Does tracker interest rate change with LTV?

Xcellor

When I took my tracker mortgage out it was ECB + 1.25 and the 1.25 was based on the LTV.

As the mortgage gets paid down the LTV will change.

Does the 1.25 change to reflect this or does it remain the same throughout the term? I don't have the original mortgage agreement to hand to check..

dotsman

Xcellor wrote: »

I don't have the original mortgage agreement to hand to check..

I'm afraid nobody here is going to be able to say with any confidence. Your mortgage agreement is the only source of truth on the matter. If you have lost it, contact your bank and ask them for a copy immediately. And keep it in a safe place. It is probably the most important documents you will ever possess.

I can say that with changing LTVs, it usually needs to be initiated by the customer, backed up by an official valuation etc, as the bank would have no idea of the LTV.

Xcellor

dotsman wrote: »

I'm afraid nobody here is going to be able to say with any confidence. Your mortgage agreement is the only source of truth on the matter. If you have lost it, contact your bank and ask them for a copy immediately. And keep it in a safe place. It is probably the most important documents you will ever possess.

I can say that with changing LTVs, it usually needs to be initiated by the customer, backed up by an official valuation etc, as the bank would have no idea of the LTV.

I did contact the bank but unfortunately the guy on the end of the line didn't sound overly confident.

Will dig up the agreement... I took out 100% mortgage and although paid down quite a bit in reality loan = value only recently out of negative territory.

As you said it's unlikely such a move would be triggered by bank as it would give them less money...

dotsman

If you are only just out of negative equity, then you're LTV will be close to 100%, so can't see how you would be in a position to change anything.

Xcellor

dotsman wrote: »

If you are only just out of negative equity, then you're LTV will be close to 100%, so can't see how you would be in a position to change anything.

Yes I don't see any major change but would be good to know the potential in the future was there.

I swithched from variable to tracker (when they became popular and the banks were pushing them) at some point and don't have the associated agreement so I was onto the bank this morning.

I got quite a defensive reception and initially was requested to send request in writing but then after being put on hold, the aggrement will be sent. The comment "We have reviewed all tracker mortgages that were due redress and your mortgage isn't included" was mentioned and I was asked why I would want this paper work etc etc.. I would have thought having a copy of a loan agreement isn't a strange request...

Anyway I'll receive a copy and can review. It was a weird reaction though.

Xcellor

Xcellor wrote: »

Yes I don't see any major change but would be good to know the potential in the future was there.

I swithched from variable to tracker (when they became popular and the banks were pushing them) at some point and don't have the associated agreement so I was onto the bank this morning.

I got quite a defensive reception and initially was requested to send request in writing but then after being put on hold, the aggrement will be sent. The comment "We have reviewed all tracker mortgages that were due redress and your mortgage isn't included" was mentioned and I was asked why I would want this paper work etc etc.. I would have thought having a copy of a loan agreement isn't a strange request...

Anyway I'll receive a copy and can review. It was a weird reaction though.

Was onto the bank today. They sent me out the original mortgage agreement rather than info on tracker. When I rang in they couldn't find record of the switch. I can't imagine they could have switched from SVR to tracker without some paper trail.. Obviously I've no issue being on tracker but from a legal standpoint I would like something in writing. Maybe it's just not scanned...

phormium

It's unlikely that your rate is going to go down with LTV. You may initially have had an LTV tracker but it would be based on the LTV when it was taken out or switched over. There was not usually back then anyway an automatic right to drop to another LTV other as it was based on the original figures.

I know these days banks will allow customers switch to another band but that is mainly I would say for customer retention or competition reason. There is no reason for a bank to voluntarily facilitate you getting a reduced tracker rate out of goodwill. I seriously doubt this will be written into anything they send you. The transfer to tracker was probably just a one page document so not a new loan agreement complete with loads of conditions/small print etc.

Zaph

Iirc from the original agreement, with my mortgage in theory the rate can change as the LTV changes, but that would require the bank having to do a new valuation. However seeing as I'm only paying ECB +0.5% I'm not in any hurry to initiate anything from my side as I'd be afraid the rate would go up! I'm guessing it's probably in the small print of all tracker mortgages, although I'd be surprised if it ever changes for the vast majority of people, mainly due to inertia on both sides.

phormium

Possibly where the original mortgage was a tracker but OP had a variable to start with and switched to a tracker. I worked in banking and we used to get printouts of variable rate customers to ring to offer them switch to tracker, it was just a matter of signing a single form, no new loan offer and those trackers would have been whatever was on offer at the time but I do not recall any options to reduce them based on a reducing LTV, that margin was fixed at time of transfer.

Xcellor

Zaph wrote: »

Iirc from the original agreement, with my mortgage in theory the rate can change as the LTV changes, but that would require the bank having to do a new valuation. However seeing as I'm only paying ECB +0.5% I'm not in any hurry to initiate anything from my side as I'd be afraid the rate would go up! I'm guessing it's probably in the small print of all tracker mortgages, although I'd be surprised if it ever changes for the vast majority of people, mainly due to inertia on both sides.

Yeah this is why I want to see the small print... Who is your bank out of interest, I'm with Perm TSB

Zaph

Xcellor wrote: »

Yeah this is why I want to see the small print... Who is your bank out of interest, I'm with Perm TSB

Originally Danske, and then it was moved to Pepper when Danske pulled out.

Xcellor

Got a reply from the bank to my official complaint.

The long and short of it is at the time they were switching mortgage holders from standard variable to tracker with absolutely no formal confirmation. They have no signed agreement and have been unable to provide me with any information about the terms surrounding the tracker rate other than ECB+1.25%.

Its understood that the ECB part is variable but there is nothing in writing about what determines the rest of the "bank governed %".

I'm more than surprised that an agreement as substantial as a mortgage could have a change which impacts significantly from the original agreement and introduces a fixed aspect to the loan and have no paper trail.

When you switch from a variable to a fixed interest rate is there paper work to sign and an agreement?