LTV mortgage rates

cmssjone

Hi all,

Just a quick query.....If you obtain a mortgage with a LTV rate of >=80 but <=90 then you pay a higher %age rate than someone with an LTV value <80. If you start in the 80 -90% bracket and then move into the <= 80% bracket, are you entitled to the more favourable rate or are you stuck on your initial rate for the entire period of the mortgage?

Thanks for any replies.

Bepolite

Usually yes, but you could possibly re-mortgage, with all the fees that entails.

The_Conductor

Presumably absolutely everyone would lower their LTV ratio, over the course of the mortgage (as interest only periods are viewed as Financial Restructuring these days, and incur all sorts of unwarranted/unwanted inspection of otherwise sound finances).

Aka- as you slowly pay your mortgage back- totally outside of anything that might happen to house prices- your LTV ratio, will gradually drift to zero (assuming of course you intend to repay your mortgage- which for some people appears to be a big ask).

dinnyirwin

If you are on variable rate then just tell your bank you want the new rate.
If you dont tell them you want it they will happily keep on taking the higher rate from you.
Dont let them charge you a switching fee either if its the same bank.
If you have to move to a different bank it is prohibitively more expensive than it is worth these days.
Sometimes they will have fixed for one year which might be better again, but fixing for more than a year these days doesnt seem to be worth it for the rates they are offering.

Trish56

The loan to value rate that you draw down your mortgage at is the rate that will apply to your mortgage. You cannot request reductions as your mortgage balance reduces. You can of course re mortgage with another lender to avail of a lower rate however legal fees and valuation fees will be incurred.

dinnyirwin

Trish56 wrote: »

The loan to value rate that you draw down your mortgage at is the rate that will apply to your mortgage. You cannot request reductions as your mortgage balance reduces. You can of course re mortgage with another lender to avail of a lower rate however legal fees and valuation fees will be incurred.

Thats not true.
If you are on a variable rate you can switch any time you want, with the same lender. If when you switch the LTV has changed you are entitled to the rate that matches that LTV.
You can also switch at the end of a fixed term.
You only pay legal and valuation fees if you switch lender.

Trish56

Perhaps you might advise which lender you are referring to.

dinnyirwin wrote: »

Thats not true.
If you are on a variable rate you can switch any time you want, with the same lender. If when you switch the LTV has changed you are entitled to the rate that matches that LTV.
You can also switch at the end of a fixed term.
You only pay legal and valuation fees if you switch lender.

dinnyirwin

Trish56 wrote: »

Perhaps you might advise which lender you are referring to.

All lenders.
Which ones are you referring to?

johnnyskeleton

On the plus side, if you take it out at 80-90 and the price drops you should still get the lower rate. (However, if you go above 90 because of arrears/non payment you may lose the better rate)

Trish56

I am sorry but your information is not correct. You cannot switch to a lower rate as your loan to value decreases. My information is from all the lenders so I would advise you to ring them up and confirm. The rate at initial drawdown is the rate that is applicable to your mortgage. Also if it was the case you would have to pay for a valuation every time you wanted to switch rate. As previously stated you can avail of a rate as low as 3.85% (APR 3.92%) if you switch lender and your loan to value is less than 60% however you will incur legal and valuation fees to do so.

dinnyirwin wrote: »

Thats not true.
If you are on a variable rate you can switch any time you want, with the same lender. If when you switch the LTV has changed you are entitled to the rate that matches that LTV.
You can also switch at the end of a fixed term.
You only pay legal and valuation fees if you switch lender.

dinnyirwin

Trish56 wrote: »

I am sorry but your information is not correct. You cannot switch to a lower rate as your loan to value decreases. My information is from all the lenders so I would advise you to ring them up and confirm. The rate at initial drawdown is the rate that is applicable to your mortgage. Also if it was the case you would have to pay for a valuation every time you wanted to switch rate. As previously stated you can avail of a rate as low as 3.85% (APR 3.92%) if you switch lender and your loan to value is less than 60% however you will incur legal and valuation fees to do so.

Sorry but that is just plain wrong.
Ive done it myself in the past several times.
And I've advised friends to do it too, who have then gone on to do it.
Same applies to insurance.

Have you tried to do this yourself and failed?
Just because you couldnt do it doesnt mean the op cant.

But the OP doesnt have to take any of our words for it, ring the bank.

Trish56

dinnyirwin wrote: »

Sorry but that is just plain wrong.
Ive done it myself in the past several times.
And I've advised friends to do it too, who have then gone on to do it.
Same applies to insurance.

Have you tried to do this yourself and failed?
Just because you couldnt do it doesnt mean the op cant.

But the OP doesnt have to take any of our words for it, ring the bank.

No I didn't try and fix my mortgage as I don't have one thankfully and the same goes for you just because you managed to do it doesn't mean the Op can do it. I am in the mortgage business and made an enquiry for a customer last month with their lender and I have an email from them saying no. Today as you were so adamant that it could be done I rang four other lenders and again I was told a definite no and also received an confirmation email. I am referring to the Irish Banks and KBC and not Ulster Bank, Bank of Scotland or National Irish Bank.

I can only presume that you are talking about your own case pre recession as unfortunately the only way property values went since the recession is down.

Can I also direct you to a similar post in the Banking, Insurance and Pensions forum where a poster rang their lender today and was told no and that the Loan to value rates are only available to new customers.

As you said the only way the OP can find out is to ring his or her lender. Maybe you should state your lender so other boards members can avail of this reduction.

dinnyirwin

OP heres how you do it.

Lets say you got the rate your lender offers for >80% LTV
After several years if you find that you now owe less than 80% of that value and you see another product that they are offering which is for <80% LTV.
You just pick up the phone and call your bank.
Tell them that your LTV has changed and you want to be put on the new rate that is now available to you.
Its that simple.

And dont listen to brokers or any other vested interest who wants you to take out a brand new mortgage to get the new LTV.

TheDriver

I asked AIB last year about this and I was told that No, you can't just switch rates as the ltv falls. Now maybe you could switch mortgages??

Trish56

dinnyirwin wrote: »

OP heres how you do it.

Lets say you got the rate your lender offers for >80% LTV
After several years if you find that you now owe less than 80% of that value and you see another product that they are offering which is for <80% LTV.
You just pick up the phone and call your bank.
Tell them that your LTV has changed and you want to be put on the new rate that is now available to you.
Its that simple.

And dont listen to brokers or any other vested interest who wants you to take out a brand new mortgage to get the new LTV.

What utter nonsense with no facts or information to back up your advice ... Not going to get into an argument here.. the OP asked for advice if he/she could avail of a lower interest rate as the mortgage balance reduced... based on experience and on the basis that I checked with four lenders yesterday and was informed a definite NO it is only available to new customers.

Dinny says YES he done it several times and he advised his friends who also got a reduced rate but no information to back it up as to the lender(s) involved and if a valuation is required or forms to be completed!!!!

OP do as Dinny says simply just pick up the phone and tell your lender your LTV has changed and you want a reduced rate on your mortgage and please do come back and tell us how you got on as I have two children who would love to avail of a reduced rate based on their current loan to value and I am sure there are numerous members here on boards who would be delighted to avail of a reduced rate/monthly repayment on their mortgage.

The_Conductor

OP- perhaps you may post back here and let us know how your phone call with your lender goes.

Now- thats it folks- no more sniping at one another.

Have a nice day.

The_Conductor

cmssjone

Trish56 wrote: »

OP do as Dinny says simply just pick up the phone and tell your lender your LTV has changed and you want a reduced rate on your mortgage and please do come back and tell us how you got on as I have two children who would love to avail of a reduced rate based on their current loan to value and I am sure there are numerous members here on boards who would be delighted to avail of a reduced rate/monthly repayment on their mortgage.

I would love to Trish56 but it will be a few years before this applies to me. I was just interested to know the answer. Perhaps I'll pop into the bank and just ask them. Would it be worth remortgaging or do the associated fees with switching make the idea redundant?

Trish56

cmssjone wrote: »

I would love to Trish56 but it will be a few years before this applies to me. I was just interested to know the answer. Perhaps I'll pop into the bank and just ask them. Would it be worth remortgaging or do the associated fees with switching make the idea redundant?

Cmssjone, the fees would be circa 1k for legal and valuation. Prior to recession and banking crisis the banks had no problem reducing your rate rather than lose your business to another lender. The amount you would save would depend on the current rate you are paying and the rate offered - lowest is 3.85% for less than 60% loan to value.

Ray Palmer

TheDriver wrote: »

I asked AIB last year about this and I was told that No, you can't just switch rates as the ltv falls. Now maybe you could switch mortgages??

Strange. I did this with the AIB but it was 2007. I didn't have to pay for a valuation either as some people are suggesting. I think we just asked an estate agent to value the property and they did so free. White lie in that we said we would sell if the price was right which we would have done. We would have sold at the highest price if we sold then too

Anyway they gave us LTV with a tracker of 0.65% which I think is the smallest you could ever get for residential property. No fees from the bank to do it either so it cost us nothing at all to do it other than effort.

I assumed it was brought to an end the same way trackers did. So I would be inclined to believe you can't do it anymore given all fees have gone up from the banks and they lose money on trackers on their books. Why would they reduce profitability?

Heisenberg1

Ray Palmer wrote: »

Strange. I did this with the AIB but it was 2007. I didn't have to pay for a valuation either as some people are suggesting. I think we just asked an estate agent to value the property and they did so free. White lie in that we said we would sell if the price was right which we would have done. We would have sold at the highest price if we sold then too

Anyway they gave us LTV with a tracker of 0.65% which I think is the smallest you could ever get for residential property. No fees from the bank to do it either so it cost us nothing at all to do it other than effort.

I assumed it was brought to an end the same way trackers did. So I would be inclined to believe you can't do it anymore given all fees have gone up from the banks and they lose money on trackers on their books. Why would they reduce profitability?

So for example if I bought a house last year for a 100k with a 92% mortgage and the house is now valued at 300k can I look for a lower interest rate as my LTV is lower?

marathonic

Heisenberg1 wrote: »

So for example if I bought a house last year for a 100k with a 92% mortgage and the house is now valued at 300k can I look for a lower interest rate as my LTV is lower?

In years gone by, yes. In recent times, highly unlikely.

In the past, with National Irish Bank offering trackers at 0.5% above ECB, the likes of AIB and Bank of Ireland knew that moving was likely to save people a couple of percent in their mortgage rates and, therefore, the legal fees were justifiable. Therefore, in the knowledge that a rising market had lifted property prices significantly, they could accept these requests, even without a valuation.

These days, the banks know that the competitor is likely to have rates that are only a couple of tenths of a percent below their own rates. Therefore, for all but a few, the legal fees cannot be justified and the customer is likely to stick with them, even after a refusal to move to the lower LTV product.

I love the way people give anecdotal evidence regarding mortgages based on their experiences of 2005-2007 and somehow think that the rules that applied then still apply.

Edit: Take AIB for example. If you had a 92% LTV last year and move to 80% LTV, you could request to move from their 4.49% rate to their 4.29% rate (available for <80% LTV new business). AIB know that, if they refuse, your best value alternative would be to move to KBC at 3.99%. If this were a tracker product, a lot of people may consider this. However, as it stands, they would pay €1,000-€1,500 to move to a product that KBC can change the rate on at a whim. In addition to these legal fees, you'd have the time spent going through the whole mortgage application process.

ted1

marathonic wrote: »

In years gone by, yes. In recent times, highly unlikely.

In the past, with National Irish Bank offering trackers at 0.5% above ECB, the likes of AIB and Bank of Ireland knew that moving was likely to save people a couple of percent in their mortgage rates and, therefore, the legal fees were justifiable. Therefore, in the knowledge that a rising market had lifted property prices significantly, they could accept these requests, even without a valuation.

These days, the banks know that the competitor is likely to have rates that are only a couple of tenths of a percent below their own rates. Therefore, for all but a few, the legal fees cannot be justified and the customer is likely to stick with them, even after a refusal to move to the lower LTV product.

I love the way people give anecdotal evidence regarding mortgages based on their experiences of 2005-2007 and somehow think that the rules that applied then still apply.

I was just thinking about moving earlier. My property has gone up since I got it, the LTV has gone from 92% to about 54%
I'm with AIB if I was to move to ulster or KBC what fees would be involved?

Ulster offer 3.9%

Trish56

ted1 wrote: »

I was just thinking about moving earlier. My property has gone up since I got it, the LTV has gone from 92% to about 54%
I'm with AIB if I was to move to ulster or KBC what fees would be involved?

Ulster offer 3.9%

KBC offer 3.85% for loan to value of less than 60%.

dinnyirwin

Dont take anyones word for it here people.
Make that phone call.

Heisenberg1

ted1 wrote: »

I was just thinking about moving earlier. My property has gone up since I got it, the LTV has gone from 92% to about 54%
I'm with AIB if I was to move to ulster or KBC what fees would be involved?

Ulster offer 3.9%

Same here I currently have a LTV of 48% I haven't contacted the bank as I am on a fixed rate.

Just checked It's not possible to change with AIB it's in the terms and conditions of the loan.

cmssjone

Trish56 wrote: »

Cmssjone, the fees would be circa 1k for legal and valuation. Prior to recession and banking crisis the banks had no problem reducing your rate rather than lose your business to another lender. The amount you would save would depend on the current rate you are paying and the rate offered - lowest is 3.85% for less than 60% loan to value.

Thanks. Something to consider for the future. Thought the fees would be much more tbh

marathonic

KBC are now offering €1,000 towards legal fees to anyone who switches their mortgage to them and draws down the loan before 30/4/2014

ted1

marathonic wrote: »

KBC are now offering €1,000 towards legal fees to anyone who switches their mortgage to them and draws down the loan before 30/4/2014

They didn't mention that to me when I was on the phone earlier. The move is in motion I'll chase up the 1,000. Hope its cash.

sona_sasta

I did this myself on an AIB mortgage in November last year. I was on the LTV Variable >80% rate and moved to the LTV Variable > 50%< =80% rate.

I just phoned the bank and asked to move rate as what I had paid off put us below 80% LTV based on the valuation when the mortgage was issued. They asked me to submit a new valuation from a valuer along with putting the request in writing.

There were no fees apart from the valuer.

dinnyirwin

ted1 wrote: »

They didn't mention that to me when I was on the phone earlier. The move is in motion I'll chase up the 1,000. Hope its cash.

Its how you are framing the question to them.
Try again and this time tell them that you only owe x amount now, so even if the value of the house hasnt increased they have to offer you the relevant product. If they still protest speak to someone higher up in the decision chain.
And if they insist on a valuation, which they most likely wont as it will result in an even lower LTV its not expensive at all to get a valuation.

ted1

dinnyirwin wrote: »

Its how you are framing the question to them.
Try again and this time tell them that you only owe x amount now, so even if the value of the house hasnt increased they have to offer you the relevant product. If they still protest speak to someone higher up in the decision chain.
And if they insist on a valuation, which they most likely wont as it will result in an even lower LTV its not expensive at all to get a valuation.

Oh no KBC are happy to take my buisness they just didn't offer to cover the transfer fees.