Switching mortgage - only 2 years in - Too soon?

[sulo]

Current position:
2 years paying mortgage - 374k left
House cost - 408k
5.1% - Tracker ecb over 1.1


Mortgage Broker offered:
a rate of 0.85% above ECB for the term of the
mortgage
€1,000 towards legals
50% off home insurance for 12 months
6 months free mortgage payment protection

I emailed my bank highlighting offer - their response:
"If we can get a valuation which will give an LTV of 80% or less we can offer you a rate of the ECB rate currently 4% with a margin of .95%.
We as a branch would be very sorry to loose you as a customer.
The industry norm at the moments is that mortgages are reviewed or upgraded within 5 years of issue"

Houses on our road currently "asking" for in the region 415 - 450k..


My question is it best to wait 5 years for the bank to upgrade? Is the offer from the Mortgage Broker worth moving for?

Not the best at understanding all these acroynms at the best of time... so go easy on me!

 

[ClubMan]

My question is it best to wait 5 years for the bank to upgrade?

No - especially if you can get a better deal elsewhere now. I never heard of the 5 year "industry norm" to which they refer.

Is the offer from the Mortgage Broker worth moving for?

Is that the best that they can offer or that you can find independently? Don't be afraid to haggle with and, if necessary, walk away from your existing lender.

Not the best at understanding all these acroynms at the best of time... so go easy on me!

What acronyms? You seem to understand the two mentioned above (ECB and LTV)?

 

[irishlinks]

You will need a house valuation of around 470k or more to get an LTV (Loan to Value Ratio) of under 80% . This looks unlikely based on your local selling prices.
What valuation has the broker based his/her offer on? If it is based on a house value of 410 to 430k than it seems a good deal.
If you stick with your current lender on 5.1% you would pay 2207 a month on a 25 yr mortgage . At a rate of 2154 4.85 you would pay 2154 a month over 25 yrs.
So - if your loan is over 25 yrs you would save 53 euro a month. If you wait and see what the bank offer you in 3 yrs time you couls have saved 1908 euro. How many hours work would you have to do to earn that (after tax etc?).
Your only expense should be the valuation fee about 150 euro - but the 1k towards costs may well cover that as well as legal costs.
If the offer is based on a realistic valuation it is a good one .The best advertised rate on a tracker loan under 500k on an LTV of over 80% that I am aware of is 5.05% from Ulster - who will give you 2k cashback if you switch mortgage and current account .
Also - ask the broker if there is any clawback of the 1k if you switch again in a few years?

 

[sulo]

Thank you very much for your comments.

Mortgage taken out over 30 years - 339 months to go!