Mortgage- Changing banks - new offer 20k short. Why&What to do?

selfbuildache

Hi all,
I'm looking to transfer my mortgage to a new (better rate) bank. I've been offered a 'new' mortgage which comes in 20k under the outstanding loan.

Does anyone know why?
(2.5 times my wages is enough to cover the full amount owed.)

2nd question: I would have the 20k difference in savings. Would I be better off lumping this in to clear some of the mortgage anyway and thereby bridging the gap?

Wheety

Would that wipe out your savings?

If you can afford it then go for tr. €20k less of a mortgage and a lower rate. If you can afford to keep overpaying to the same as previous payments, your mortgage will clear a lot quicker.

If that's all your savings, then I'd go back to the bank and ask if they can increase by €20k. Or start lashing money into your savings again, from the lower payments to the mortgage.

bluetractor

The central bank limits are maximum limits that a bank cannot go over. But banks have their own criteria for loans and these will have to be met too. They will look at the repayment capacity and your general situation including other loans, your age, how many children, the age of those children and what someone of your profile would normally spend over the coming years. Example, two children in mid teens and the bank may take into account potential college costs in 2-3 years time.
Also, see what all rate options your current bank has. Rates won't drop any further unless the government suddenly changes and allow squick repossessions for non payers like most countries permit thus the costs of repossession drops dramatically (no chance). So you may find that a 7 year or 10 year fixed rate, whilst a little more expensive now, is better in the long run. I'd also look at how the bank has treated customers over the past few years. eg PTSB have great incentives, but charge a very high standard variable rate to current customers and also don't permit current customers take the better fixed rates whereas Ulster bank allow all customers access to all rates.

selfbuildache

Thanks for those replies. I've to give the bank a ring in the morning to see if they have any clear reasons.
My kids are young enough not to cost me much (!) for a few more years so the idea would be to build up that 20k again before they hit college-age.
The rate offered is for a fixed-rate for 6 ish years so I was happy with that - I'll look into their treatment of customers etc as suggested.

bluetractor

selfbuildache wrote: »

Thanks for those replies. I've to give the bank a ring in the morning to see if they have any clear reasons.
My kids are young enough not to cost me much (!) for a few more years so the idea would be to build up that 20k again before they hit college-age.
The rate offered is for a fixed-rate for 6 ish years so I was happy with that - I'll look into their treatment of customers etc as suggested.

At a 6year ish fixed, I'll guess Ulster. They treat all customers the same and both new and old customers can access all rates available.

pwurple

selfbuildache wrote: »

Thanks for those replies. I've to give the bank a ring in the morning to see if they have any clear reasons.
My kids are young enough not to cost me much (!) for a few more years so the idea would be to build up that 20k again before they hit college-age.
The rate offered is for a fixed-rate for 6 ish years so I was happy with that - I'll look into their treatment of customers etc as suggested.

The kids are probably it. Each child reduces your disposable income by 500 per month for a lot of bank calculations.

I found preschool age children to be the most expensive age by far, childcare was 1500 a month. College will be far less than that. I hope!

Trish56

Lenders usually use the figure of €250 per child to calculate your net disposable income for example a couple with two children need to have €2550 net disposable income per month after stress tested mortgage repayments and other short term loan repayments. If you are paying childcare then that payment is also taken into consideration and will reduce the amount you can borrow.

Children going to College are treated no differently than younger children.