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Fix for 4 or 7 years

  • 03-10-2022 9:06pm
    #1
    comerla
    Registered Users Posts: 231 ✭✭


    Hi,

    We are about to switch mortgage, and are all set to have offer issued at 2% for 4 years. Our broker is recommending we go with same lender at 2.65% for 7 years. I am seeing better 7 year rates (2.2%) but suspect these would not be available by the time it was processed - he is saying rates are being hiked.

    The difference works out at a grand a year, but extra cash back would cover this difference for the first few years.

    Would you be taking the 4 year term, or locking in and paying more for longer for peace of mind?

    Appreciate no one has a crystal ball but would be interested in some perspectives on this one.



Comments

  • #2
    handlemaster
    Registered Users, Registered Users 2 Posts: 6,003 ✭✭✭handlemaster


    Fix for as long as you can get.



  • #3
    Q&A
    Registered Users, Registered Users 2 Posts: 561 ✭✭✭Q&A


    There's a bit of tortoise and the hare here. While the 4 year rate might be lower and appear to be saving you money in the short term you have to have one eye on the long game. What you save on the first 4 years could easily be wiped out by higher prevailing rates between year 4-7.

    All the rhetoric is how rates are going up and this is the end of cheap money. If you believe that's the case locking in a relatively cheap rate - even if not the cheapest - for a longer period is probably better.



  • #4
    comerla
    Registered Users Posts: 231 ✭✭comerla


    Went for 4 years in the end. Hopefully we aren’t back in a 1980s-type environment by that stage..



  • #5
    walterking
    Registered Users, Registered Users 2 Posts: 1,297 ✭✭✭walterking


    I don't know of any bank offering a 7 year rate of 2.2%. I suspect the figures are out of date. (avant are now 2.95%)

    You will see announcements in the next few days of increases by many of the banks, especially in fixed rates which are currently amongst the cheapest in Europe (that won't last long).

    2% for 4 years is phenomenal and will work out cheaper than the 7 year rate if the rate you pay at the end of the fixed rate is anything under 3.75% and there's a good chance it will be at or a little lower than this if going by what the ecb is publicly stating (ECB of 1.5-2% target)



  • #6
    comerla
    Registered Users Posts: 231 ✭✭comerla


    Thanks Walterking- the kind of insight I was hoping for! Should have done the sums myself!

    the rate was 2.65% with Haven. This should leave us even more head room than the 3.75% - closer to 4.



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