EBS vs KBC, advise appreciated

D

David Costigan

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Hi

My wife and I currently have mortgage approval from KBC and EBS. We have a deposit down on a new build costing €330k.

KBC
We have approval from KBC for €264k (LTV at 80%) at a rate of 2.99% fixed for 3 years. Total term is 29 years. Monthly repayments of €1,135.35

EBC
We have approval from EBS for €276k (LTV of 83% approx) at a rate of 3.7% variable . Total term is 26 years. Monthly repayments of €1,378.57. EBS offer €5k cashback

In both cases the fixed / variable rates are not set in stone until drawdown

The pros and cons are

- KBC are cheaper per month but higher deposit needed
- EBS offer €5k cashback and I need €12k less deposit upfront but more expensive per month and total interest over the lifetime of the mortgage is a lot higher

In general my dealings with EBS have been far better, KBC have been a nightmare to deal with and also the posts on askaboutmoney seem to favour EBS (as KBC don't always pass on interest rate cuts to existing customers etc)

I'm looking for advise on which bank to go with. Does anyone have any advise

thanks
David
 
ideally you should compare apples with apples, whats the EBS fixed rate offering?

in most cases id suggested going with EBS, getting the cash back and then switching to a better variable, but you cant do that if you fix and the differential in monthly payments on the above will eat up the 5k cash back pretty quickly
 
I'd go with KBC. Higher deposit is better. Lower interest rate is better. Fixed rate for 3 years gives you peace of mind. You can also be ready to overpay in 3 years time to get a chunk off the capital. What are your ages.

You never asked. But new build. Is this sight unseen? These I dread. I've seen too many atrocious new builds in Ireland.
 
As Blackrock1 says, you really need to compare the equivalent mortgage product from different providers.

The 2% cash back from EBS (worth €5k in your case) is certainly attractive but EBS don't allow borrowers to move to the lower rates charged at lower LTV bands as they build home equity. Would you go to the trouble of switching from EBS to another provider with a lower variable rate?

KBC will give you €2k cash back but don't automatically reduce rates charged to existing customers when they reduce rates for new customers. On the other hand, they do allow borrowers to move to lower LTV bands as they build equity.

FWIW, I think KBC's fixed rate offering looks fairly attractive at the moment but only you can decide what type of mortgage product would best suit your individual circumstances.

Hope that helps.
 
Just also like to point out that both banks could be doing the opposite to each other in three years time. Nobody can guarantee anything with any bank unless you are doing something like a 10 year fix.
 
David Costigan said:
Hi

My wife and I currently have mortgage approval from KBC and EBS. We have a deposit down on a new build costing €330k.

KBC
We have approval from KBC for €264k (LTV at 80%) at a rate of 2.99% fixed for 3 years. Total term is 29 years. Monthly repayments of €1,135.35

EBC
We have approval from EBS for €276k (LTV of 83% approx) at a rate of 3.7% variable . Total term is 26 years. Monthly repayments of €1,378.57. EBS offer €5k cashback

In both cases the fixed / variable rates are not set in stone until drawdown

The pros and cons are

- KBC are cheaper per month but higher deposit needed
- EBS offer €5k cashback and I need €12k less deposit upfront but more expensive per month and total interest over the lifetime of the mortgage is a lot higher

In general my dealings with EBS have been far better, KBC have been a nightmare to deal with and also the posts on askaboutmoney seem to favour EBS (as KBC don't always pass on interest rate cuts to existing customers etc)

I'm looking for advise on which bank to go with. Does anyone have any advise

thanks
David
Click to expand...

A few points to note:

  • It's not valid to compare the monthly repayments quoted over the full term, as the KBC rate is fixed for 3 years, and will automatically roll onto a variable rate afterwards (currently 3.10% including the 0.2% current account switcher discount, which you appear to be planning on availing of). As Blackrock1 said, you need to compare apples with apples.
  • If you can comfortably afford a shorter term (including future interest rate rises and possible lower affordability), you should take it. If not, then the slightly longer term may be better for you at this point.
  • If you can afford a 20% deposit with KBC, you should not consider taking a mortgage of 83% with EBS. Their lower rate of 3.50% for 80% LTV is worth the extra effort required to fund the 20% deposit.
  • KBC changed their policy about passing on rate reductions a few weeks ago.
The best way to compare these options is using the same loan amount, same term, on the variable rates, i.e. comparing 3.50% with 3.10%. Then take into account the 2% cashback and see how long it takes before this is eroded by the higher repayments.

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl (LinkedIn profile and client testimonials)
 
Dave_Curry_IMC said:
KBC changed their policy about passing on rate reductions a few weeks ago.
Click to expand...

It is worth checking out the [broken link removed]. A lot of people think that is the case but it is not so straightforward, they are allowing existing customers to apply to switch to the new business rates BUT they explicitly state they will not pass on rate reductions made available to new customers:

33. You are only entitled to the New Business PDH LTV Rates available at the date on which the new interest rate is applied to your mortgage account. Once this interest rate has been applied to your mortgage account no variations in the New Business PDH LTV Rates that we may introduce thereafter will be applicable to your mortgage account. You may however re-apply for the Option at any time.
​
And while it states that you may re-apply to get the rate, they want to reserve the right to remove this at any time without notice:

9. We reserve the right at any time in the future to amend, modify, withdraw or change the Option or the terms and conditions applicable thereto without notice. If we withdraw the Option this will not affect those customers who have availed of it prior to the date on which we withdraw it. For the avoidance of doubt however if we withdraw the Option customers who have availed of it prior to that date will not be able to re-apply for the Option in the future.​

There are other clauses in the contract to avail of the new business rates that are concerning but they have been discussed in other AAM threads on KBC.

The new approach from KBC is different to the industry practice of variable rates. IMO It is more complicated, requires more ongoing effort from customers and the terms and conditions are compromising to customers and favouring KBC.
 
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