Fixed or Variable Mortgage Rate????

sniper83

Hi, myself and herself just got word from ulster bank of a mortgage approval and are awaiting news from a broker. We are looking to purchase a property for between 150-180k and have 30k in savings so 80% LTV is achievable.
As interest rates are so low would we be better off fixing it for a number of years?? Ulster have a 3.8% LTV Max 80% fixed for 5 years which looks to be one of the best around and 3.75% Max 80% for 3 years.

jimmycrackcorm

What's the variable rate at? I can't see variable rates dropping lower especially given the government's pressure to reduce them being ignored.

I've a 3.6% variable rate so I think being able to fix it just above that for 5 years is worth it.

sniper83

Ya that's my gut feeling too, but im no expert! Ulster's variable rate is actually higher than their fixed rate for 3 and 5 years. Sounds like a no brainer, but what's the catch???

Below are the current variable rates of the lenders atm.

Loans of 80% LTV

KBC 3.89% LTV max 80% (3.69% for KBC current account holders)
Ulster 3.9% Max LTV 80%
PTSB 4% Max 80% LTV
AIB 4.05% Max 80% LTV
BOI 4.2% (61 to 80%)
EBS 4.2% 80% to 92% LTV

JTMan

sniper83 wrote: »

Hi, myself and herself just got word from ulster bank of a mortgage approval and are awaiting news from a broker. We are looking to purchase a property for between 150-180k and have 30k in savings so 80% LTV is achievable.
As interest rates are so low would we be better off fixing it for a number of years?? Ulster have a 3.8% LTV Max 80% fixed for 5 years which looks to be one of the best around and 3.75% Max 80% for 3 years.

My best educated guess without a crystal ball ...

Do not fix. Do not choose Ulster Bank.

Go with a variable mortgage with KBC for 3.69% provided you switch current account.

Variable rates are under huge downward pressure right now. Do not fix for 5 years in this kind of climate.

phormium

There is no catch other than if you fix they can guarantee you won't switch to another provider for that length of time, it's a business retention ploy. That's why they make attractive fixed rates for new customers like that.

ifeelstupid

Hi

Just wondering if you decided what to do OP/ Friend of mine in similar position with UB also and has asked my advice. I would be inclined to fix as I don't see rates moving downward significantly and it might suit them to have the security of knowing outgoings for fixed period duration.

JTMan

ifeelstupid wrote: »

Hi

Just wondering if you decided what to do OP/ Friend of mine in similar position with UB also and has asked my advice. I would be inclined to fix as I don't see rates moving downward significantly and it might suit them to have the security of knowing outgoings for fixed period duration.

Firstly, do not choose Ulster Bank. They do not offer the best rates. In most cases, you are best off going with KBC.

What is their LTV?

Rowley Birkin QC

We're also at the point of having to decide between fixed and variable. With AIB and can't re-apply with another bank as we got approved on the "old rules" with 10% deposit.

Gut is telling me to go with 5 year fixed @ 3.8% as we would be comfortable with the repayment amount and it would remove any worry about rates.

Trish56

I would hold off on fixing at the moment as the Central Bank and Government are putting huge pressure on banks to reduce variable interest rates.
Not sure about Ulster but AIB offer the same interest rates to existing customers as new. You can also choose a split mortgage ie. 50% variable and 50% fixed.

PaulM1977

Ulster Bank are not great on rates, if you were to look at the best rates available, then it would be AIB/EBS/Haven(who are all one in the same) or KBC who will give you a further reduction of 0.20% on their interest rate if you open a current account with them.
Personally, as a first time buyer you could fix your mortgage rate for a couple of years until you are comfortable making payments on your mortgage, if this is the first time that you will be getting used to such a financial commitment on a monthly basis i.e that you were living at home until now and never paid rent before.
If, on the other hand you wanted to make increased repayments off your mortgage at regular intervals, then a variable rate would be better as you cannot make increased/lump sum repayments off a mortgage while on a fixed rate.

Also bear in mind that you should go by the APR and not the interest rate quoted, as this is the total amount a loan will cost in a year. So while the interest rate may be the lowest with one particular lender, the APR could see it costing you more overall.

PaulM

marathonic

Go variable until you see how this plays out:

http://www.independent.ie/business/personal-finance/property-mortgages/exclusive-banks-to-slash-mortgage-rates-on-variableinterest-mortgages-31243358.html

You can consider switching to a fixed rate when the bank comes through on their promise to allow customers to switch to new, lower, fixed rates.

g0g

I wonder what will happen to people on lower LTV rates? Are they also "variable rate" mortgages? Will their rates drop too, or is it possible that the SVR might end up lower than some of the LTV rates?

muloc

g0g wrote: »

I wonder what will happen to people on lower LTV rates? Are they also "variable rate" mortgages? Will their rates drop too, or is it possible that the SVR might end up lower than some of the LTV rates?

am wondering this myself....currently with AIB 4.05% LTV 50-80%.

If the aim is to have everyone < 4% we'll possibly only get one 0.25% cut and be left at 3.8%?

kennyb3

muloc wrote: »

am wondering this myself....currently with AIB 4.05% LTV 50-80%.

If the aim is to have everyone < 4% we'll possibly only get one 0.25% cut and be left at 3.8%?

On same rate - AIB due to cut 0.25% from early June (no exact date given) but expecting my rate to move to 3.8% as LTV rates are variable.