Which mortgage provider to choose? BOI or KBC?

M

Moo

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Hi All,

First time poster but long-term lurker on this excellent site.

Myself and my husband have sale agreed on a house and are approved for a mortgage of 178k (LTV of 80%) with two different lenders - BOI and KBC. My question is which lender to choose?

BOI are offering variable rate of 4.5% and will not shift this rate despite me querying whether they can offer better (I know they have given lower variable rates to others on this site). They are trying to steer us towards one of their new lower fixed rates, which at 3.7% 1 year fixed seems pretty good. However I know the general consensus seems to be not to fix and wait to see what happens with the variable rates. BOI are also now offering 2% of mortgage amount back to cover stamp duty which is tempting at €3,560 in our case.

KBC are offering a discounted variable rate of 3.69%.

Any thoughts on which to go for? My concern over BOI is what the options might be after the year of fixed is up. Also, if they do lower their variable rate in our case to get our business, what's to stop them putting it up again in a few months? But the 2% back is tempting.... It seems from what I read on this site that everyone is trying to get away from variable rate mortgages from BOI and here we are contemplating signing up for one.

Which bank might be better in the long run?

I'd appreciate any advice.
 
Does the BOI 2% cash back offer apply to all mortgages? I thought it only applied to their 3-year fixed rate offering (although this isn't absolutely clear from their ads).
 
Check the fine print on both offers. Think you need to hold onto mortgage for 5years else BOI will claw back the 2% cashback. Is the KBC discounted rate for 1st year of mortgage or full mortgage as read somewhere (however never confirmed myself) that it may not remain discounted after a set period, so worth checking with your broker/bank rep.
 
Thank you both for the replies. I'm not sure of the answers to either of your points so I will follow up with the bank reps and let you know. BOI phoned me with the info on 2% offer today and certainly gave the impression it applies to all mortgages but you are absolutely right that I should check.
 
It is very likely that variable rates will continue to fall. So you should be able to get a variable rate below 3.69% before the end of the year.

So go with the KBC loan and if rates fall, you can switch lender.

If you fix with BoI , you will be stuck with them for the duration.

It's hard to forecast the future. But if you fix with BoI, and you are not able to switch at the end of the period, you will be at their mercy.

Even if you go variable with KBC, you will be at their mercy if you can't switch and they don't reduce their rate. But at least, you are starting off with a lower than market variable rate.

Brendan
 
The one year fixed at BofI looks good, especially with the 2% cash back. But you're tied in then for 5 years apparently. So you have to figure out how much 4 years at the current BofI variable will cost you over and above the lower KBC rate.

I think rates will fall in Ireland, but my guess is as good as anyones. At least you can switch easily as you are on 80% LTV.

(Any accountant know if the cash back is subject to a tax? Or if it has to be accounted for in one's tax returns somehow )
 
Thanks everyone. Some good points for us to consider. I heard back from our BOI rep and the 2% is available for all mortgages/rates offered as long as the funds are drawn down by 31/12/15. And yes, it will be clawed back if we switch within 5 years. At this stage, we're leaning towards KBC. It seems like a better bet in the long-term.

Thanks again.
 
Moo said:
Thanks everyone. Some good points for us to consider. I heard back from our BOI rep and the 2% is available for all mortgages/rates offered as long as the funds are drawn down by 31/12/15. And yes, it will be clawed back if we switch within 5 years. At this stage, we're leaning towards KBC. It seems like a better bet in the long-term.

Thanks again.
Click to expand...

Thanks for clarifying that the 2% cash back offer applies to all BOI mortgages drawn down by year-end.

I personally would always choose a competitive variable rate over a fixed-term rate. Having said that, BOI's 2% cash back offer is certainly tempting, even with the 5 year tie-in.

It will be interesting to see how the other lenders in the mortgage market react to this development in the coming weeks.
 
I'm in a similar position although my loan to value ratio is a little lower than yours, boi are offering me a fixed 3 year 3.6% rate and 2% cash back. I am going to try and see if they will fix for the 5 years, this would prevent any worry about them rolling me on to a massive variable before the 5 years are out. KBC really did seem more on the ball with us, defo the best variable by a mile when the 0.2% reduction on switching current accounts is included (3.55%).
 
One further thought that has just struck me is that the 2% cash back offered by BOI might be particularly valuable to a borrower that was hitting up against any relevant LTV (or LTI) limit (whether imposed by the Central Bank or otherwise).
 
Moo said:
At this stage, we're leaning towards KBC. It seems like a better bet in the long-term.

.
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Richie Boucher of BofI is very negative, (any interview I ever heard) must say as a customer (abroad) of KBC I find them brillant to deal with, my best banking experience ever. (and for historical reasons I won't step foot inside of BofI or AIB)
 
I can deal with them being difficult to deal with for a cost saving over the other.

KBC offer the .2% off both fixed and variable, but what does this mean for the APR on their rates?

BOI offer the 2% back off both fixed and variable but you have to stay with them for 5 years.

Not sure which is better option for a 30 year mortgage - when I could move again in say 5-10 years.
 
How long does the KBC discounted variable rate of 3.69% last for before you move to their standard variable rate? How does their current SVR compare to BOI?
 
I believe KBC discounted variable rate of 3.69% lasts as long as you have their current account and the mortgage direct debit from it.
 
Moo said:
Thanks everyone. Some good points for us to consider. I heard back from our BOI rep and the 2% is available for all mortgages/rates offered as long as the funds are drawn down by 31/12/15. And yes, it will be clawed back if we switch within 5 years. At this stage, we're leaning towards KBC. It seems like a better bet in the long-term.

Thanks again.
Click to expand...


How about going for BOI variable for 5 years (to get the 2% back) and then consider the option of re-mortgage in 5 years?

Would KBC drop you to a lower SVR rate once they have your business? Or you get locked in at that rate?
 
Thanks everyone for all the input. It's been difficult to weigh it all up and we are swinging from one option to the other constantly. There are pros and cons to each and as so many have pointed out, it is very hard to predict the future!

We have decided to go with KBC for a number of reasons. They have confirmed that the discount of 0.2% applies to the lifetime of the mortgage provided we have a current account with them with mandated salary. Comparing their discounted variable rate with BOI, after 3.5 years we will have saved the equivalent of the 2% cashback (assuming rates stay the same) versus 5 years at the mercy of BOI. And should variable rates drop and KBC become less competitive, we have the option to switch. With BOI, we don't.

The final nail in the coffin for BOI is how they have approached us in all of our recent dealings with them. The mortgage advisor has been so difficult to contact and so poor at returning voicemails and emails. KBC have made everything so easy and have been very flexible in facilitating us. I know money talks but customer service counts too!!

Thanks again.
 
So just be aware that you may be on .2% less but that if rates drop, you will be unlikely to the the lower new customer rate. "I heard" that BOI would drop your rate if they drop rates in general... (however I am also just trying to predict best option). Also, 2% now is worth more than 2% over 3.5 years right?
 
Also, with KBC, you need to have their current account, so that is going to cost 6 euro a quarter and bank fees for atm, etc.
 
Moo said:
We have decided to go with KBC for a number of reasons. They have confirmed that the discount of 0.2% applies to the lifetime of the mortgage provided we have a current account with them with mandated salary. Comparing their discounted variable rate with BOI, after 3.5 years we will have saved the equivalent of the 2% cashback (assuming rates stay the same) versus 5 years at the mercy of BOI. And should variable rates drop and KBC become less competitive, we have the option to switch. With BOI, we don't.
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That 0.2% discount applies as long as you have a mortgage with KBC and a current account.
But it's a 0.2% discount on what? I'm with KBC, my LTV is about 63% and I have the 0.2% discount to bring me down to 4.3%. Whoop de doo. As soon as I'm down to the 60% I'll be pricing around.
 
Thanks to everyone for all your input and points to consider. It has been really helpful.

Just to update on our situation... after telling BOI that we would be proceeding with KBC and organising valuation etc with KBC, BOI came back to us at the 11th hour with an offer of 4% variable plus the 2% cashback. They have stated that should their variable rate drop, our rate will drop in line with this. I've asked for written confirmation of this and we've decided to go with their offer. Even being tied in for 5 years, the difference between what they've offered vs what KBC are offering is very little in terms of rate and a lot in terms of cashback. I went back to KBC to see if they could improve their offer but all they could say was their variable rate "might" be dropping in july, they couldn't say yet by how much.

We're delighted with the reduction in rate and I'll be keeping a close eye on things over the next 5 years.

Thanks again to you all - this really is a brilliant site.
 
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