Switching split mortgage

A

Aisling28

New Member
Messages
5
Hi
I have a mortgage with pepper was originally with tsb . It has 20 years left , it’s 120,000.
60,000 is warehouse. The interest is really high around 7/8 per cent. With such high interest very little is coming off the amount and we would rather pay it off in about 13 years rather than 20 .
I have saved about 20000 recently. Would I be better off trying to switch and maybe using the 20,000 off the main amount so would be looking for about 100,000.
Just wondering has anyone switched and if so with a bank or credit union. We were in arrears some years ago but have been paying in full for about 10 years.
Thanks .
 
What is the actual interest rate?

If it's 8% on €60,000 and 0% on €60,000, the average interest rate is 4%

So you won't get much of a saving by switching.

If they allow you, pay the €20,000 off the main mortgage as that will save you interest.
 
Thanks for reply. Our problem is my spouse and main earner is 10 years from retirement. At the moment we are paying around six thousand a year but only 1000 is coming off the main part of the mortgage. We would prefer to pay the full mortgage over 13 years and be done. We couldn’t do that with the interest pepper charges.
 
You are paying €5,000 interest on a mortgage of €120,000 or 4.2%!

Switching isn't going to save you a lot.

You can pay it over 13 years if you like, just up your repayments by €400 a month.

Brendan
 
Is it not the case that any thought of a switch with (recent?) past arrears and a currently restructured and split mortgage is moot anyway since no other lender will entertain such a borrower?
 
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@ClubMan

If a borrower gets rid of their split mortgage by moving the warehouse back into the active mortgage, it is possible that another lender might look at it.

But it's unlikely and it would mean that Aisling would have to make full repayments on her mortgage with no guarantee that she could switch.
 
Even if we pay extra it’s only on the 60,000 and we still have another 60,000 left to pay at pension age At least if we switch we could start to pay the full amount off.
We did speak to the Irish Mortgage holder’s association and they felt we would be able to switch as we have not missed a payment in years and have no other loans and equity in the house.
 
Aisling28 said:
Even if we pay extra it’s only on the 60,000 and we still have another 60,000 left to pay at pension age At least if we switch we could start to pay the full amount off.
Click to expand...

Your thinking is very muddled about this.

You owe €120,000 at present.
Under the current arrangement you will have paid of €60,000 in 20 years and will still owe the warehouse of €60,000.
If you speed up payment on the active €60,000, you will pay it off over a shorter period e.g. 10 years.
You will then be free to start repayments on the warehouse.

The dilemma is that if you pay €20,000 off the active €60,000, then they will probably do a review and decide that you can afford to pay the interest on the full €120,000 and then your interest bill will double.

As of now, with an average interest rate of 4%, there is very little to be gained by switching.

You cannot switch to another lender and get €60,000 @ 4% and the warehouse at 0%.

Brendan
 
Is it not the case that to move mortgage you would need to have zero arrears and 2 years of full payments ?
From different sources in the recent past its the warehousing of part of the debt is the biggest hinderance on a switch .

If it means a bit of hardship then pay the full amount for 2 years then switch , its easier than is sounds , you only have to see the numbers unable to switch and don't the vultures know it.
 
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