Mortgage overpayment before fixed period starts

Laura459

I am just coming to the end of a fixed rate mortgage period and will be going into another one shortly (variable rates at BOI are still way to high). I've been told that I can let my fixed period lapse and go to variable for a couple of days, set up an overpayment of a couple of hundred each month and then ask to go into a fixed rate period again. I've been advised that they will still honour my overpayment but I cant change the overpayment amount (I can still stop it) and it will go against the capital

Has anyone else done this?

You could just move your mortgage to another bank for a low variable rate? Now is the time to be taking advantage of the low variable rates rather than locking into high fixed rates.

Laura459

Theo Aggressive Performance wrote: »

You could just move your mortgage to another bank for a low variable rate? Now is the time to be taking advantage of the low variable rates rather than locking into high fixed rates.

That was the original plan but the banks are using a higher value for the house than the amount I know it's actually worth (based on what's sold recently in the area) so if I switched I would have to get a valuation done which would move me to a higher LTV bracket and the variable rate is much higher with other banks in this bracket than the fixed I've been offered with BOI. Figured I would lock it in for a couple of years and then try switch

van_beano

Laura459 wrote: »

That was the original plan but the banks are using a higher value for the house than the amount I know it's actually worth (based on what's sold recently in the area) so if I switched I would have to get a valuation done which would move me to a higher LTV bracket and the variable rate is much higher with other banks in this bracket than the fixed I've been offered with BOI. Figured I would lock it in for a couple of years and then try switch

I may be reading this wrong but if your house is valued at a higher value than what it's worth (subject to a valuation report approx. €150), that would mean you have a better LTV. A good LTV would mean a better LTV variable rate which are generally better than the standard variable or fixed rates. I moved to a variable LTV last week of 3.3% after breaking a 3.8% fixed rate, this was due to me having an LTV of >50%<80%. KBC are doing very good LTV rates at the moment, as low as 2.9% I think if you have a current account with them.

Edit: Just looked at BOI's mortgage rates, they're quite high. What percentage are the bank suggesting your LTV to be?

Laura459

van_beano wrote: »

I may be reading this wrong but if your house is valued at a higher value than what it's worth (subject to a valuation report approx. €150), that would mean you have a better LTV. A good LTV would mean a better LTV variable rate which are generally better than the standard variable or fixed rates. I moved to a variable LTV last week of 3.3% after breaking a 3.8% fixed rate, this was due to me having an LTV of >50%<80%. KBC are doing very good LTV rates at the moment, as low as 2.9% I think if you have a current account with them.

Edit: Just looked at BOI's mortgage rates, they're quite high. What percentage are the bank suggesting your LTV to be?

van_beano wrote: »

I may be reading this wrong but if your house is valued at a higher value than what it's worth (subject to a valuation report approx. €150), that would mean you have a better LTV. A good LTV would mean a better LTV variable rate which are generally better than the standard variable or fixed rates. I moved to a variable LTV last week of 3.3% after breaking a 3.8% fixed rate, this was due to me having an LTV of >50%<80%. KBC are doing very good LTV rates at the moment, as low as 2.9% I think if you have a current account with them.

Edit: Just looked at BOI's mortgage rates, they're quite high. What percentage are the bank suggesting your LTV to be?

Sorry not sure if I'm being clear, the bank are using a higher value than I know the house is worth so variable rate they are offering is LTV <80% but with it being BOI the rate is still high at 4.2%. If I switched banks now I would have to get the house valued and I know the LTV would come in >80% so plan on sticking with BOI for a couple of years as they are offering a low enough fixed rate and then I'll switch when I know the LTV will be <80% and it'll be worth it for me to move

Was just wondering had anyone set up the overpayment before setting a fixed rate

antoinolachtnai

They will certainly want you to commit to overpayments for the duration of the fix. Even this might be complicated.

The simplest thing would be to pay what you can in before the beginning of the fixed period, them save up another lump sum to pay in at the end of the fix.

Laura459

antoinolachtnai wrote: »

They will certainly want you to commit to overpayments for the duration of the fix. Even this might be complicated.

The simplest thing would be to pay what you can in before the beginning of the fixed period, them save up another lump sum to pay in at the end of the fix.

We are fine with committing to the overpayments for the duration - do you know what the complications would be? It's one of those scenarios where if it's too good to be true it usually is so just seeing if anyone has done this before (haven't got it in writing yet but it's been confirmed by 2 seperate advisors)

The reason I would prefer overpayments to saving up and paying as a lump sum is finding some other use for the money that's sitting in my account!

jimmycrackcorm

Laura459 wrote:

We are fine with committing to the overpayments for the duration - do you know what the complications would be? It's one of those scenarios where if it's too good to be true it usually is so just seeing if anyone has done this before (haven't got it in writing yet but it's been confirmed by 2 seperate advisors)

I'm doubtful this would be allowed as fixed rates usually come with overpayment restrictions.

antoinolachtnai

Laura459 wrote: »

We are fine with committing to the overpayments for the duration - do you know what the complications would be? It's one of those scenarios where if it's too good to be true it usually is so just seeing if anyone has done this before (haven't got it in writing yet but it's been confirmed by 2 seperate advisors)

The reason for the complication is the computer.

You want to do something sophisticated and bespoke. You want to fix the rate, to accelerate repayments for a period, then have the right to decelerate again. The software may not be able to cope with this complex a schedule of payments. The bank is unlikely to admit that this is the problem.

There is no reason it can't be done in principle. The obstacle will be a practical problem.

Supercell

OP I did this, had to agree the amount of overpayment prior to fixing. I fixed with BOI at 3.6% about two years ago and will be coming to the end of the fixed period this summer and will then decide whether to fix again or to move the mortgage to another bank.