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Mortgage interest rate options

  • 11-08-2009 11:59am
    #1
    memaul
    Registered Users, Registered Users 2 Posts: 209 ✭✭


    Hey there,

    Just looking for some advice. We have just purchased a house and will be drawing down our mortgage in a few weeks.

    We have decided to get a fixed interest rate.

    The options are:

    1 year fixed 2.49%

    2 year fixed 2.99%

    3 year fixed 3.65%

    5 year fixed 3.99%

    We are thinking of going for the 5 year fixed at 3.99%. Any advice would be greatly appreciated.


Comments

  • #2
    Senna
    Registered Users, Registered Users 2 Posts: 8,800 ✭✭✭Senna


    Were you offered a 10yr fix also, i've seen some banks offering the same rate for 10yr as the 5yr rate. The 1 and 2 yr will save you next to nothing compared to SVR's, so i would look at 3yr minimum, but 5 & 10yr fix will probably be the best value.

    Do you plan on staying in the house for the foreseeable future 10/15yrs?
    Will your repayments be comfortable if rates rise to 6/7%?
    Do you hope to over-pay the mortgage in the medium term?
    Has the bank given you the option of fixing a percentage of mortgage only?

    If i was fixing at the moment, i would go for 5yr (or 10yr if available and less than 4.5%) and fix 70% of the mortgage so i could over pay during those years.


  • #3
    memaul
    Registered Users, Registered Users 2 Posts: 209 ✭✭memaul


    Senna wrote: »
    Were you offered a 10yr fix also, i've seen some banks offering the same rate for 10yr as the 5yr rate. The 1 and 2 yr will save you next to nothing compared to SVR's, so i would look at 3yr minimum, but 5 & 10yr fix will probably be the best value.

    Do you plan on staying in the house for the foreseeable future 10/15yrs?
    Will your repayments be comfortable if rates rise to 6/7%?
    Do you hope to over-pay the mortgage in the medium term?
    Has the bank given you the option of fixing a percentage of mortgage only?

    If i was fixing at the moment, i would go for 5yr (or 10yr if available and less than 4.5%) and fix 70% of the mortgage so i could over pay during those years.


    Thanks Senna,

    Not sure if they do a 10 year but i will enquire today. I'm not exactly sure what you mean when you say:

    Do you hope to over-pay the mortgage in the medium term?
    Has the bank given you the option of fixing a percentage of mortgage only?


  • #4
    kmick
    Registered Users, Registered Users 2 Posts: 3,375 ✭✭✭kmick


    Had a look at the rates there and AIB seem to be the most competitive. Today they are quoting
    AIB
    5 Year Fixed 5 €1,198.99 3.86%
    Variable €1,009.02 2.65%

    My own personal opinion is that rates wont be above 5% in the next 5 years but that is an educated GUESS. On that basis I would go variable and overpay the extra 189 euros into the mortgage account each month. Alternatively save the 189 in a high interest account and use it to help with any rate increase. Assuming it will be on average 2.5 years before the variable matches the fixed you will have 5670 (189 x 30months) in that account. I cant see the attraction in overpaying 189 a month. For full disclosure purposes I have to say I fixed my mortgage at 4.44 for 5 years when I got my first loan. Over the course of that I would have lost versus the variable rate though.


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