BTL deal from BOI - can I trust it?

ReBop

My buy-to-let (BTL) mortgage currently with Bank of Ireland (BOI) is 5.95% fixed to 01/09/2014. BOI has recently sent a letter offering the opportunity to switch to a lower fixed interest rate:

1. 3.49% 3 year fixed to 31/03/2015, or
2. 4.99% 5 year fixed to 31/03/2017

If I switch there are the following benefits:

• no legal fees
• no arrangement fee
• a standard valuation
• no early repayment charge

BOI say they are offering this becuase they wish to reduce the number of customers with mortgages with them.

Presumably if I stay with BOI, after 01/09/2104 my BTL mortgage reverts to a low variable rate of interest - perhaps this is why I am being incentivized to move on...?

Can I trust this deal or is it a bit of a scam?

Simon_gloster

It would depend if their variable rate is easy to work out when it reverts. Not how they or anyone can know that.

Taking those fixed deals means at least on the 3 year they lock you in for one more year.

Any idea from your offer what it will definatly revert to in 2014?

Thrugelmir

ReBop wrote: »

Presumably if I stay with BOI, after 01/09/2104 my BTL mortgage reverts to a low variable rate of interest

Quite possibly not. I would imagine those that remain will pay a commercial rate of interest irrespective of their currently quoted terms.

Who is the new lender?

ReBop

Thanks for the replies.

@Simon: no idea from the offer what it will definitely revert to in 2014. Will try to find out.

@Thrugelmir - the new lender is Coventry B/Soc and one of their "extremely competitive Godiva Mortgages". They were "voted Best Buy to Let Lender by Moneywise in 2011", apparently.

I don't believe that any lender has my best interests at heart which is why I'm a little suspicious of any deal offered.

Many thanks!

Simon_gloster

Was the BTL origially Bristol and west? If so they did loads of btl's.

Before you jump to Godiva, I would def see what their revert rate is. If it is set by them at whatever rate they like it may be a case of you following what you think is best.

Thrugelmir

ReBop wrote: »

I don't believe that any lender has my best interests at heart which is why I'm a little suspicious of any deal offered.

The Irish banks have enormous financial issues to resolve. Offloading their UK mortgage books is merely one phase of a much larger reconstruction programme. So you really need to do is view this from the perspective of what's best for you. What the BOI is up to, has no relevance other than that it will impact you in some way or another.

ReBop

@Simon: yeah, original BTL was with B&W.

Ok, I'll have to check what BOI intend to do at the end of the fixed rate.

But I wonder why BOI is doing this? Are they predicting a further down turn inthe economy and are trying to reduce debt that might become risky/toxic? Currently I'm reasonably solvent but precarity is the order of the day, these days.

Or with regard to the Irish economy, shouldn't BOI now be swapping debt for hard currency? So I really don't understand the basis for this deal.

Obviously, I am not a financier or economist...

Thrugelmir

ReBop wrote: »

But I wonder why BOI is doing this?

Eire was bailed out by the EU and IMF to the tune of £85 billion Euro's. Most of which was used to support the banking system.

BOI was the only Irish bank to escape full nationalisation. As part of the EU deal, BOI had to shrink its balance sheet. Much in the same way LloydsHBOS is doing.

ReBop

Thanks all - glad I came by here to ask!

real1314

ReBop wrote: »

@Simon: yeah, original BTL was with B&W.

Ok, I'll have to check what BOI intend to do at the end of the fixed rate.

But I wonder why BOI is doing this? Are they predicting a further down turn inthe economy and are trying to reduce debt that might become risky/toxic? Currently I'm reasonably solvent but precarity is the order of the day, these days.

Or with regard to the Irish economy, shouldn't BOI now be swapping debt for hard currency? So I really don't understand the basis for this deal.

Obviously, I am not a financier or economist...

That's exactly what they would achieve if you agree to swap. Coventry BS gets a mortgage account (and the inherent stream of payments) and in return pays BoI a sum of hard cash.
:cool:

ReBop

Hi

If I stay with BOI the new mortgage rate will be 1.75% above base rate - if rates stay low then I think I'll be better off.

The current base rate (since 09/02/12) is 0.5% so presumably the new mortgage rate - if rates stay at the same low rate for the foreseeable future - will be 2.25%.

The best rate BOI is offering now is 3.49% fixed for 3 years so the base rate will have to increase to more than 1.74% in the next 3 years for me to lose.

The alternative offer from BOI would mean that the base rate will have to increase to more than 3.24% in the next five years for me to be worse off.

Has anybody got a crystal ball?

Many thanks

ReBop