Mortgage Renewal in the current turmoil

FMLUCAS

Hi,

Im a looking to speak to a Mortgage broker for advice if anyone there can suggest please PM or reply.

Approaching the end of our first 2year fixed at 3% from a 25 year loan for 198K. Property was evaluated at 275K initially and parcels being 938.88

Recently I received the following options for a LTV 61%-80% from my current bank BOI.

Variable 4.2%
3 Year Fixed at 3%
1 Year Fixed at 2.9%
2 Year Fixed at 2.9% **
5 Year Fixed at 3.00

Would it matter which financial institution we switch to if we are getting a better value and pay less interest in run?

dotsman

Do not go near the bank offering you those rates is the main thing. That variable rate is horrific.

FMLUCAS

dotsman wrote: »

Do not go near the bank offering you those rates is the main thing. That variable rate is horrific.

I guess so, but I need to speak to someone!

listermint

You will need the house valued by a nominated valuer for each bank. This would obviously be easier if the banks use the same local valuer so you would not have to repeat this process per bank.

But getting a valuer out in the current lockdown - no chance.

Also what will your value be versus loan.. I suspect it will be changed to what you think it is. The landscape is different valuer might even have some difficulty with assessment too.

FMLUCAS

listermint wrote: »

You will need the house valued by a nominated valuer for each bank. This would obviously be easier if the banks use the same local valuer so you would not have to repeat this process per bank.

But getting a valuer out in the current lockdown - no chance.

Also what will your value be versus loan.. I suspect it will be changed to what you think it is. The landscape is different valuer might even have some difficulty with assessment too.

I think with what’s happening with the Corona virus it might be difficult for me to switch as I think the mortgage departments in most banks are not dealing with new customers for the moment. Would that be somewhat accurate to say?

FMLUCAS

dotsman wrote: »

Do not go near the bank offering you those rates is the main thing. That variable rate is horrific.

Hey @dotsman

So just for my understanding the banks get money at 0% interest rates and pass onto us at 2.x fixed or 4.x variable?

dotsman

FMLUCAS wrote: »

Hey @dotsman

So just for my understanding the banks get money at 0% interest rates and pass onto us at 2.x fixed or 4.x variable?

Pretty close to 0% these days, but there are obviously other expenses they have to cover, the main one is the people who are refusing to pay their mortgage.

When it comes to fixed interest rates, it can be tempting to switch banks to chase the lowest rate. However, it needs to be remembered that once the fixed interest rate period is up after just a few years, the competitive situation we are in at the moment may be over. You may even not be able to switch banks (depending on your LTV, economic situation, personal situation etc), and thus be stuck with a bank that charges a very high variable rate.

Pretty much every bank is charging approx 3% variable at the moment. BOI are pretty much always far more expensive (with no benefit) than the other banks. A difference of 1.2% every year on a 200K mortgage is about 2 grand a year of your money every year (obviously, as time goes by, that difference will decrease), but you are still talking about needlessly handing over tens of thousands of euro to BOI over the life of the mortgage.

From the few details you have given, using bonkers.ie, that variable rate will cost you circa €34,000 more than if you were with AIB, Haven/ Finance Ireland. Obviously, variable rates change, so there's no way to predict what the difference will end up being, but the likes of AIB have been consistently far cheaper than BOI over the past decade. It's not like switch electricity or broadband provider and saving a few hundred quid. Choosing who to get a mortgage from can be one of the best/worst financial decisions you will make in your life.

My advice would be to absolutely switch. Take a look at the various switching offers, fixed interest rates etc, but also consider being stuck with that bank long-term on a variable rate and what that would mean.

lomb

No need to switch. Boi offer 2.9 fixed which with the cash back offer you got gives a blended rate of 2.3 over the 5 years which is very competitive. Just resign for 2 year fixed and crack on. You can use the end of the fixed to overpay some mortgage if you like. Otherwise max overpayment is 10 percent when on fixed. Even that isn't bad as if you have opted for 25 year mortgage and overpay 10 then that takes it to 20 years which is grand.

SeanJ09

FMLUCAS wrote: »

I think with what’s happening with the Corona virus it might be difficult for me to switch as I think the mortgage departments in most banks are not dealing with new customers for the moment. Would that be somewhat accurate to say?

Incorrect. They are still open for business.