Take a low rate mortgage and switch???

Fabio

Hi all,

Apologies if this comes across as stupid but I don;'t have much experience in this area.

We're first-time buyers and are looking for a mortgage. We understand that Ulster Bank has the lowest fixed rates at the moment (at least for a 2 yr fixed). However, their variable rate is relatively high.

KBC are the other bank we are looking at and their fixed rates are good but not quite as good as Ulster. However, their variable is much better.

When we do an online calculator on mortgages.ie or some place, you can clearly see KBC is cheaper over the course of the lifetime of the mortgage. However, the calculator assumes that once the initial fixed term with any bank is complete, that you automatically let it slip on to a variable rate. In that case the Ulster Bank quotes are pretty high as their variable is high. But who let's their mortgage slip into a high variable rate without ringing the bank to check for something cheaper?

I suppose my question is this:

If we signed up with Ulster Bank for a 2 year fixed mortgage, what are the chances of them having a competitive fixed rate for us to switch to after that 2 years are up? Or are you better off going to a bank with a slightly higher fixed rate but knowing that, if it does slip into a variable, it's still relatively cheap?

Thanks all.

amcalester

No way of knowing what will happen in 2 years or which banks will have the most competitive rates.

I was approved by both UB and BOI and went with BOI with their 5 year fixed, slightly more expensive per month than UB but it gives me certainty for the 5 years and I really didn't fancy having to apply to various other lenders after the UB 2 year period was up.

With the BOI cashback, there also wasn't much in the difference spread across the 5 years anyway. I ignored the follow on rate as it's unlikely to be the same in 5 years anyway.

cruizer101

Fabio wrote: »

Or are you better off going to a bank with a slightly higher fixed rate but knowing that, if it does slip into a variable, it's still relatively cheap?

In my opinion no, if you go with UB you can just change in two years time either to another bank or to another fixed mortgage with UB.
I wouldn't consider the variable after fixed rate at all with any of the banks as chances are you will be either fixing again or changing bank so its kind of irrelevant.

Now deciding how long to fix for is another question altogether.

Fabio

amcalester wrote: »

No way of knowing what will happen in 2 years or which banks will have the most competitive rates.

I was approved by both UB and BOI and went with BOI with their 5 year fixed, slightly more expensive per month than UB but it gives me certainty for the 5 years and I really didn't fancy having to apply to various other lenders after the UB 2 year period was up.

With the BOI cashback, there also wasn't much in the difference spread across the 5 years anyway. I ignored the follow on rate as it's unlikely to be the same in 5 years anyway.

cruizer101 wrote: »

In my opinion no, if you go with UB you can just change in two years time either to another bank or to another fixed mortgage with UB.
I wouldn't consider the variable after fixed rate at all with any of the banks as chances are you will be either fixing again or changing bank so its kind of irrelevant.

Now deciding how long to fix for is another question altogether.

Thanks for the advice folks, much appreciated. It makes a lot of sense. My gut tells me to fix the thing for 3-5 years if possible. It guards against any mad rate increases etc.

myshirt

You may not be able to switch in two years. Who knows.

Will you have changed job, will you have fallen sick, what will the property price be, etc

cruizer101

Even if you can't switch you will be able to fix again with UB.

Now nobody knows the future but chances are with them currently having some of the best fixed rates they will still have some decently comparable products.

Ulster actually have two variable, when you finish a fixed you get put onto their higher variable rate by default, but they do have a lower variable which you can go on to by just talking to them, loyalty rate.

The above applies to all banks, even if you can't switch you will be able to fix again with them.

Fabio

cruizer101 wrote: »

Even if you can't switch you will be able to fix again with UB.

Now nobody knows the future but chances are with them currently having some of the best fixed rates they will still have some decently comparable products.

Ulster actually have two variable, when you finish a fixed you get put onto their higher variable rate by default, but they do have a lower variable which you can go on to by just talking to them, loyalty rate.

The above applies to all banks, even if you can't switch you will be able to fix again with them.

Just spotted they have a loyalty rate. I've been with them for years for day to day stuff so I'd quality for that I reckon.

Thanks!

pwurple

On switching, it is a more complex process in Ireland than in other countries.

I've switched mortgages 4 times in the last 15 years or so since we started buying, and while well worth it in the life of the mortgage, be warned, it can be long and drawn out. You need a solicitors involvement, valuers, sometimes engineers, producing the title again, doing legal searches. It costs around 2k and sometimes takes around 2 or 3 months. Some banks make it easier than others. One particular bank were particularly troublesome for us to get away from. They kept issuing the closing balance on the mortgage the day before the next repayment, so that it was immediately out of date. Quite frustrating and took a lot of phonecalls and an escalation to an external body to resolve it.


I've never fixed a mortgage, as I like the flexibility to be in my corner should the market change, or should my circumstances change. For example, I typically overpay any bonus I get into a mortgage to clear it down faster. It's not always possible to overpay on a fixed, or take a break from the mortgage if you are out of work for any reason.

Fabio

pwurple wrote: »

On switching, it is a more complex process in Ireland than in other countries.

I've switched mortgages 4 times in the last 15 years or so since we started buying, and while well worth it in the life of the mortgage, be warned, it can be long and drawn out. You need a solicitors involvement, valuers, sometimes engineers, producing the title again, doing legal searches. It costs around 2k and sometimes takes around 2 or 3 months. Some banks make it easier than others. One particular bank were particularly troublesome for us to get away from. They kept issuing the closing balance on the mortgage the day before the next repayment, so that it was immediately out of date. Quite frustrating and took a lot of phonecalls and an escalation to an external body to resolve it.


I've never fixed a mortgage, as I like the flexibility to be in my corner should the market change, or should my circumstances change. For example, I typically overpay any bonus I get into a mortgage to clear it down faster. It's not always possible to overpay on a fixed, or take a break from the mortgage if you are out of work for any reason.

I think Ulster allow you to overpay up to 10% of the value of it. Not sure of the exact T&Cs there but KBC allow similar overpayments, up to a point. Still, worth thinking about....

zl1whqvjs75cdy

Fabio wrote: »

I think Ulster allow you to overpay up to 10% of the value of it. Not sure of the exact T&Cs there but KBC allow similar overpayments, up to a point. Still, worth thinking about....

Yeah kbc are 10 % too, just finished switching to them myself. Will save approx 60 k over the lifetime of the loan and shortened the term by 5 years. Well worth it for me.

Fabio

donkeyoaty0099 wrote: »

Yeah kbc are 10 % too, just finished switching to them myself. Will save approx 60 k over the lifetime of the loan and shortened the term by 5 years. Well worth it for me.

How was the switching process? I've heard of nightmares but a lot of banks seem to WANT people to switch to them so surely they must be trying to make it easier.

zl1whqvjs75cdy

Fabio wrote: »

How was the switching process? I've heard of nightmares but a lot of banks seem to WANT people to switch to them so surely they must be trying to make it easier.

Was pretty ok. I used a broker who didn't charge a fee. I think that helped a lot because our accounts are all over the place at the moment as we're paying for a wedding. The mortgage protection was a bit of a pain as we had to take a new policy out so actually have two running at once. Need to cancel one actually. But overall so worth it. Just think how much you'll have to work to make 60 k after tax. That'll put the time and hassle into perspective for you.

Fabio

donkeyoaty0099 wrote: »

Was pretty ok. I used a broker who didn't charge a fee. I think that helped a lot because our accounts are all over the place at the moment as we're paying for a wedding. The mortgage protection was a bit of a pain as we had to take a new policy out so actually have two running at once. Need to cancel one actually. But overall so worth it. Just think how much you'll have to work to make 60 k after tax. That'll put the time and hassle into perspective for you.

Absolutely, makes a pile of sense when you see the figures in front of you like that.

iluvfatfrogs

Just finished switching from AIB to BOI

Took 3 months (loads of paperwork)

But got the 2% cash back on drawdown, which was double the cost of switching (solicitor, breakage fee - only applicable to AIB, valuer, and we needed an engineer for something specific)
AS with previous poster our monthly repayment falling €80 and knocking a few years off mortgage.

(another 1% cashback if still with BOI in 5 years, but def too far away to be sure of that)