Got a mortgage with Start Mortgages Ireland? Check out our Start Mortgages Ultimate Review – 2023 to understand your options.
Rates for Start mortgages customers have shot up by almost 3.5% in less than a year. With rates for some Start mortgages customers now at over 8%.
| Mortgage Type (Closed Funds) | Customers | Average Rate June ’22 | Average Rate March ’23 | Average Rate August ’23 |
|---|---|---|---|---|
| Tracker Mortgage | 31,000 | 1.15% | 4.65% | 5.65% |
| Variable Mortgage | 38,000 | 3.65% | 7.15% | 8.15% |
| Fixed Mortgage | 15,000 | 2.66% | 2.66% | 2.66% |
Although recent press coverage of Start mortgages customers has focussed on ‘Vulture Funds’ and ‘Mortgage Prisoners’ some Start 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 10,000 Start 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.
| Fixed Term APRC | Avant Money | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland | Bank of Ireland (Re-fixing) |
| 3 Yr | 3.87% | 4.00% | 3.82% | 4.20% | 4.21%% | 4.90% | – | 6.26% | 4.10% |
| 4 Yr | 3.92% | – | 3.78% | – | 4.16% | – | – | – | – |
| 5 Yr | 3.94% | 4.30% | 3.93% | 4.50% | 4.43% | 4.90% | – | 6.20% | 4.40% |
| 7 Yr | 3.97% | 4.60% | 4.33% | – | 4.59% | – | – | – | – |
Read on to find out to see if you might be able to get a better rate than the one your have with Start mortgages and what the other options to manage your repayments are.
- Start Mortgages Overview – Start Mortgages Ireland 2023
- ‘Vulture Fund’ Background – Start Mortgages Ireland 2023
- Is Pepper Finance a ‘Vulture Fund’ – Start Mortgages Ireland 2023
- Pepper Mortgage Types – Start Mortgages Ireland 2023
- Options for Start Mortgage Customers – Start Mortgages Ireland 2023
Start Mortgages Overview – Start Mortgages Ireland 2023
Start Mortgages Ireland
Start Mortgages are a specialist mortgage servicer focussed on managing non performing loans.
Servicing the mortgages of closed investment funds including Cerberus, Carval, Lonestar, Oaktree, Havbell and Beltany.
In total Start have around 19,000 residential mortgages on their books.
Vulture Fund’ Overview – Start Mortgages 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.
Are Start Mortgages A Vulture Fund – Start Mortgages Ireland 2023
Start Mortgages are not a fund themselves however they do service over 19,000 residential mortgages in Ireland. Many of which are owned by the firms known as Vulture funds as they specialise in owning distressed debt.
Start Mortgages Types – Start Mortgages Ireland 2023
There are around 95,000 mortgage holders with non banks, of these 85,000 are with closed funds of which Start Mortgages services just under 20,000.
| Mortgage Type (Closed Funds) | Customers | Average Rate June ’22 | Average Rate March ’23 | Average Rate August ’23 |
|---|---|---|---|---|
| Tracker Mortgage | 31,000 | 1.15% | 4.65% | 5.65% |
| Variable Mortgage | 38,000 | 3.65% | 7.15% | 8.15% |
| Fixed Mortgage | 15,000 | 2.66% | 2.66% | 2.66% |
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.
| 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% | 3.82% | 4.20% | 4.25% | 4.60% |
| 4 Yr | 3.92% | – | – | 3.70%* | 3.61%* | 3.80%* | 3.89% | 3.90%* |
| 5 Yr | 3.94% | 6.26% | 7.42% | 4.30% | 3.81%* | 4.50% | 4.13%* | 4.00%* |
| 7 Yr | 3.97% | – | – | 4.60% | 4.33% | – | 4.35% | 4.10%* |
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 Status | Mortgage Customers |
|---|---|
| Performing | 35,000 |
| Restructured | 19,000 |
| In Arrears | 31,000 |
Start Mortgages Options – Start Mortgages 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 tracker rate of potentially 5.65% or average variable rate of potentially 8.15% for rates as low as 3.19% below.
| Fixed Term APRC | Avant Money | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland | Bank of Ireland (Re-fixing) |
| 3 Yr | 3.87% | 4.00% | 3.82% | 4.20% | 4.21%% | 4.90% | – | 6.26% | 4.10% |
| 4 Yr | 3.92% | – | 3.78% | – | 4.16% | – | – | – | – |
| 5 Yr | 3.94% | 4.30% | 3.93% | 4.50% | 4.43% | 4.90% | – | 6.20% | 4.40% |
| 7 Yr | 3.97% | 4.60% | 4.33% | – | 4.59% | – | – | – | – |
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.
| 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% |
| 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% |
| 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% |
| 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% |
| 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% |
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 | % Allowed | Age | % Allowed | Age % Allowed | Age % Allowed |
|---|---|---|---|---|---|
| 60 | 15% | 69 | 24% | 78 | 33% |
| 61 | 16% | 70 | 25% | 79 | 34% |
| 62 | 17% | 71 | 26% | 80 | 35% |
| 63 | 18% | 72 | 27% | 81 | 36% |
| 64 | 19% | 73 | 28% | 82 | 37% |
| 65 | 20% | 74 | 29% | 83 | 38% |
| 66 | 21% | 75 | 30% | 84 | 39% |
| 67 | 22% | 76 | 31% | 85 | 40% |
| 68 | 23% | 77 | 32% |
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 – Start Mortgages Ireland 2023
If you are with Start Mortgages 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 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.
