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Pepper Finance Mortgage Ireland Ultimate Review – 2023

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Got a mortgage with Pepper Finance Ireland? Check out our Pepper Finance Mortgage Ultimate Review – 2023 to understand your options.

Pepper

Rates for Pepper Finance mortgage customers have shot up by almost 3.5% in less than a year. With rates for some Pepper Finance mortgage customers now at over 8%.

Mortgage Type (Closed Funds)CustomersAverage Rate June ’22Average Rate March ’23 Average Rate August ’23
Tracker Mortgage31,0001.15%4.65%5.65%
Variable Mortgage38,0003.65%7.15%8.15%
Fixed Mortgage15,0002.66%2.66%2.66%
Moneysherpa estimates based on Central Bank data

Although recent press coverage of Pepper Finance mortgage customers has focussed on ‘Vulture Funds’ and ‘Mortgage Prisoners’ some Pepper Finance mortgage holders may be able to bring their mortgage repayments back down under control by switching or other refinance options.

In fact we estimate that around 30,000 Pepper Finance customers with ‘performing’ loans may be eligible to switch to rates as low as 3.19% APRC and may have been put off switching so far.

If you have been out of arrears for more than 2 years and paying full capital and interest for more than a year a moneysherpa advisor will be happy to advise you for free here. If you are over sixty then even if you aren’t out of arrears equity release may be an option, if want to find out more check out our Equity Release Ultimate Guide.

Standard Mortgage Average Rate (3-7yr) at LTV 50%
Fixed Term APRC Avant Money MoCo Haven Mortgages AIB Mortgage EBS Mortgage Permanent TSB Bank of Ireland ICS Mortgages Finance Ireland Bank of Ireland (Re-fixing)
3 Yr 3.87% 5.21% 4.00% 4.09% 4.20% 4.61% 4.90% 6.64% 4.40%
4 Yr 3.92% 4.19% 4.28%
5 Yr 3.94% 5.06 4.30% 4.47% 4.50% 4.72% 4.90% 6.35% 4.40%
7 Yr 3.97% 4.60% 4.58% 4.79% 6.04%
Correct as of 22/03/24. APRC = Average Rate paid across the whole mortgage term, table, excludes Mortgage value >€250,000, excludes Green mortgages

Read on to find out to see if you might be able to get a better rate than the one your have with Pepper Finance and what the other options to manage your repayments are.

  1. Pepper Finance Overview – Pepper Finance Mortgage Ireland 2023
  2. ‘Vulture Fund’ Background – Pepper Finance Mortgage Ireland 2023
  3. Is Pepper Finance a ‘Vulture Fund’ – Pepper Finance Mortgage Ireland 2023
  4. Pepper Mortgage Types – Pepper Finance Mortgage Ireland 2023
  5. Options for Pepper Finance Customers – Pepper Finance Mortgage Ireland 2023

Pepper Finance Overview – Pepper Finance Mortgage Ireland 2023

Pepper Finance Ireland

Pepper Finance Ireland supports lending in three areas.

  • Residential Mortgages
  • Commercial Mortgages and Loans
  • Consumer Loans

In the residential mortgage market Pepper Finance supports both its own customers, some of whom were purchased from Bank of Scotland and Danske Bank when they left the Irish market and those of other non bank lenders, including Cerberus, Lonestar, Oaktree, Havbell and Beltany.

In total Pepper Finance have around 80,000 residential mortgages on their books, with lending of just under €20 Billion all round.

Vulture Fund’ Overview – Pepper Finance Mortgage Ireland 2023

‘Vulture Funds’ area also known as a non-bank entity funds or closed funds.

When retail or ‘open’ lenders need to transfer their loan book to another company, for example when they are exiting Ireland or when they have loans that no longer ‘fit’, they can sell to other retail/open lenders or to ‘closed’ funds who only manage existing loans.

Open funds include the high street retail banks or non bank lenders such as Finance Ireland or ICS.

Closed funds include funds such as Pepper Finance that focus mainly on loans that aren’t in trouble, known as performing loans, but also funds that specialise in loans that have got into trouble. These funds are sometimes called ‘vulture funds’.

Closed funds of all flavours often get lumped together with distressed funds and called ‘vulture funds’, this causes a lot of unhelpful confusion for customers of closed funds.

Whether they are are open or closed, vulture or not vulture all funds are covered by the same consumer protections.

That said, closed fund customers are potentially more vulnerable as closed funds are not under the same market pressures as open funds. This means that closed funds may set higher interest rates than open funds as they are not competing for new business and the customers they have may have less options to switch.

Is Pepper Finance A Vulture Fund – Pepper Finance Mortgage Ireland 2023

Pepper Finance customers come mainly from the purchase of the Bank of Scotland Ireland and Danske Bank loan books as well as a brief period when it offered mortgages direct to consumers.

So although it is now a closed fund , as it’s no longer actively open to new business it’s not a ‘vulture’ fund.

It does however service over 60,000 residential mortgages in Ireland as well as its own mortgage book. Many of which are owned by the firms known as Vulture funds as they specialise in owning distressed debt.

Pepper Finance Mortgage Types – Pepper Finance Mortgage Ireland 2023

There are around 95,000 mortgage holders with non banks, of these 85,000 are with closed funds of which Pepper Finance either owns or services the majority.

Mortgage Type (Closed Funds)CustomersAverage Rate June ’22Average Rate March ’23 Average Rate August ’23
Tracker Mortgage31,0001.15%4.65%5.65%
Variable Mortgage38,0003.65%7.15%8.15%
Fixed Mortgage15,0002.66%2.66%2.66%
Moneysherpa estimates based on Central Bank data

Based on ECB rates increasing to 4.5% as the market predicts and closed funds continuing to pass on these rate rises to customers, tracker rates could climb to 4.65% and variable rates to 8.15% on average for closed fund customers by the summer.

These rates are much higher than the rates currently available from the open funds, shown below.

Green and High Value Average Rates at LTV < 50%
APRC Avant Mortgage ICS Mortgages Finance Ireland Haven Mortgages AIB Mortgage EBS Mortgage Permanent TSB Bank of Ireland
3 Yr 3.87% 6.43% 6.26% 4.00% 4.09% 4.20% 4.34% 4.60%
4 Yr 3.92% 3.70%* 4.02%* 3.80%* 4.28% 3.90%*
5 Yr 3.94% 6.26% 7.42% 4.30% 3.79%* 4.50% 4.13%* 4.00%*
7 Yr 3.97% 4.60% 4.58% 4.35% 4.10%*
LTV < 50%, *Includes Mortgage value >€250,000 or Building Energy Rating B3+, rates updated 22/03/24/

According to Central Bank data 35,000 of the total 85,000 closed fund customers are performing, this means that they are not in arrears and payment is being made on all of the original mortgage.

A further 19,000 have been restructured, which can mean part of the mortgage has been mothballed or repayments reduced by extending the term for example, with the remaining 31,000 mortgage customers in arrears.

Mortgage StatusMortgage Customers
Performing35,000
Restructured19,000
In Arrears31,000
Closed Fund Customers Arrears Status Based on Central Bank Data

Pepper Finance Options – Pepper Finance Mortgage Ireland 2023

Performing Mortgages

If you’re one of the 35,000 mortgage holders with a performing loan you may be able to switch to an open fund and get better rates. By fixing your rates you will be able to cap your repayments and avoid most of the rate hikes.

For example you may be able to trade in your average traker rate of potentially 5.65% or average variable rate of potentially 8.15% for rates as low as 3.19% below.

Standard Mortgage Average Rate (3-7yr) at LTV 50%
Fixed Term APRC Avant Money MoCo Haven Mortgages AIB Mortgage EBS Mortgage Permanent TSB Bank of Ireland ICS Mortgages Finance Ireland Bank of Ireland (Re-fixing)
3 Yr 3.87% 5.21% 4.00% 4.09% 4.20% 4.61% 4.90% 6.64% 4.40%
4 Yr 3.92% 4.19% 4.28%
5 Yr 3.94% 5.06 4.30% 4.47% 4.50% 4.72% 4.90% 6.35% 4.40%
7 Yr 3.97% 4.60% 4.58% 4.79% 6.04%
Correct as of 22/03/24. APRC = Average Rate paid across the whole mortgage term, table, excludes Mortgage value >€250,000, excludes Green mortgages

To qualify to be able to switch though you will have to pass the lenders affordability test, where they will be looking for a minimum amount of income left over every month and the Central Banks loan to income test where your gross income has to be at least 4.5% more than your outstanding loan.

Restructured Mortgages

If you’re one of the 19,000 restructured mortgages with a ‘split’ mortgage, interest only or longer payment terms you also might still be able to switch away from a closed fund. To do this though you will have to be able to demonstrate that you can make repayments on both the capital and interest on the whole outstanding amount of your mortgage.

This will almost certainly see your repayments rise in the short term as you will be repaying all of your loan, however you will probably be able to fix your interest rate at around 5-6% and moving forward you will be able to access rates from other retail lenders.

You will have less options and higher rates as only a few of the open market lenders, for example Finance Ireland, will take customers who have restructured previously.

Finance Ireland are only available through certain mortgage brokers so if you’re investigating this option make sure the broker you work with offers mortgages from Finance Ireland.

Finance Ireland Progressive vs Progressive Plus – 50% LTV
Fixed Rate LTV 50% Fixed Rate Fixed APRC
Progressive Plus 3 Years 7.15% 6.85%
Progressive 3 Years 6.20% 6.26%
Progressive Plus 5 Years 7.05% 6.94%
Progressive 5 Years 6.00% 6.20%
FINANCE IRELAND RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40), rates updated 15/02/23
Finance Ireland Progressive vs Progressive Plus – 60% LTV
Fixed Rate LTV 60% Fixed Rate Fixed APRC
Progressive Plus 3 Years 7.15% 6.67%
Progressive 3 Years 6.20% 6.23%
Progressive Plus 5 Years 7.05% 6.89%
Progressive 5 Years 6.00% 6.17%
FINANCE IRELAND RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40), rates updated 15/02/23
Finance Ireland Progressive vs Progressive Plus – 70% LTV
Fixed Rate LTV 70% Fixed Rate Fixed APRC
Progressive Plus 3 Years 6.78% 6.81%
Progressive 3 Years 6.25% 6.25%
Progressive Plus 5 Years 7.05% 6.92%
Progressive 5 Years 6.05% 6.20%
FINANCE IRELAND RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40), rates updated 15/02/23
Finance Ireland Progressive vs Progressive Plus – 80% LTV
Fixed Rate LTV 80% Fixed Rate Fixed APRC
Progressive Plus 3 Years 7.15% 7.03%
Progressive 3 Years 6.25% 6.25%
Progressive Plus 5 Years 7.05% 7.08%
Progressive 5 Years 6.05% 6.20%
FINANCE IRELAND RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40), rates updated 15/02/23
Finance Ireland Progressive vs Progressive Plus – 90% LTV
Fixed Rate LTV 90% Fixed Rate Fixed APRC
Progressive Plus 3 Years 7.30% 7.29%
Progressive 3 Years 6.60% 6.51%
Progressive Plus 5 Years 7.15% 7.29%
Progressive 5 Years 6.45% 6.51%
FINANCE IRELAND RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40), rates updated 15/02/23

Arrears Mortgages

If you’re one of the 31,000 of closed fund customers in arrears there are still options to exit the closed funds for certain groups of customers.

One option that is available to performing, restructured and arrears mortgage all home owners are over 60 is to release equity from your home to pay down your outstanding debt. The amount you can release depends on your age of the youngest homeowner and the value of your home.

The table below

Age% AllowedAge% AllowedAge % AllowedAge % Allowed
6015%6924%7833%
6116%7025%7934%
6217%7126%8035%
6318%7227%8136%
6419%7328%8237%
6520%7429%8338%
6621%7530%8439%
6722%7631%8540%
6823%7732%
Spry Finance % Loan to Home Value

If you don’t qualify for switching or equity release you don’t have as much room for maneuver unfortunately. Open lenders won’t take on business in arrears for at least two years after the arrears are cleared and more usually a full 5 years.

This is why customers in this group as sometimes referred to as ‘mortgage prisoners’ as you may be ‘trapped’ with your current lender. This could make you vulnerable to predatory pricing as your current lender doesn’t have to price at market rates or worry about you moving elsewhere.

Because of this we believe there should be increased protection for ‘mortgage prisoners’, but there has been no action from either the government or regulator on this yet.

Your current lender is regulated under the code of conduct for mortgage arrears however and has to offer you options under that code. You should also discuss your options with MABS who will give you independent advice.

Next Steps – Pepper Finance Mortgages Ireland 2023

If you are with Pepper Finance it doesn’t mean you don’t have options. If you aren’t in arrears you should talk to a broker to see if you qualify for a switch, to get on a lower rate and cap your repayments.

If you have been out of arrears for more than 2 years and paying full capital and interest for more than a year a moneysherpa advisor will be happy to advise you for free here. If you are over sixty then even if you aren’t out of arrears equity release may be an option, if want to find out more check out our Equity Release Ultimate Guide.

If you want to see what you could save by calculating your repayments and see all mortgage provider rates you can click here.

If you want to get your savings started right now, set up a free no obligation video call with a mortgage sherpa here, covering not only the best rate, but also helping choose the lender most likely to approve you and helping take the pain out of the paperwork.

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