Fix or Not?

Bluefoam

I'm in the process of closing a house purchase.

The rate I have been offered is grand in the current climate, but wondering whats going to happen in the near future... Brexit, Possible USA meltdown, Euro rates increasing... I'm tempted to fix for 3 years, some say go for 5, but others say go variable... Whats your thoughts?

JimmyMW

Bluefoam wrote: »

I'm in the process of closing a house purchase.

The rate I have been offered is grand in the current climate, but wondering whats going to happen in the near future... Brexit, Possible USA meltdown, Euro rates increasing... I'm tempted to fix for 3 years, some say go for 5, but others say go variable... Whats your thoughts?

Lowest rates currently in the last 40 odd years, I plan on switching and fixing for 10 years as soon as I can, not currently in a position to do so.

Frank Castle

Bluefoam wrote: »

I'm in the process of closing a house purchase.

The rate I have been offered is grand in the current climate, but wondering whats going to happen in the near future... Brexit, Possible USA meltdown, Euro rates increasing... I'm tempted to fix for 3 years, some say go for 5, but others say go variable... Whats your thoughts?

As I used the help to buy scheme and I can't sell for at least 5 years with that I decided to go with a 5 year fixed.

If you are happy to switch mortgage provider then there is no reason why you can't take the best rate fixed now for X years then switch once that is finished.

I think Ulster bank to a 2.3% over 2 years? Even with brexit I imagine there will be enough competition between banks to keep the rates low-ish on fixed terms

PhoenixParker

Fixing isnt the millstone it used to be.
Banks can no longer charge massively punitive rates for breaking a fixed term that they used to.

If you're getting a better rate there's little reason not to fix.

Bluefoam

Bluefoam wrote: »

but wondering whats going to happen in the near future...

Nobody knows.

Imo the 5 year offered by KBC or BOI offer the best mix of good rates + certainty in your payments for the next number of years.

awec

Fixing for 5 years here.

By the time the 5 years are up we should be into the lower LTV bracket (assuming a static house value) and qualify for lower rates.

godtabh

awec wrote: »

Fixing for 5 years here.

By the time the 5 years are up we should be into the lower LTV bracket (assuming a static house value) and qualify for lower rates.

We did something similar. Getting a valuation done on Monday to bring us into the lower LTV. THe 5 year rate is good value but not the 10 year.

Interest rates will only go up. They may hold low for another while but they will go up.

I would personally take the best possible rate for now (which will be variable) and see how things go. Also remember if you fix you can't overpay which might not be a big deal for some but for others it would be something they want to do regularly.

Supercell

Santiago Quiet Trainer wrote: »

I would personally take the possible rate for now (which will be variable) and see how things go. Also remember if you fix you can't overpay which might not be a big deal for some but for others it would be something they want to do regularly.

You can agree an overpayment amount before fixing though.
We agreed to overpay by around €400 IIRC and then fixed again at the newer rate when our last fixed deal expired, this was with BOI last year. For irregular top ups though this wouldn't suit.

TheChizler

Supercell wrote: »

You can agree an overpayment amount before fixing though.
We agreed to overpay by around €500 IIRC and then fixed again at the newer rate when our last fixed deal expired, this was with BOI last year. For irregular top ups though this wouldn't suit.

Or split a %age between fixed and variable and overpay the variable portion by whatever you want? At least KBC told me that was possible.

Santiago Quiet Trainer

Santiago Quiet Trainer wrote: »

I would personally take the possible rate for now (which will be variable) and see how things go. Also remember if you fix you can't overpay which might not be a big deal for some but for others it would be something they want to do regularly.

I think you've left a word out above but the best rates on the market at the moment are not variable.

Bonnie Early Pinprick

Bonnie Early Pinprick wrote: »

I think you've left a word out above but the best rates on the market at the moment are not variable.

True, that has changed around quite quickly they were always better not so long ago.

Misguided1

ECB likely to increase interest rates in Q3 2019
It'll be the first time many homeowners have been faced with interest rate hikes.

Fixing sounds like a good option imho

koheim

Interest rates in Ireland are still 100% higher then European average, they can only go down. But you can only get best interest rates deal in Ireland by fixing. Banks are just screwing us the best they can..

cruizer101

Santiago Quiet Trainer wrote: »

I would personally take the best possible rate for now (which will be variable) and see how things go. Also remember if you fix you can't overpay which might not be a big deal for some but for others it would be something they want to do regularly.

At the moment and for at least 18 months fixed have been the best rates.

Also regarding overpaying, with most banks you can overpay a fair bit without penalty.
I can't remember all the different terms but ulster for example you can do 10% of principle per year. E.g. 360k mortgage can overpay 3k a month.
It is one of the better option out there but still most are flexible enough.
The penalties for breaking fixed are also a lot smaller than they used to be.

We fixed for 4 years with UB, I did consider the 10 year fixed but about 1% more on the rate means I don't think worth it.

Wheety

I will be coming out of a fixed rate soon (think it's 3.05%) and switching to a 2.6%.

The first one, we fixed last year for 5 years but KBC dropped their rates, so we're breaking out of one and fixing again for another 5.

There was no cost to this as the wholesale rate has not changed.

There will only be a break funding fee if the wholesale rate goes down. If it goes up, there is no break funding fee.

We're also allowed to over pay by 10% of the principle balance, at the time of fixing. So if it was €200,000 we could over pay by €20,000 in the 5 year term. This can be a lumpsum or as a regular amount it could be an extra €333 (if we overpaid from the beginning).

riclad

I would fix for 10 years ,as i read in the usa rates went up,
and experts expect them to rise more in the future.
So i think its wise to assume rates will rise in europe in the future.
they are unlikely to fall lower than the present rate.
So you can,t lose out by fixing now.

fret_wimp2

cruizer101 wrote: »

Also regarding overpaying, with most banks you can overpay a fair bit without penalty.
I can't remember all the different terms but ulster for example you can do 10% of principle per year. E.g. 360k mortgage can overpay 3k a month.

KBC are 10% of the total loan amount, over the course of the fixed period.
in this case on a mortgage of 360k, you can overpay by a total of 36k for the duration of the fixed period. after that there is a penalty, but im unsure about teh size of the penalty.

riclad wrote: »

I would fix for 10 years ,as i read in the usa rates went up,
and experts expect them to rise more in the future.
So i think its wise to assume rates will rise in europe in the future.
they are unlikely to fall lower than the present rate.
So you can,t lose out by fixing now.

You absolutely can lose by fixing now.
e.g. 10 year fixed at 80%LTV with KBC is 3.75. variable is 3.3.
Fixing for 1 year is 2.9.

if fixed for 10 years, you're paying a lot more than if you fixed for 3 or 5 years and reassessed or even if you went variable. Yea theres some risk, but thats the cost of the lower rate.

cruizer101

riclad wrote: »

So you can,t lose out by fixing now.

Not necessarily, the best 10 year fix is 3.5%, best rate overall is 2 year fix @ 2.3%
On 300k mortgage that is monthly 1347 and 1154, so you save near 200 monthly by going with the 2 year fix.
Thats a significant savings which even if rates rise a bit you are still potentially better off.
If you overpaid that 200 each month you will knock 8 months off your mortgage and save near 4,500 in interest, on top of the 200 saved each month.

No one knows for sure what interest rates are going to do, and the 10 year fixed are good options, with the added benefit of security in knowing what you are going to be paying, but financially the best option I'm not so sure.

There is also potentially the option of splitting the mortgage, fix half for 10 years and the rest for 2, get a bit of best of both.