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TRACKER MORTGAGES ARE very attractive to homeowners in the current economic climate but obtaining one has been difficult.
According to experts, that could change for thousands of mortgage holders in Ireland who could soon see major reductions in their repayments.
The key is to check the terms and conditions of your mortgage contract, says Frank Conway of MoneyCoach.ie.
“A few years back fixed rate mortgages became popular as inflation was soaring and interest rates were gathering pace,” Conway tells TheJournal.ie.
“Oil prices were going through the roof, as was the cost of food. The European Central Bank was eyeing inflation and increasing interest rates,” he explains.
Irish people generally look for a safe bet so began to lock into their mortgages for about three to five years.”
A lot of those fixed rate mortgage deals are now coming to an end and their holders may be able to revert back to trackers, says Conway.
This could lead to hundreds of euro in savings each month.
For fixed rate mortgage holders who are now due to revert back to tracker deals, the monthly repayments on a €250,000 loan will fall from about €1,266 to approximately €988.
It seems like a sweet deal but it will not happen automatically, warns Conway.
“The deals are fairly nuanced,” he says. “The loan will not automatically revert to a tracker so people should check their terms and conditions. It is important to be thorough and not leave it to the last minute.”
The lender is obliged to send a letter to the mortgage holder at the end of the deal but it may offer other options, including fixing again which could see the borrower save very little – or nothing at all.
It is also important to check if the contract says the mortgage will revert to a standard variable rate deal as this could result in higher monthly repayments.
Mortgage holders can also check with their broker if they went through one before signing their mortgage.
Conway estimates that between 3,000 and 6,000 homeowners could benefit if their mortgages revert to attractive tracker deals due to them. Even more savings could be seen down the line if the ECB cuts the base rate of lending again.
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I went thought a mortgage broker for my mortgage and I spent the first two years fixed. Before the two years were up I got a letter from the broker stating that i had the tracker option build in to my contract but I had to opt into it before before the fixed was up. So def read the contract upon signing it. I was lucky with my broker. Some mightn’t be as.
Thanks Cormac. Great point, I’ve added your point about checking with your broker to the article.
The bank normally send those letters with the options anyway. Strange you got it from your broker.
The issue in the news is that the letter the banks are sending sometimes don’t include a tracker which people may be entitled to.
I got the letter from the bank alright. Not even a week before my fixed was up and giving me 4 options. Tracker was the last. Only think was as I said I had to choose before the fixed was up which gave me bout 4 days(excluding weekend) to get to the bank and sign the papers.
Of course people need to be aware that not all trackers are those of the ECB + 1% variety. In a lot of cases the bank get to choose the rate above the ECB that the tracker is when you come off a fixed rate. This can be ECB + 4% for example!
Can I ask do I stand a chance ? Fixed in in 2007 till 2010 and never got a choice of a tracker in the next letter but in my terms and conditions it says after “any” fixed rate term I can opt into veritable ,fixed , or tracker
With BOI and was fixed at two different rates over 4 years got the letter in last week offering a tracker plus others. Took the tracker now paying much less. My letter did say that once I took the tracker option and further down the road changed to fixed or variable I could never revert to tracker again.
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