Variable vs Fixed Rate - Switcher

MaggyB

Looking for some advice on switching our mortgage from variable to fixed. It’s not something that we had looked into previously but a friend mentioned she recently switched and got a great deal and it made me look into it more.

We are currently on a variable rate of 2.95 and have 60% LTV, we are with AIB and wouldn’t qualify for the lower variable rate of 2.75 as that’s only for <50% LTV. We currently make some overpayments when we can and we have 24 years left on our current mortgage.

Ulster bank seem to be offering a 5 year fixed rate of 2.2%, 1,500e towards your legal fees and 500e cash back to open a current account with them. You can overpay by a maximum of 10% on the remaining loan value every year.

Obviously the different between 2.2% and 2.95% would be a decent monthly saving for us if we did switch so I am tempted however, other family members I have spoken to seem to think Ireland may see a dip in variable rates in the near future but I can’t find any recent articles indicating this or discussing it. Not sure if the banks are doing lots of switching promo at the moment to lock people into higher rates because there are lower variable rates on the way (is that even a thing!!!).

I’m not overly knowledgeable in this space so wondered if anyone has any advice/thoughts. Is switching a massive hassle?

This is also not our forever home and we would probably be house hunting again in 5 years.

Thanks in advance!

Q&A

MaggyB wrote: »

Looking for some advice on switching our mortgage from variable to fixed. It’s not something that we had looked into previously but a friend mentioned she recently switched and got a great deal and it made me look into it more.

We are currently on a variable rate of 2.95 and have 60% LTV, we are with AIB and wouldn’t qualify for the lower variable rate of 2.75 as that’s only for <50% LTV. We currently make some overpayments when we can and we have 24 years left on our current mortgage.

Ulster bank seem to be offering a 5 year fixed rate of 2.2%, 1,500e towards your legal fees and 500e cash back to open a current account with them. You can overpay by a maximum of 10% on the remaining loan value every year.

Obviously the different between 2.2% and 2.95% would be a decent monthly saving for us if we did switch so I am tempted however, other family members I have spoken to seem to think Ireland may see a dip in variable rates in the near future but I can’t find any recent articles indicating this or discussing it. Not sure if the banks are doing lots of switching promo at the moment to lock people into higher rates because there are lower variable rates on the way (is that even a thing!!!).

I’m not overly knowledgeable in this space so wondered if anyone has any advice/thoughts. Is switching a massive hassle?

This is also not our forever home and we would probably be house hunting again in 5 years.

Thanks in advance!

Well worth switching. As for which is best value it really depends on the outstanding mortgage amount and how quickly you plan to repay. Ulster Banks offer is very good, especially the overpayment option. To be clear the 2.2% rate is only available on balances above 300k otherwise it's 2.6%. Another option is kbc they offer 3k cash back. To maximise the benefits you could look to do multiple switches with institutions that offer cash back. The switcher forum on askaboutmoney will open your eyes to what's on offer and how far people have gone.

Will variable rates go down? Personally I doubt it, banks now compete on fixed rates. If they lower variable rates they'd lose more money on forgone interest from existing customers than they'd ever make from attracting new customers. Not great business sense.

As for how difficult it is to switch well it depends on you and your property. You're applying for a new mortgage and the bank will do is due diligence regardless of what AIB did first time. You'll have to get all your bank statements, property documents, solicitor etc. I think a lot of people are put off of switching because of the stress associated with buying in the first place. Thankfully second time round it's just proving to the bank you and your property are a good bet.

Trish56

If you open a current account with KBC you get a 3 year fixed for 2.25% and 5 year fixed 2.40%. You can also pay 10% off the principal over the fixed term otherwise there is a penalty so if you're thinking of moving within the short term you may be best going for the 3 year fixed.

They also pay cash back of 3k for switching. it's a simple enough process but will need to provide a recent payslip. salary certificate and P60 for 2019, 3 months current account statements and 2 months credit card statements. You will also need a Solicitor with approx. fees of €1200/€1500 (would recommend getting a quote) and a valuation fee of €130.