Mortgage query - are we silly?

FutureGuy

Hi there,
Sale agreed on a property. We are mortgage approved with AIB and the best rate we can see is 2.85% fixed for 3-5 years.


However, Ulster Bank has 2 years fixed at 2.9% BUT give 4,000 cashback.

Are we nuts not to quickly get approved with BOI asap for a similar value and then perhaps move the mortgage at the end of the 2 years?

Am I missing a catch?

Wheety

BOI or Ulsterbank?

Did you work out how much the extra the 2.9% would cost you? Would it be worth the €4k cashback?

You can always switch at a later date but there will be legal fees. Personally I prefer a mid term fixed rate. We fixed for 5 years with KBC at 2.6%.

FutureGuy

Wheety wrote: »

BOI or Ulsterbank?

Did you work out how much the extra the 2.9% would cost you? Would it be worth the €4k cashback?

You can always switch at a later date but there will be legal fees. Personally I prefer a mid term fixed rate. We fixed for 5 years with KBC at 2.6%.

BOI, so it's costing very little over 2 years (0.05%) in the difference

Sarn

Take the cash back and switch to a better rate once your fixed is up.

iluvfatfrogs

FutureGuy wrote: »

BOI, so it's costing very little over 2 years (0.05%) in the difference

About 40% of that cashback will be eaten up in Legal switching fees I'd imagine

ErinGoBrath

iluvfatfrogs wrote: »

About 40% of that cashback will be eaten up in Legal switching fees I'd imagine

This is new mortgage so they'd be paying legal fees anyway.

When it comes time to switch the majority of switcher deals will offer to cover cost of legal fees or a higher cashback amount.

I'd go with the cashback here, no brainer.

iluvfatfrogs

ErinGoBrath wrote: »

This is new mortgage so they'd be paying legal fees anyway.

When it comes time to switch the majority of switcher deals will offer to cover cost of legal fees or a higher cashback amount.

I'd go with the cashback here, no brainer.

If this is was the case everyone would be just going around switching the whole time, availing of great cash back offers

It could happen, but there's no way I'd be relying on it.

If this is a €300k mortgage, the €4,000 cashback could be offset by:

€300 extra interest over the 2 years
€1,500 legal fees
€150 property valuation

(& obv the work involved in a mortgage application to switch, which come people don't mind, but others hate)

So, yes you are up €2k +, but you lose the security of a 5 year fixed term v the 2 year term.

ErinGoBrath

iluvfatfrogs wrote: »

If this is was the case everyone would be just going around switching the whole time, availing of great cash back offers

It could happen, but there's no way I'd be relying on it.

Yes it is the case and that's what people are doing.

iluvfatfrogs

FutureGuy wrote: »

Hi there,
Sale agreed on a property. We are mortgage approved with AIB and the best rate we can see is 2.85% fixed for 3-5 years.


However, Ulster Bank has 2 years fixed at 2.9% BUT give 4,000 cashback.

Are we nuts not to quickly get approved with BOI asap for a similar value and then perhaps move the mortgage at the end of the 2 years?

Am I missing a catch?

Can you not get access to the 2.3% UB rate generally available if you are willing to go fixed for 2 years?

Trish56

Have you taken into consideration that AIB's variable rate is currently 3.15% versus Ulster Bank's is 4.30%.