AIB variable rate mortgage.

I also plan to ask UB about missing payments/ paying off lump sums etc. and which mortgage this would effect so i will update once i go through this with them,

I'm not sure if i'm seeing all the benefits/risk here so would appreciate any input/thoughts from others out there.
 
Murt2006 said:
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-keeping paying the tracker rate on the existing mortgage for the rest of that mortgage term (9 years left ).
-take out a new mortgage for the trade up at a existing standard variable/fixed rate for the agree term (20 years etc.) etc., (we also have savings to put towards this).
Click to expand...

What age are you? You could make the new mortgage as long as possible, i.e. until retirement age, and then overpay after the initial tracker mortgage is paid off.

Would they be able to figure out a percentage of the new mortgage that would need to go interest-only for the initial 9 years in order to average out the payments over the entire term?
 
Hi Ronaldo,

i'm 37, have since spoken to UB and it is possible to push out the new mortgage term so thats a good option, thanks,

also just to update

-on paying a lump sum, UB said that the lump sum would come off the mortgage with the higher interest rate (good for customers),
-the mortage payment goes in as one payment and they sort out the deductions in-house in UB wrt to each mortgage portion

obviously the better deal between UV vs AIB depends on how much i am going to borrow, but UB sounds like the best option if i go with their discounted variable (3.85%, with an LTV of <75%, and a ufirst member)
 
ok, just to update again,

-if you have a reduced payment (due to customer circumstance) on the above deal, the amount you pay also come off the mortgage with the higher interest rate (which will almost definitely be the newer mortage),

Now i need some advice (apologies if i should have started a new thread for this, but it's related to the above discussion: so here goes),

My situation is that,
-i have 74K approx left on the tracker, for 9 years left on term at ECB + 0.85%.
-i need to borrow an additional 91K to trade up (as already mentioned, have savings to offset the rest of the trade up cost)
-UB 's current “discounted variable” rate for an LTV of <75% is 3.95% (SVR-0.80%)

-initial monthly repayments (barring any rate changes) would equate to

735 on tracker (9 years)
475 on new mortgage (25 years term)

however this discounted variable is not guaranteed to remain discounted for any period of time, i.e. as far as I understand from UB it could be changed back to the SVR at any time (i.e. 4.75% at the moment which is one of the highest on the market)

as mentioned i went to AIB and the scenario with them is,

-clear the mortgage with UB
-take out new mortage with them at LTV < 50%, SVR APR 2.84%, 25 year term, for the entire 165K,

monthly repayments would be

768 approx (25 years),

All things being equal (both institutions pass on the same rate cuts/increases etc.), then UB would work on that little bit cheaper over the life of the mortgage.

But really the better mortgage offer will as always depend on what each institution does with interest rates over time,

-am I right in thinking that AIB (being 97% owned by the government) could be the better option here?, given that they will come under political pressure to pass on ECB rate cuts and keep their rates low during the foreseeable future?

-am I mad to think of giving up the UB tracker (based on the above), who are owned by RBS, so the Irish government will have very little/no impact on trying to protect mortgage owners with UB from rate hikes!

In essence this deal by UB (while welcome) seems to be a way of clawing back some of their losses on tracker mortgages and I am wary of offerings titled “discounted variables”, as I’m sure this discount will disappear at some stage..
 
Hi Murt

Check out the Ulster Bank [broken link removed] and print it off just in case it's not included in their terms and conditions.

Variable Mortgage type Typical APR 20 years Discounted Variable <75% LTV with ufirstgold / ufirst Private discount (Standard Variable Rate* minus 0.95% for the life of the mortgage). Available exclusively to ufirstgold / ufirst Private current account holders. 3.90%
Click to expand...



You will get the discount for the life of the mortgage from UB, so I would say that this is the next best thing to a tracker. Did the UB not make this clear to you?

All things being equal (both institutions pass on the same rate cuts/increases etc.),
Click to expand...

Ulster Bank has the most expensive SVR at the moment. AIB has the cheapest. It is much more likely that the AIB SVR will rise as they are losing money on their mortgages.

Given that you are already with UB, it seems a clear cut decision to me. Stay with them.
 
Hi Brendan,

thanks for that,

-i had a print out of rates which UB had given to me which actually doesn't quote all the options at your link above (got this back in Feb so this may have been out of date), having said that i was talking to them just this week and these newer rates were not mentioned.
-was not clear to me after discussions that the discounted variable applies to the term of the mortgage (but that maybe my mis-understanding), i can see from the website that it is clearly stated,

again, advice very much appreciated
 
Update

Hi Brendan,

couldn't figure out how to PM so just replying to the thread, (don't think this is enabled on my account),

anyway just to update how this whole process finished up:

-we transferred the tracker (rate,remaining balance and schedule of repayments) onto the new house and
-took out the new mortgage on top of this,

except for the whole UB (should that be GUBU) IT issues it worked out fairly straightforward in the finish. The loan contract with the bank now specifies 2 different loans attached to the property. Have not made repayments yet but as far as i am aware the tracker schedule continues as is with a new schedule for the new mortgage portion.

If there any particular questions on other details i will do my best to answer them,

cheers
 
Hi Murt

Well done! Great to hear that these are actually working in practice.

Would you mind summarising the numbers and I will update your first post to show the numbers

I think it would be very useful for any other UB customer going through the process.

sales price of original home
Amount of mortgage outstanding
Term outstanding: 9 years
Rate: ECB + 0.75%
Purchase cost of new home
Deposit
Amount borrowed
Rate borrowed at
Term of new mortgage

Any advice for potential users of this?

In practice, how did you synch the selling of your old home and the purchase of your new home?
 
Hi Brendan,

summary of details below at end of post below,

co-ordinating the buying and selling was fraught with difficulty, however our solicitor kept a good handle on both wrt to signing contracts etc. At times we were worried that one or other would fall through due to current climate and some minor issues with the house we were buying.

For anyone going through the same process and if you need to sell to release funds to but the next house, you obviously need to ensure you get the sale of your own house over the line first, i.e contract signed. We did not want to go renting but at the same time getting "sale agreed" took a while and a lot of viewings/negotiating so we were willing to take so that route: i.e. sell, rent and keep looking for the next house. Luckily in our case we found a house which ticked a lot of boxes and went sale agreed within 2 weeks of Sale agreed on our own. We then had to agree a handing over money/keys date for both and based on the fact we needed "to sell to buy" this all happened on the one day. This was difficult from the perspective of

-agreeing the same date across 2 different parties (ok in our case as neither party were depending on another property sale in order to proceed)

-funds: UB needed to redeem the old mortgage, release the money to the solicitor (very difficult in our case as UB were experiencing their infamous IT issues at the time and all this had to be done manually, meaning the money was only released on the day of handover)

-solicitor had to co-ordinate the funds (equity from sale of our own/our savings/ UB mortgage) and the various legal dealings with 2 other solicitors on the day

-moving: needed to wait for the above to go through before i could get the keys, then needed to move everything on one day into the new place, clean the old place and leave it in good order for the buyer ( in our case I asked the vendor if you we could possibly get access the day before to move “one load” and they generously agreed as they had moved out at this stage, they keys were not handed over but the EA met us there and gave us access for an hr so this definitely helped).

If I’m being honest: the chances of all the above working out in order for us to meet the dates were slim based on other peoples experience (friends/solicitor/EA), but we had to get it done…so we did. We are in the house about 5 weeks now are very happy with it (even if my hair is a little greyer because of the above).

sales price of original home: 173K
Amount of mortgage outstanding: 71K
Term outstanding: 9 years
Rate: ECB + 0.85%
Purchase cost of new home: 330K
Deposit:74K
Amount borrowed: 154K (Total made up for existing mortgage 71K at tracker rate and new mortgage at 81K at (SVR-0.80% guaranteed for life of mortgage)
Rate borrowed at: see above
Term of new mortgage: 25 years,


any other queries don’t hesitate to reply,

cheers
 
Murt2006 said:
For anyone going through the same process and if you need to sell to release funds to but the next house, you obviously need to ensure you get the sale of your own house over the line first, i.e contract signed. We did not want to go renting but at the same time getting "sale agreed" took a while and a lot of viewings/negotiating so we were willing to take so that route: i.e. sell, rent and keep looking for the next house. Luckily in our case we found a house which ticked a lot of boxes and went sale agreed within 2 weeks of Sale agreed on our own. We then had to agree a handing over money/keys date for both and based on the fact we needed "to sell to buy" this all happened on the one day.
Click to expand...

We're currently working through the process as well but it appears to be very constrained. Selling and renting while you look is not a option - once your mortgage is redeemed you've lost your tracker.

This is what has been communicated by the local UB branch mortgage advisor:
1. Your sale of house must be locked in - ie contract has been signed by buyer - before they will even process your application
2. You must state the house you want to buy in your loan application and this cannot be changed.
3. The loan offer only extends for three months

So effectively when you go sale agreed for the sale on your old house you have to find and go sale agreed to buy a new house quite quickly. All this without even any loan approval in principle from UB!

After that it looks like you need to close both sales on the same day.
 
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