Fixed rate mortgage advice

AdrianG08

Got our mortgage in 2019 (October). We are three 3 into our 5 year fixed rate of 2.85% with AIB.

General question, We don't really intend to overpay on our mortgage for some time, maybe not for another 10 years. Just wondering if I would be mad to try and extend the fixed rate for another 5/10 years?

Variable rate will no doubt have us paying more in 2 years and if we choose to go fixed again in 2 years it will probably be higher rate than we can get now?

walterking

The should be no breakage fee as the cost of money then was lower for AIB.

Your house has probably moved up in value, so you might get a lower LTV rate.

If its B rating you should get the Green mortgage rate.

Call them and talk

If you can break and refix for 5 years at the same rate or lower, then do it

AdrianG08

https://www.boards.ie/discussion/comment/119858076#Comment_119858076

Thanks a million for the response.

Finally received a reply by letter, they have confirmed there will be no breakage fee but was just seeking some guidance on the apparent options.

All the PDH LTV Fixed rates (7 and 10 year rates of all percentages) are higher at 3.45%, 3.55% and 3.65% for the 7 year. And for the 10 its 3.60%, 3.70% and 3.80%.

The House isn't B rated unfortunately, therefore not eligible for the green mortgage rate.

The other options are High value 4 year fixed for all percentages, 2.65%, 2.70% and 2.80%.

Could you explain the latter? Very disappointed not to be offered a lower LTV rate than 2.85% we are currently on.

Would love a lower fixed rate for another 10 years ideally.

walterking

https://www.boards.ie/discussion/comment/119934374#Comment_119934374

Inflation is looking like it will cool down a bit quicker than the ecb expected, so I'd be happy with the 4 year rate at the moment. 10 years at 3.6% is a bit on the high side.

4 years at 2.65% is excellent in any market.

AdrianG08

https://www.boards.ie/discussion/comment/119939909#Comment_119939909

What is the difference between the LTV fixed rate and the high value fixed rate in lay mans terms?

I have 2 years left on the current fixed rate of 2.85%, will this Higher rate offer start now and only give me an extra 2 years fixed, or will the new fixed rate only commence once my current fixed rate finishes in 2024?

walterking

https://www.boards.ie/discussion/comment/119962990#Comment_119962990

Any new rate is applicable immediately. You are in effect settling the old fixed rate and starting anew rate agreement, so its an additional two years but well worth it.

"High Value" is over 250k with most banks.

You've nothing to lose in taking a new 4 year rate and it means you don't have to worry about nay volatility in the market. It will all calm down at some point, Ukraine and Russia will shake hands and inflation will be back at 1%-2%. Whether that's next year or 2024, no-one knows

AdrianG08

https://www.boards.ie/discussion/comment/119964003#Comment_119964003

What does High value 4 year fixed <=50% (rate is 2.65%)

Similarly High value 4 yr fixed>50 per cent<=80 per cent (Rate is 2.70%)

And High Value 4 yr Fixed >80 per cent (Rate is 2.80%)

What are the differences in the above options? Tempted to go for lowest rate (2.65%) over 4 years but what are the ramifications? We borrowed €225k approx in 2019, on 5 year fixed rate of 2.85%.

walterking

https://www.boards.ie/discussion/comment/119964338#Comment_119964338

High value 4 year fixed <=50% (rate is 2.65%) - Loan to Value under 50% and value of outstanding balance over €250,000 (or whatever your bank says their high value amount is) 

High value 4 yr fixed>50 per cent<=80 per cent (Rate is 2.70%) - as above but loan to value is between 50% & 80%. So if house is valued at 500k, and outstanding balance is between 250k & 400k

High Value 4 yr Fixed >80 per cent (Rate is 2.80%) - as above but loan to value of over 80%.

As you bought in 2019, you are almost certainly in the 2.70% band.

The result will be a very slight drop in your monthly repayments and the knowledge that they will stay at that level for another 4 years.

I would act very quickly as AIB may be about to make changes on their fixed rates with a 0.5%-0.75% increase (and at the same time finally increasing deposit rates)

AdrianG08

https://www.boards.ie/discussion/comment/119966284#Comment_119966284

Is High value rate applicable though if we bought house for €246k? We borrowed in or around 220k

Cape Clear

https://www.boards.ie/discussion/comment/119934374#Comment_119934374

How far off a B3 rating is the house? Have you done any work that might improve the rating since the BER cert was issued? I recently got a B3 rating for a 25 year old dormer bungalow. Aside from a bit of attic insulation and pumping the cavity little else was done to it.

AdrianG08

Contacted them, unfortunately the High value rate isn't applicable to us.

House was purchased for €246k, needed to be bought for 250k at least.

Also to be eligible, we needed to have at least 4 years left on our fixed rate. We can only break out now (last 2 years of 2.85% fixed rate) to get a LTV fixed rate of 3.55% (7 years) or 3.70% (10 years).

We'd be paying €100 per month more on our mortgage, but guessing this will possibly be more in 2 years time.

walterking

https://www.boards.ie/discussion/comment/119966616#Comment_119966616

I'd stick with what you have.

Inflation has topped, you will get 0.5% this month increase in ecb (won't affect you) and then possibly a couple of 0.25 increases before ECB pauses. Then as inflation falls dramatically (a lot of increases will be out of the equation in 8-10 months), and economies start to struggle, rates will drop. ECB has stated that mid term target is 1.5%-2% inflation and "neutral rates". So they are targeting to have rates settle at 1.5%

So in 2 years you have good chance that you will get a rate less than 3.5% and even if its higher, it will be wont be by much.

Advice is to stay as you are.