Mortgage advice

Shedite27

Trying to pick a mortgage provider at present, in the nice situation of having all the main providers to choose from (We're just under 85% LTV). We're looking at 3 year fiixed.

The BOI offer of 2% back is very tempting, would cover a lot of the buying fees. Their fixed rate at 3.8% isn't the best (AIB offering 3.65%), but it's their follow on that's really unattractive. BOI (currently) would be 4.5% whereas AIB offer 3.9%. Quite a difference (over €400 annually per 100k borrowed).

I've 2 questions:
BOI have stated publicly that their goal is to get everyone on a fixed term, so when you come out of your 3 year, you'd be fixed again for another 3 years. Is the rate for a subsequent fixed term likely to be similar to the new customers fixed rate, or a higher rate?

My missus thinks it's possible to switch mortgage providers. Assuming there's no negative equity or circumstance changes in 3 years time, what's the process for switching providers. Are there fees charged by your current bank? Discount offered by the new bank?

I don't think anyone can guarantee what interest rates will be in the future.

One very clear part of the advertising on the money back is that it may be taken back if you repay the mortgage within five years.

Broadly the difference in rates over the five years makes up for the money back offer.

Shedite27

Deleted User wrote: »

I don't think anyone can guarantee what interest rates will be in the future.

One very clear part of the advertising on the money back is that it may be taken back if you repay the mortgage within five years.

Broadly the difference in rates over the five years makes up for the money back offer.

Thanks, I suppose what I'm asking is if there's any current BOI variable rate mortgage holders (paying 4.5%) who's looked into going 3/5 year fixed. Would the rate that BOI would fix be above or below the 4.5% rate?

BOI have constantly said they want everyone on fixed rate, but there's nothing on their website about fixed rates for existing customers. Some of their recent quotes...

January...
BOI says that existing customers can still benefit from Monday’s reduction as when they mature off a fixed rate they can avail of the new business fixed rates; or if on a variable rate they can switch to a new fixed rate; and existing customers maturing on a fixed rate but returning to variable can avail of a reduced “roll to rate” at the end of the fixed period with the provision of an up to date valuation showing a lower LTV of 75 per cent.

May...
“The bank outlined its strategy and focus on fixed-rate offerings which mitigate interest rate risk for customers and the bank, the availability of the bank’s current fixed rate offers to all Irish SVR customers, and the savings to the bank’s Irish SVR customers from the current fixed rate offers,” it said.

seamus

Shedite27 wrote: »

My missus thinks it's possible to switch mortgage providers. Assuming there's no negative equity or circumstance changes in 3 years time, what's the process for switching providers. Are there fees charged by your current bank? Discount offered by the new bank?

Your bank won't charge any fees unless you're breaking a fixed rate. Switching mortgage providers is in effect a lot like getting a new mortgage with the documentation you have to fill out. The main costs are legal fees to process the documentation. You're looking at 4 figures for that. So the saving being made by switching needs to be pretty decent.

Worth noting with BOI's cashback offer that if you switch in the first five years you'll have to pay that money back. It's a golden handcuffs offer.

farrerg

My understanding is that they are offering whatever fixed rates they have to all SVR customers, so new and existing, which would include you at the end of your fixed term. But there is no guarantee that because one bank has the lowest rates now, that they will in the future, you just have to review it again and potentially see if switching adds up, or if you could reduce your rate by updating your LTV