Variable Rate Mortgages

Youngpies

Hi, 
We have had a mortgage with KBC for the past two years and a few months ago the bank wrote to us advising of their reduction in mortgage rates.
As we are on a variable rate mortgage we assumed that our current interest rate would drop automatically in line with the banks new reduced rates, but this is not the case. In order for us to take advantage of KBC's new reduced rates they have advised that we need to remortgage our property and re-apply for our already existing mortgage at the new rate. This will incur the cost of having our property revalued by an independent valuer at a cost to us of 150 Euros.

This practice suggests that a so called 'variable rate' mortgage is only variable in one direction, and it's not down.
I would like to know if this is standard practice for all of our banks?

Thanks

Fanny Wank

Not sure if other banks use this practice

We fixed for 3 years a few months after we bought. Argued with KBC.

- we weren't looking to change LTV bands
- CSO indicated prices were up since we bought
- we'd paid down some of our mortgage

The last two indicated we'd a lower LTV than at draw down, but as stated were not looking to move LTV bands just avail of the lower rate. Computer said no, we'd to get another valuation done

Trish56

This doesn't sound right OP. You need to ring KBC again to clarify. As far as I'm concerned once your loan to value is less than 90% you can avail of a lower rate fixed or variable once you submit an up to date valuation.
Full details are on KBC's website.

Youngpies wrote: »

Hi,
We have had a mortgage with KBC for the past two years and a few months ago the bank wrote to us advising of their reduction in mortgage rates.
As we are on a variable rate mortgage we assumed that our current interest rate would drop automatically in line with the banks new reduced rates, but this is not the case. In order for us to take advantage of KBC's new reduced rates they have advised that we need to remortgage our property and re-apply for our already existing mortgage at the new rate. This will incur the cost of having our property revalued by an independent valuer at a cost to us of 150 Euros.

This practice suggests that a so called 'variable rate' mortgage is only variable in one direction, and it's not down.
I would like to know if this is standard practice for all of our banks?

Thanks

Youngpies

Trish56 wrote: »

This doesn't sound right OP.  You need to ring KBC again to clarify.  As far as I'm concerned once your loan to value is less than 90% you can avail of a lower rate fixed or variable once you submit an up to date valuation.
Full details are on KBC's website. 

Yes we can avail of the lower rate of interest but it will cost us the price of the valuation i.e. 150 Euros. We signed up to a variable rate mortgage because we thought that if the banks interest rates dropped then our rate would drop automatically.
If what you are saying is correct, a mortgage holder would be better off with a fixed rate rather than a variable rate.
There has to be a fee for breaking out of a fixed rate mortgage contract before it has gone full term though?

Trish56

You mentioned in your post that you have to remortgage to get a reduced rate that is not the case. To avail of a lower rate you need to provide them with a up to date valuation but do not have to go to the bother of remortgaging.

Youngpies

Trish56 wrote: »

You mentioned in your post that you have to remortgage to get a reduced rate that is not the case.  To avail of a lower rate you need to provide them with a up to date valuation but do not have to go to the bother of remortgaging.

Perhaps my terminology isn't quite right in my initial post but, regardless of this, my main point is as follows:

We can avail of the lower rate of interest but it will cost us the price of the valuation i.e. 150 Euros and we feel that this is nonsense given the fact that we have agreed to a so called 'variable rate mortgage'.

Trish56

Ah I understand now. Their interest rates did not reduce across the board. They just decided to reduce the loan to value rates for existing customers who they have ripped off since the recession as they could not move as they were in negative equity.

If your rate reduces by 0.50% over the remaining term it would be a big saving and well worth the expenditure of €150 which you could make up within 2/3 months from reduced repayments.

source

Youngpies wrote: »

Perhaps my terminology isn't quite right in my initial post but, regardless of this, my main point is as follows:

We can avail of the lower rate of interest but it will cost us the price of the valuation i.e. 150 Euros and we feel that this is nonsense given the fact that we have agreed to a so called 'variable rate mortgage'.

You're looking to change from a standard variable rate, to a LTV rate. You need to prove to the bank that you qualify to move to that rate. You do that by getting a valuation.

You shoulder the cost if you want to change the terms of your mortgage agreement.

Youngpies

No. I am not looking to change anything regarding the mortgage LTV.

I have a variable rate mortgage and I believed the rate would come down if the banks variable rate reduced. The banks variable rate has reduced but my mortgage rate has not come down. In effect, I have committed to a variable rate mortgage that is not variable.

lawred2

Youngpies wrote: »

No. I am not looking to change anything regarding the mortgage LTV.
I have a variable rate mortgage and I believed the rate would come done if the banks variable rate reduced. The banks variable rate has reduced but my mortgage rate has not come down. In effect, I have committed to a variable rate mortgage that is not variable.

I'm not sure that KBC do vanilla variable rate mortgages..

It's usually something they call an LTV variable rate.. Well that's what it was in 2015 but we've remortgaged since.

Youngpies

It looks like this is a standard practice by KBC and they have been doing it for years (askaboutmoney - kbc variable rate beware).
They reduce their mortgage rates but they do not pass on the reduction to their customers on so called 'variable' rate mortgages.

askaboutmoney.com/threads/kbc-variable-rate-beware.199568/

QUOTE "KBC have a two tier system. There's the rates for new customers (these are what you'll hear all over the radio ads where they tell you they have no gimmicks and only offer you the best rates) and there are the rates for existing customers (otherwise known as we have you now so screw you).

When you join you should make sure you get the best rate possible because when the rates go down for new customers yours won't be touched. Welcome to KBC. "The bank of you"."

Trish56

All the banks offer new customer rates and existing customer rates with the exception of AIB/Haven who passed on all the ECB rate reductions to their existing customers.

People need to switch their mortgage if at all possible so as not to let these lenders get away with this overcharging existing customers.

Youngpies

This link to another thread is also relevant to this topic:

https://www.boards.ie/ttfthread/2057559181

ethical

KBC are a shower of C.U NEXT .Tuesdays.I had the same arguement with them a few months back,I was coming off a fixed (which was extremely high!),they told me there were now better rates BUT if I wanted the newer rate I would have to basically go through what nearly amounted to a whole new application.I told them stick it where the sun dosent shine! Recently I got correspondance from them telling me they now had a great rate for existing borrowers whose property had increased in price,meaning a better LTV.I just told them that this was the arguement I had with them months previously and they would not budge on it then.I told them I was sticking with the variable rate and then requested all the rates I was on and (perhaps should have been on ) over the past 16 years! Perhaps I should have been on a tracker!!!! They corresponded recently to say they will furnish me with ALL this information by early March.....i just cannot wait for their letter.(By the ways I did not charge them for MY letter).They are a SHOWER OF CNUTS! ( And this is from someone that hasnt missed apayment in 16 yrs!)