Was about to sign mortgage offer letter...

dellas1979

Hello. Need advice and a rationale as to why.

I was in solicitors this evening. I was about to sign te mortgage offer letter. I think/thought I wanted a fixed rate of 3% from BoI, over 3 years.

My solicitor asked me to reconsider getting a 3% over 5 years.

I dunno why I went with 3 (rather than 5). I just thought Id be 3 years into the mortgage and then I could shop around.

I mean, none of us have crystal balls.

What would you do? 3 or 5! And why?

Heres Johnny

dellas1979 wrote: »

Hello. Need advice and a rationale as to why.

I was in solicitors this evening. I was about to sign te mortgage offer letter. I think/thought I wanted a fixed rate of 3% from BoI, over 3 years.

My solicitor asked me to reconsider getting a 3% over 5 years.

I dunno why I went with 3 (rather than 5). I just thought Id be 3 years into the mortgage and then I could shop around.

I mean, none of us have crystal balls.

What would you do? 3 or 5! And why?

Longer fixed term reduces uncertainty. That's all. You could end up better off on a variable after 3 years or worse. Nobody knows really.
Certainty is seen as good in finance. But it's your call to figure out where you think rates will go.

thegills

3 for me. They should offer a better rate for 5 years. Perhaps the market is going to see some new entrants with competition.

Sleeper12

Interest rates are at the lowest ever in history. Not just the history of the state but lowest worldwide ever. They have been ridiculously low for the guts of 10 years. They can only go up and they will be going up possibly in the next months or so. I'd jump at 5 years. You can be almost 100 percent certain that you won't get as low as 3 percent in 3 years when the 3 years fixed is up.

naughtysmurf

I've had two different mortgages since 1995 & only ever had a fixed rate for the first year of both , then either variable or tracker, financially it's been much better that way than fixed rate, in my case

Your solicitor is probably recommending a fixed rate for financial planning / budgeting your end for the first number of years to allow you to easily budget for other expenses that come with new home ownership, settling in expenses, DIY improvement, upgrades etc as your largest monthly outgoing will be fixed

Interest rates have been very low for quite a number of years now, they have to start rising at some stage

If I was in your shoes, I'd probably have opted for 3 years fixed too, only time will tell if it was the correct decision, I know people who fixed at 13% in the past & regretted it & paid a large penalty to get out of it at least at 3% you won't get badly burnt like they did

Were they your only options?

dellas1979

naughtysmurf wrote: »

Were they your only options?

Thanks for all the replies.

I went to a mortgage advisor a few months ago (was a chat really) as I couldnt figure out what type of mortgage to get.

After listening to me, he felt that a fixed rate would be better. As I like to know my outgoings. Looked up who has the lowest fixed rate (BoI). He said 3 or 5 year would be up to me.

fritzelly

Like the stock markets - can you take the hit if you are wrong or do you want certainty over what you will have to pay within your budget
Who knows what will happen in 3 or 5 years...

LionelNashe

dellas1979 wrote: »

Hello. Need advice and a rationale as to why.

I was in solicitors this evening. I was about to sign te mortgage offer letter. I think/thought I wanted a fixed rate of 3% from BoI, over 3 years.

My solicitor asked me to reconsider getting a 3% over 5 years.

I dunno why I went with 3 (rather than 5). I just thought Id be 3 years into the mortgage and then I could shop around.

I mean, none of us have crystal balls.

What would you do? 3 or 5! And why?

For me, it would depend on what variable rate is on offer.

December2012

I would have thought the best person to take advice on your mortgage is your mortgage broker, not your lawyer?

dellas1979

I had a chat with a mortgage broker.

He didnt charge me anything.

We had a chat for about an hour.

You know, I cant figure this out, so flipped a coin. And it came out tails (5 years). 3% is still a good rate.

I know noone has a crystal ball. Thanks everyone.

source

dellas1979 wrote: »

I had a chat with a mortgage broker.

He didnt charge me anything.

We had a chat for about an hour.

You know, I cant figure this out, so flipped a coin. And it came out tails (5 years). 3% is still a good rate.

I know noone has a crystal ball. Thanks everyone.

https://www.irishtimes.com/business/economy/the-days-of-super-low-interest-rates-seem-numbered-1.3352303

ECB is looking to start increasing their rate in the next 12 months, which will see rates rise throughout Europe, both Tracker and SVR. It will more than likely only rise at a quarter of a % at a time but the banks will more than likely pass the increase onto customers immediately.

Personally i would be fixing as low as i can for as long as i can to ensure some bit of certainty in my outgoings.

beefburrito

I ain't religious but the Islamic way of loans is much better.....

dellas1979

source wrote: »

https://www.irishtimes.com/business/economy/the-days-of-super-low-interest-rates-seem-numbered-1.3352303

ECB is looking to start increasing their rate in the next 12 months, which will see rates rise throughout Europe, both Tracker and SVR. It will more than likely only rise at a quarter of a % at a time but the banks will more than likely pass the increase onto customers immediately.

Personally i would be fixing as low as i can for as long as i can to ensure some bit of certainty in my outgoings.

Thank you. That was very helpful reply.