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Mortgage - Fixed v Variable

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  • 25-09-2014 12:27pm
    #1
    GampDub
    Registered Users Posts: 227 ✭✭


    Hi,

    I'm a first time buyer with very limited knowlodge of Mortgages.

    I am very close to buying a property for 195k. I have been offered a 92% mortgage at 4.5% variable. I intend paying a min of 20k deposit so would be taking on a mortgage of 175k over 30-35 years.

    I have also been offered fixed terms ranging from 3.5% for 1 year to 5.2% for 5 years.

    Just wondering if anybody had any opinions on taking the Fixed Rate v Variable Rate mortgate.

    Will it all work out much the same over 30-35 years regardless.

    Thanks
    Gampdub


Comments

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    #2
    jameshayes
    Registered Users Posts: 3,772 ✭✭✭jameshayes


    Are you sure you've been offered a fixed at 3.5? jump on it if so!! It must be a mistake, normally variable would be less than fixed - as you take a fixed as security against fluctuation the bank charge you a little more to cover themselves..

    fixed -v- variable is a tough choice, personally I go variable because I'm in a position to pay more if the rates go up and willing to take the gamble they wont. If I was a person with kids, a non secure job or any other reason I would be unable to pay if the rates flew up I would take a fixed.. at least you know what you'll be paying every month...


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    #3
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    jameshayes wrote: »
    Are you sure you've been offered a fixed at 3.5? jump on it if so!! It must be a mistake, normally variable would be less than fixed - as you take a fixed as security against fluctuation the bank charge you a little more to cover themselves..

    fixed -v- variable is a tough choice, personally I go variable because I'm in a position to pay more if the rates go up and willing to take the gamble they wont. If I was a person with kids, a non secure job or any other reason I would be unable to pay if the rates flew up I would take a fixed.. at least you know what you'll be paying every month...

    Seems to be a good few banks offering fixed lower than variable at moment. I am buying a house and variable is 4.5% against their 3 year fixed @ 4.2%. Going for the fixed option as gives some security of payments for the first few years as we get setup in the house. But each to their own really on it.


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    #4
    SBarrett
    Registered Users Posts: 160 ✭✭SBarrett


    Over the term of the mortgage, taking the ups and downs of a variable mortgage will be cheaper than fixed.

    But as Chris says, each to their own. It's impossible to know. I got my mortgage a few years ago when it looked certain that rates were going up, so I fixed 75% of it for 3 years. Rates have fallen ever since. In saying that, the variable portion of my mortgage hasn't fallen every time the rates have been cut.

    That 12 month rate is very good, so I would bite their hand off.

    Steven


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    #5
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    jameshayes wrote: »
    Are you sure you've been offered a fixed at 3.5? jump on it if so!! It must be a mistake, normally variable would be less than fixed - as you take a fixed as security against fluctuation the bank charge you a little more to cover themselves..

    fixed -v- variable is a tough choice, personally I go variable because I'm in a position to pay more if the rates go up and willing to take the gamble they wont. If I was a person with kids, a non secure job or any other reason I would be unable to pay if the rates flew up I would take a fixed.. at least you know what you'll be paying every month...

    Be careful choosing 3.50% fixed for 1 year only and if you are going to opt for it you should check what rate you go back on after the year ..will it be the loan to value rate or the standard variable which is 4.60% with one lender. 3 year fixed rate of 4.20% is good value at the moment. Irish lenders are charging their customers 1% more on the variable rate than lenders in Europe.


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    #6
    murphaph
    Registered Users Posts: 19,021 ✭✭✭✭murphaph


    Is it really just 1%? As an example... We're looking at mortgages now to build a house near Berlin. We have a site purchase in progress that cost 70k and we'll need 220k to build including outside works. The site counts as a 70k deposit as we will have paid cash for it and will own it outright.

    We can get that 220k fixed for 10 years at 2%. 20 years fixed at 3.2%. I know these are fixed rates but they are much cheaper than you see even for variable rate mortgages in Ireland.

    In our case we are lucky. We have a friend who works for a building society and he can get us a special deal through a slightly complicated system of a fixed rate discount 10 year interest only loan against which you save what you would otherwise pay off the capital into a special savings account. You then have a couple of options after the 10 years are up. Clear the intetest only loan or continue with it and maybe buy something else etc. It will work out at around 1.6% for us fixed for 10 years and after that the max it can go to will be 2.75%.

    German lenders can go this low because German property is seen as very low risk and because they can repossess relatively easily if you don't hold your end of the bargain up.


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