Interest rates - fixed or variable?

Mountain_M78

when we had our mortgage approved we were provisionally offerd rates.
obviously, these can fluctuate. (we are first time buyers)
Im aware PTSB may have slightly higher rates than competitors but we got approved by them and went with them.

i am totally clueless on the issue and would greatly appreciate some advice.
obviously rates for jan 2019 will be different to the ones which were based on summer 2018.as we get closer towards drawdown its a choice that has to be made soon.

the one we looked at was 3.25 - 5 year fixed. APRC 3.9 per cent (whatever that means) there were also various fixed offers - 3 yer 3.15 / 2 year 3.60 /

the way were thinking was that fixed, for as long as possible is a good start and more stability in knowing exactly what we are paying .

The "discounted" variable rates are 1 yr 3.70 (aprc 4.26)
also there are "managed" variable rates of 4.30 with APRC of 4.42.

im not sure if anyone can advise me , based on past experience , whether fixed or variable is better.
or will an economic downturn such as brexit directly affect .ie lower rates somehow?

or am i over - thinking it and is there a negligible difference between these rates over the first few years of our mortgage?

any advice GREATLY appreciated!

Fabio

Depends. Based on my very limited knowledge fixed gives you predictability and certainty at the expense of a higher price. Some places will split a mortgage so some is done on a fixed rate, some on variable.

Lycoge

A fixed interest rate on your mortgage is better when interest rates rise as you are protected against any increase in rates. Would you prefer to be on variable now, hope they remain the same or lower, keep an eye on interest rates in Irish banks and if they look to start rising then fix to protect against rising rates? Or would you prefer to fix now and not have to think about what your payments will be for a few years.

It depends on how you see interest rates moving. The European central bank have said they will raise interest rates in summer 2019 or possibly later. Irish increases will follow that, but when is the question.

https://www.google.com/url?sa=i&source=web&cd=&ved=2ahUKEwjrjdWK2qbfAhUxVBUIHWG_ACEQzPwBegQIARAC&url=https%3A%2F%2Fwww.independent.ie%2Fbusiness%2Fworld%2Fecb-interest-rates-to-remain-at-present-levels-at-least-through-the-summer-of-2019-37010239.html&psig=AOvVaw168_E-PkYbvegRjtKwv2bK&ust=1545130577021233

Variable allows you to overpay any amount. Fixed depends on the bank, BOI allow you to overpay by 10% of your monthly repayment without penalty. Check what your provider allows if you want to overpay.

This is a useful website to calculate what mortgage payments will be based on interest rates you input. You can enter an overpayment if you plan to over pay monthly in the monthly prepayment section on the input tab. The SUM tab will show you what you will pay over the lifetime of the mortgage

https://m.drcalculator.com/mortgage/

In my opinion, if you're going to fix, do either for 1 year and see what the rates are like at the end of the year which isnt too long of a time committment or fix for the longest period of time and get the stability of a fixed payment for that timeframe. Whatever fixed term you choose remember when that ends you'll have to make the decision again at that time about rates.

We fixed for 10 years this month figuring that rates are low now and even if they drop another 0.1 or 0. 2% it won't be a huge difference in repayment. Happy with the security that if interest rates rise over the next few years we're locked in at our current rate.

Best of luck with your decision. I know it wrecked my head weighing up all the options! Plenty of articles online and threads to read up on if you think that will help with your decision.