KBC Rate for 80% LTV Mortgages: Worth going for?

frebel

Hey,
have mortgage sanctioned from AIB and have cash to pay 20% of house value. Mortgage valuer has been to house and things are moving on steadily apart from a few issues relating to the engineer's report. AIB are my main bank and I have found them very good to deal with always getting prompt replies to emails etc. But....

Their current rate of variable interest on 80% LTV is 4.29%
KBC are now offering 3.99%

AIB monthly repayments over 25 years would be 979
KBC monthly repayments over 25 years would be 949

Total Approx Cost of mortgage AIB = 293,749
Total Approx Cost of mortgage KBC = 284,733

Even the difference of 360 over one year is significant enough not to mind say
over 25 years.

I'm just wondering is it worth applying for KBC mortgage? Obviously,variable rates can be changed by either bank
Is the KBC rate just a gimmick to get people to drawn down a mortgage with them and then raise rates? I notice they pay first year's house insurance as well
Have people here had any experiences with KBC? (I have done a forum search)
Thanks
Frebel

The_Conductor

AIB are still fully state owned, and if they are to exit state ownership- will most probably have to significantly increase their costs to their customers. BOI who managed to stay out of state ownership- have increased their costs to customers- however their loan books are in better shapes, and they can borrow money on better terms than can AIB or PTSB.

The potential for rate increases, would, in my opinion, be far higher for a bank intent on exiting state ownership- than it would be for an independent bank (using this term loosely), as their costs of funding will be higher than they might otherwise be.

Personally- I'd suggest biting off KBC's hand- and tying in for as long a period as possible- rates will most probably stay low for even 2-3 years- but there is only one direction they can go, as the effective interest rate (not the overnight rate) is already below zero.

Get as good a rate as you can- and tie in for as long a period as you can.

lima

frebel wrote: »

Hey,
have mortgage sanctioned from AIB and have cash to pay 20% of house value. Mortgage valuer has been to house and things are moving on steadily apart from a few issues relating to the engineer's report. AIB are my main bank and I have found them very good to deal with always getting prompt replies to emails etc. But....

Their current rate of variable interest on 80% LTV is 4.29%
KBC are now offering 3.99%

AIB monthly repayments over 25 years would be 979
KBC monthly repayments over 25 years would be 949

Total Approx Cost of mortgage AIB = 293,749
Total Approx Cost of mortgage KBC = 284,733

Even the difference of 360 over one year is significant enough not to mind say
over 25 years.

I'm just wondering is it worth applying for KBC mortgage? Obviously,variable rates can be changed by either bank
Is the KBC rate just a gimmick to get people to drawn down a mortgage with them and then raise rates? I notice they pay first year's house insurance as well
Have people here had any experiences with KBC? (I have done a forum search)
Thanks
Frebel

I set up a sterling savings account with KBC at a pretty good (variable) rate but within 3 months the rate went from 3% to 1% so I would probably not trust them with this carrot

The_Conductor

lima wrote: »

I set up a sterling savings account with KBC at a pretty good (variable) rate but within 3 months the rate went from 3% to 1% so I would probably not trust them with this carrot

In all fairness- I got burnt by BOI with a similar ruse- they're all aping one another. Savers have gotten gouged- to be honest it makes no sense to save- the rates on offer are below the rate of inflation. If only you had some manner of saving that made sense...........

lima

Sure I'd buy a house only there aren't many on sale!

Woodville56

The_Conductor wrote: »

AIB are still fully state owned, and if they are to exit state ownership- will most probably have to significantly increase their costs to their customers. BOI who managed to stay out of state ownership- have increased their costs to customers- however their loan books are in better shapes, and they can borrow money on better terms than can AIB or PTSB.

The potential for rate increases, would, in my opinion, be far higher for a bank intent on exiting state ownership- than it would be for an independent bank.

We have mortgage approval from AIB but on reading the above re likelihood of significant increases in this bank's charges to customers , is it advisable to try other the other "less state dependant " banks for preferable terms over the long term ? We were thinking of going with variable rate AIB product but having regard to Mod's view of future prospects for AIB mortgage rates, would fixing rate for a few years with AIB be a better option or alternatively source mortgage elsewhere ?

The_Conductor

Woodville56 wrote: »

We have mortgage approval from AIB but on reading the above re likelihood of significant increases in this bank's charges to customers , is it advisable to try other the other "less state dependant " banks for preferable terms over the long term ? We were thinking of going with variable rate AIB product but having regard to Mod's view of future prospects for AIB mortgage rates, would fixing rate for a few years with AIB be a better option or alternatively source mortgage elsewhere ?

Stated ECB policy (as of last update) is that rates are to remain roughly where they are at present for the next 18 months or so. After that- it all depends on whether or not the economic conditions improve- if they do- interest rates will go up- to counter any inflationary pressures (with a target inflation rate of 2%). Unfortunately we don't do fixed term rates in Ireland- most of Europe does- where the interest rate is fixed for the entire term of the mortgage- and the mortgage packaged and sold off to pension funds etc as a solid investment for them.

Here- a 10 year fixed rate is rarer than hens teeth- but if you could get something along these lines- at a favourable rate- you'd be mad not to take it (of course you'll have to factor the unknown into the equation- god only knows what the next few years are going to bring us.......)

I'd suggest fixing for as long as possible- or in the event of not fixing- to revisit this in about a years time- and fix then.

pwurple

http://www.kbc.ie/personal/mortgage/mortgageinterestrate
It's APR's I compare, (column 2) not the Rate. 3.99 is 4.06 APR.


Our mortgage is currently fixed for two years with KBC at 4.00% APR. I suspect it is an 'introductory' fixed rate to get you to become a customer, as we will go onto a higher rate at the end of the 2 year term (KBC's variable 4.56% vs AIB's 4.37% APR). We plan on renegotiating / rearranging at that 2 year point, moving banks if required.

We moved mortgages 3 times on our previous home over 11 years. I have no loyalty to banks (as they have never shown me anything to deserve it) and we do monitor where it is cheaper to move to. It's a bit of paperwork, but is worth it long term.

KBC so far have been problem-free to deal with so far for us.

who_ru

pwurple wrote: »

http://www.kbc.ie/personal/mortgage/mortgageinterestrate
It's APR's I compare, (column 2) not the Rate. 3.99 is 4.06 APR.


Our mortgage is currently fixed for two years with KBC at 4.00% APR. I suspect it is an 'introductory' fixed rate to get you to become a customer, as we will go onto a higher rate at the end of the 2 year term (KBC's variable 4.56% vs AIB's 4.37% APR). We plan on renegotiating / rearranging at that 2 year point, moving banks if required.

We moved mortgages 3 times on our previous home over 11 years. I have no loyalty to banks (as they have never shown me anything to deserve it) and we do monitor where it is cheaper to move to. It's a bit of paperwork, but is worth it long term.

KBC so far have been problem-free to deal with so far for us.

is there freedom to move regardless of the bank you're with, or is this something that has to be agreed and have in writing at the start of the mortgage?

thanks

D3PO

who_ru wrote: »

is there freedom to move regardless of the bank you're with, or is this something that has to be agreed and have in writing at the start of the mortgage?

thanks

theres freedom to move if you can get a mortgage with the other lender of course but bear in mind there are costs associated with this anyway so its not like you would be chopping and changing whenever you felt like it.

OP FWIW Id stick with AIB. KBC have in the past had these great rates to suck people in only to up them significantly after they have reeled you in.

AIB have for quite a significant time now been the lender with the best mortgage rates. I don't see the KBC rate over time being better.

Might be worth hearing from Killers on what he thinks but my gut would be go with AIB.

frebel

pwurple wrote: »

We moved mortgages 3 times on our previous home over 11 years. I have no loyalty to banks (as they have never shown me anything to deserve it) and we do monitor where it is cheaper to move to. It's a bit of paperwork, but is worth it long term.

KBC so far have been problem-free to deal with so far for us.

I love the idea of using the banks like that but surely there are fees for changing mortgages, no?

Some great feedback from other posters as well... My gut does say AIB alright, as most institutions know that once an Irish customer signs up, they can be slow to change...but those rates are tempting.
For now, I've made my inquiries to KBC and see how it goes, I spos'

pwurple

D3PO wrote: »

theres freedom to move if you can get a mortgage with the other lender of course but bear in mind there are costs associated with this anyway so its not like you would be chopping and changing whenever you felt like it.

Oh I wouldn't be doing it every month or even every year. More the hassle than the cost to be honest. There is no fee from the banks side, and you are free to move as long as you aren't in a fixed term contract. But you've to get the place revalued (fee here), and resubmit any documents you had to do to get the first mortgage.

You can save tens of thousands though over the term of the mortgage depending on the interest rate by switching sometimes, all depends on the sums.


If your circumstances are likely to change as well it may not be the best idea. As said by another poster, you do need to be able to get another mortgage approved to do it. If you are in a volatile industry or planning on increasing the size of your family shortly... consider those too.

D3PO

pwurple wrote: »

Oh I wouldn't be doing it every month or even every year. More the hassle than the cost to be honest. There is no fee from the banks side, and you are free to move as long as you aren't in a fixed term contract. But you've to get the place revalued (fee here), and resubmit any documents you had to do to get the first mortgage.

You can save tens of thousands though over the term of the mortgage depending on the interest rate by switching sometimes, all depends on the sums.


If your circumstances are likely to change as well it may not be the best idea. As said by another poster, you do need to be able to get another mortgage approved to do it. If you are in a volatile industry or planning on increasing the size of your family shortly... consider those too.

no your right Im just saying its not like you can just switch to a better rate willy nilly. Look at the OP for example the yearly saving would be gone in the cost of the valuation fee, so unless your sure the rate difference would remain at least the same for 18 months then there would be no point in switching IYKWIM.

You need to be pretty sure that your going to benefit in at least the medium term for a switch to be worth doing is all I was really trying ot put across and like you said unless your a prime mortgage candidate then its a risky strategy given how restrictive banks are on lending these days. You could move and end up in a position where you get stuck with your lender at prohibitive rates.

Id much more advocate switches to those in solid employment with significant equity and no worries about switching at any stage. Also isn't there legal costs with switching ? I can recall banks like PTSB advertising that they would pay legal costs for switching to encourage people to do so a few years back.

Switching and a new mortgagee wouldn't be a match made in heaven strategically speaking.

josip

We had considered switching from BOI to KBC now that our 3 year fixed term is running out. We're reverting to 4.5% in BOI. We could get a 4% in KBC. We would have to pay Valuation fee (150-250 + VAT), KBC legal fees (€400 from what I can see on their website) and our own legal fees so it looks like a minimum of €1000 to switch. It would take us a year to start profiting from our switch and we would be at the mercy of KBC variable interest rate increases in the meantime.

So we had a look at KBC rates versus staying with BoI for our 75% LTV

KBC New | KBC Existing | BOI New | BOI Existing
(LTV) Variable | 3.99% | 4.20% | 4.30% | 4.50%
2Yr Fixed | 4.40% | 4.95% | 4.49% | 4.69%
3Yr Fixed | 4.75% | 5.45% | 4.69% | 4.89%
(Table formatting thanks to Standard Toaster)

From the above figures it seems to me that KBC are trawling for new customers right now. The spread between KBC and BoI narrows considerably as you move from the short term to the medium term; to the extent that over 3 years BoI are more attractive. I would expect that after 12 months with KBC variable interest rates will increase.

Now that trackers no longer exist, the only certaintly when switching is if you choose a fixed rate term, so that's what we're evaluating to see if it's worthwhile switching.

Standard Toaster

josip wrote: »

(What's the delimiter for cols in a table? I can't find anything for tables in the FAQ)

It's the pipe symbol |

KBC New|KBC Existing|BOI New|BOI Existing
(LTV) Variable|3.99%|4.20%|4.30%|4.50%
2Yr Fixed|4.40%|4.95%|4.49%|4.69%
3Yr Fixed|4.75%|5.45%|4.69%|4.89%

Only following this thread so I'm sorry to say this is my only contribution

/moves back into the shadows

killers1

frebel wrote: »

Hey,
have mortgage sanctioned from AIB and have cash to pay 20% of house value. Mortgage valuer has been to house and things are moving on steadily apart from a few issues relating to the engineer's report. AIB are my main bank and I have found them very good to deal with always getting prompt replies to emails etc. But....

Their current rate of variable interest on 80% LTV is 4.29%
KBC are now offering 3.99%

AIB monthly repayments over 25 years would be 979
KBC monthly repayments over 25 years would be 949

Total Approx Cost of mortgage AIB = 293,749
Total Approx Cost of mortgage KBC = 284,733

Even the difference of 360 over one year is significant enough not to mind say
over 25 years.

I'm just wondering is it worth applying for KBC mortgage? Obviously,variable rates can be changed by either bank
Is the KBC rate just a gimmick to get people to drawn down a mortgage with them and then raise rates? I notice they pay first year's house insurance as well
Have people here had any experiences with KBC? (I have done a forum search)
Thanks
Frebel

At the end of the day all you're doing is buying money, so buy it at the cheapest price possible..

Apogee

pwurple wrote: »

Oh I wouldn't be doing it every month or even every year. More the hassle than the cost to be honest. There is no fee from the banks side, and you are free to move as long as you aren't in a fixed term contract. But you've to get the place revalued (fee here), and resubmit any documents you had to do to get the first mortgage.

Are there not legal fees and land registry fees also associated with switching mortgage provider? Or were you able to somehow avoid these?

pwurple

Apogee wrote: »

Are there not legal fees and land registry fees also associated with switching mortgage provider? Or were you able to somehow avoid these?

There are land registry fees if there is a deed of transfer (change of owner).. Or maybe if you need a copy (if you've lost the original). But not for changing mortgage provider itself. Legal fees I have never paid, as the banks paid them to get the business at the time. but the last time I switched was 2007, so don't rely on my foggy brain!