Fixed or variable?????

ImBoredDotIe

Hi,

I have recently secured a mortgage and now need to decide between the following options for my bank. Any advice as to which one would be best? The variable is the most expensive but if I fix for say 3 years then I won't be able Have a Loan to Value variable rate at the end of this period as would be stuck on a standard variable rate. Any help appreciated!



Variable >80% <90% 4.10% (APR 4.18%)

1 Year fixed rate 3.30% (APR 4.27%)

2 Year fixed rate 3.65% (APR 4.24%)

3 Year fixed rate 3.70% (APR 4.19%)


Thanks!

PaulM1977

Hi ImBoredDotIe

What is the standard variable rate in comparison to the Loan to value variable rate?

Before you decide which would be the best option for you, regardless of the variable rate issue, you should think about what you would like to do repayment-wise in the near future. If you would like to know how much your monthly mortgage repayments are each month, until you get used to having to pay this financial commitment, then it would be better to go for a fixed rate for a certain period of time, i.e. 1 year, 2 year or 3 year. Once this fixed rate has ceased you may be offered the option to fix your mortgage rate again, but this would not be at the same rates as you would be offered as a new customer to your mortgage lender.

If you want to pay lump sums off your mortgage e.g. if you happened to receive a lump sum gift/win a cash prize/cash in a savings plan then the best option would be a variable rate as you would be charged a breaking fee to come out of your fixed rate in order to pay off additional funds. This would not be the case if your mortgage was on a variable rate.

Bear in mind that last Friday all 5 mortgage lenders agreed to reduce their variable mortgage interest rates by 0.25% so that will bring the variable rate closer to the fixed rates currently on offer. On top of that, you should look at the APR for each rate as this is how much you will be charged per annum to maintain your mortgage account by the lender, so the APR on the variable rate is actually the best of the four available.


PaulM

JTMan

ImBoredDotIe wrote: »

Hi,

I have recently secured a mortgage and now need to decide between the following options for my bank. Any advice as to which one would be best? The variable is the most expensive but if I fix for say 3 years then I won't be able Have a Loan to Value variable rate at the end of this period as would be stuck on a standard variable rate. Any help appreciated!



Variable >80% <90% 4.10% (APR 4.18%)

1 Year fixed rate 3.30% (APR 4.27%)

2 Year fixed rate 3.65% (APR 4.24%)

3 Year fixed rate 3.70% (APR 4.19%)


Thanks!

Which bank? What is your LTV?

The above rates are all awful. Have you tried to get approval from KBC? KBC offer some of the lower rates out there including 3.55% APR variable for some LTV ranges.

ImBoredDotIe

PaulM1977 wrote: »

Hi ImBoredDotIe

What is the standard variable rate in comparison to the Loan to value variable rate?

Before you decide which would be the best option for you, regardless of the variable rate issue, you should think about what you would like to do repayment-wise in the near future. If you would like to know how much your monthly mortgage repayments are each month, until you get used to having to pay this financial commitment, then it would be better to go for a fixed rate for a certain period of time, i.e. 1 year, 2 year or 3 year. Once this fixed rate has ceased you may be offered the option to fix your mortgage rate again, but this would not be at the same rates as you would be offered as a new customer to your mortgage lender.

If you want to pay lump sums off your mortgage e.g. if you happened to receive a lump sum gift/win a cash prize/cash in a savings plan then the best option would be a variable rate as you would be charged a breaking fee to come out of your fixed rate in order to pay off additional funds. This would not be the case if your mortgage was on a variable rate.

Bear in mind that last Friday all 5 mortgage lenders agreed to reduce their variable mortgage interest rates by 0.25% so that will bring the variable rate closer to the fixed rates currently on offer. On top of that, you should look at the APR for each rate as this is how much you will be charged per annum to maintain your mortgage account by the lender, so the APR on the variable rate is actually the best of the four available.


PaulM

Thanks for that.

At the end of the fixed term I will only be offered a standard variable rate instead of a LTV rate. What is the difference between the 2? Is it better to always keep a LTV rate mortgage???

The interest rates shown are with KBC and the LTV is 80-90%

skippy2

If the banks are selling fixed rates then they are making money from them.
Always prefer to have a variable rate myself and never been wrong yet.
In this day and age banks only sell things they are making money from
From you figures it shows the variable is cheapest at APR 4.18%...................

enfant terrible

Is the APR rate the only figure that matters?

PaulM1977

ImBoredDotIe wrote: »

Thanks for that.

At the end of the fixed term I will only be offered a standard variable rate instead of a LTV rate. What is the difference between the 2? Is it better to always keep a LTV rate mortgage???

The interest rates shown are with KBC and the LTV is 80-90%

An LTV rate will be based on how much is outstanding on your mortgage versus the open market value of your property, with less owing against the property making it less of a risk for the lender, should they ever have to sell your property due to non-payment/repossession. So if, for example, your house is worth €100,000.00 and your mortgage balance outstanding is €79,000.00 then you might be able to get an LTV variable rate that falls in to the 60%-80% bracket.
A standard variable rate is what they would offer anyone who may be borrowing up to 90% as the risk to the bank is at its highest, in relation to the chance of being left out of pocket should they ever have to take ownership of the property due to non-payment.

If at present, based on how much you are borrowing, you will only get their standard variable rate, but if your property value goes up and your mortgage loan is coming down, then you may also be eligible for an LTV variable rate at some point in the future. The lender is essentially telling you that, in today's terms, you can only get the standard variable rate based on how much you are looking for by way of mortgage finance against the value of the property.


PaulM

PaulM1977

enfant terrible wrote: »

Is the APR rate the only figure that matters?

Yes.

Trish56

ImBoredDotIe wrote: »

Thanks for that.

At the end of the fixed term I will only be offered a standard variable rate instead of a LTV rate. What is the difference between the 2? Is it better to always keep a LTV rate mortgage???

The interest rates shown are with KBC and the LTV is 80-90%

When you choose a fixed rate with KBC other than a 1 year fixed the rate will rollover to a LTV rate. With a 1 year fixed it will roll over to standard variable which is currently 4.50%.

I have this is writing from KBC

enfant terrible

Trish56 wrote: »

When you choose a fixed rate with KBC other than a 1 year fixed the rate will rollover to a LTV rate. With a 1 year fixed it will roll over to standard variable which is currently 4.50%.

I have this is writing from KBC

Did you ask them to send you a letter as proof or is it in mortgage contract?

Trish56

enfant terrible wrote: »

Did you ask them to send you a letter as proof or is it in mortgage contract?

I'm a broker so am just confirming it is in their credit policy. The OP needs to check with broker who arranged the mortgage or KBC if applied directly to confirm same. It should also be stated in the loan offer.