Variable or Fixed Short Term Mortgage

Tim76

Hi all,

I'm taking out 35k over 5 years and the amount I would be paying on a variable would be manageable if the rate was not to increase wildly.

The variable is at 4.09% and the fixed for the 5 years is at 5.35%

Any advice on which way to go?

Thanks in advance for any help!

roro2

Personally, I wouldn't go near that 5-year rate especially if the capital will be repaid in 5 years.

If you assume that rates won't increase over the next 12-24 months (my opinion and generally accepted), you'd struggle to get close to "break-even" even if rates increased significantly thereafter. Look at it this way, if you paid 4.09% for 2 years and then the variable rate jumped to 6% immediately (unlikely in my opinion) - your average rate would still be 5.24% over the 2 years.

But, as you're paying back the capital so quickly, you're balance would be close to €20k after 2 years so the higher rate would be on a much lower balance, and lower again in years 4 & 5.

The fixed rate is likely to cost you much more over the 5 years, but some people like paying for the certainty of fixed repayments.

Tim76

Cheers roro2, I was leaning towards the varaible alright

D3PO

what bank is offering 5 year mortgages of 35k ? Im not aware of any banks that would offer either a mortgage of such a small amount (most have a min 50k) and I know none that would offer a 5 year mortgage term.

if your taking just a general query and haven't checked it out I don't think the possibility of this exists and Id be pretty sure your only option would be a personal loan

Tim76

D3PO wrote: »

what bank is offering 5 year mortgages of 35k ? Im not aware of any banks that would offer either a mortgage of such a small amount (most have a min 50k) and I know none that would offer a 5 year mortgage term.

if your taking just a general query and haven't checked it out I don't think the possibility of this exists and Id be pretty sure your only option would be a personal loan

AIB. The mortgage is to make up the shortfall on a larger sum.

Woodville56

Currently applied for a mortgage of €75k which we plan to repay over 10-12 years.
On offer is fixed rate for 2 years with repayments at €676.86 per month (4.55%) while variable rate repayment is € 674.64 per month (4.49%)
Question is : to fix at the above rates for 2 years costing €2.22 per month or to stay variable ?
Are interest rates likely to stay at current values over the next 2 years ? I heard somewhere that interest rates will increase next year ?
Accepted that with fixed rates we cannot increase repayments or pay off within the fixed period but on the other side is the peace of mind a fixed rate gives for a relatively small extra per month over the 2 years ?
Any comments or advice welcome !

D3PO

for €2.22 a month your be mad not to fix.

Variable rates certainly wont fall even if the ECB rate goes to zero at best they will stay even but there is a chance they could increase.

Its a no brainer fix for the 2 years.