Should I fix my mortgage for 1 year?

G

gebbel

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I am a first time buyer. I need a 95% mortgage amounting to €253,650. My broker has suggested I should go for a 1 year fixed First Active mortgage at 4.34%, which is the cheapest 1 year fixed rate in the country at the moment. However, after 1 year, this would automatically default to a variable rate of 5.03%. This is obviously an introductory rate but should I be wary of going for it? Originally I had been advised to go for a tracker option, but was not keen after hearing the ECB base rate could rise 3 times in the next year (according to ABN Amro),

Thanks
 
Re: Mortgage Advice

There there Gebel,
I have quiet a substantial mortgage and for some time have being thinking about going fixed.
I decided against it when a friend of mine pointed out that one year fixed - you will pay extra than you would have if you were on a tracker. The rate rises will more than likely occur over the period of the year - and when you fixed term is up - you would probably have paid more over the year than if your mortgage was a tracker.

Hope that hels:)
 
Re: Mortgage Advice

Gebbel

It defaults to a variable rate but you can then choose whatever other rates are on offer at that time with First Active. ABN Amro is just one bank, don't be spooked by them. 4.34% is a great 1 year fixed rate, whether it will be available by the time you drawdown is debatable.
 
Re: Mortgage Advice

pinky,

I understand where you are coming from if you have a low loan to value and can get a preferential rate of ECB + 0.5% (or better) but for a 95% loan to value first time buyer mortgage you will be looking at ECB + 1.1% (4.6%) as against a 1 year fixed of 4.34%.
 
Re: Mortgage Advice

What i would do if you're going with that option is the following;

1. Stick with that 1 year fixed.
2. Switch to the variable then for a few months
3. Look at all you're options at that point. And if there are greater rates out there, which would save you money, switch your mortgage to the bank offering the best rate.

May have small amount of legal fees but some banks pay legal fees for you. EBS, UB, etc.

Cheers

Johnny
 
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