2-4 year fixed options

[funkel]

Buying a new home and have approval in principle from BOI for around €300k via a broker with an estate agent. We are looking to fix for 2-4 years. Rates have really gone up in the last 3 months.
Our LTV is under 70% / A2 BER.

Was looking at a Cashback offer from BOI for a 2yr fixed with 2% back now and 1% in 5 years time. This was based on a 3.6% rate but since last Friday this has gone to 4.1%. Because of the 0.5% rise the cashback is not now as appealing if we would save more by fixing at a lower rate.

I guess there's no point in taking a small cashback amount upfront if we end up paying a significantly higher repayment over a number of years just to get it. Although the ~€6k cashback would take some of the sting out of legal costs and furnishing the place etc.

BOI also have a 4 yr fixed BOI - 4 Year Fixed "green" mortgage which we qualify for, for 3.4%.

What are Avant like - are they reputable? any issues with them? The 3 Year Fixed (<=70% LTV) is the best I can see at 3.3%. I'm a little concerned as their rates haven't increased since Dec 22 (I think) so they may hike before we drawdown...next 6-8 weeks hopefully. Obviously, I understand things might change from the ECB and other lenders again before drawdown.

Is it possible / common to get approval in principle from multiple lenders and then choose closer to when contracts need signing (or whichever step the mortgage cheque needs to be issued at)?

Under pressure to decide as apparently BOI turnaround times are very slow at the moment, even though we have AIP from them.

Any other obvious options or deals I've missed? Thanks for any input / opinion on the above etc.

 

[ClubMan]

Best Buy - Which lenders have the lowest mortgage rates? (Updated April 2023)

While I wrote the original post on this, Paul F has edited it and made it far easier to read and has kept it updated. Brendan You (or your broker) should apply to two or three of the cheapest lenders simultaneously. It might take some time for your loan offer to materialise, and today's Best...

www.askaboutmoney.com

 

[markodaly]

I am in the same predicament as you.
Looking at PTSB or BOI
BOI have a 3.4% green rate fixed for 4 years which on the face of it is the best deal.
However, they also have a 2-year fixed rate of 4.1% but include a 2% cashback which actually works out better

I've worked it out that the 2 year fixed with the CB is the best if you calculate it over two years only.
2,219 per month - 3.4%
2,390 per month - 4.1% but if you include the cashback it works out as 2,016 per month

The danger of course is that
a) the rates go up in two years' time
b) you stay on a higher rate once your fixed rate expires

But you can move in two years' time and avail of another cashback scheme and perhaps rates might be on the downward cycle again by then.

PTSB has a 4-year rate at 4.05% with a 2% Cashback on the loan amount and 2% off the monthly payment.
It works out as 2,149 per month all in.

 

[Paul F]

Is it possible / common to get approval in principle from multiple lenders

You should definitely do this.

and then choose closer to when contracts need signing (or whichever step the mortgage cheque needs to be issued at)?

The problem is that even if you have got AIP from a few lenders and completed a few more of the steps, you will then have to instruct your solicitor which lender to try to get full approval (a letter of offer) from. That's because the solicitor needs to engage with the lender on certain matters. It's unlikely that a solicitor would try to get full approval from multiple lenders. You could ask them if they would do that but they might want a higher fee.

So the best you can do is try to get AIP from one or two other lenders (apart from BOI) and complete whatever other steps you can. Then tell your solicitor which lender to go with.

I've worked it out that the 2 year fixed with the CB is the best if you calculate it over two years only.
2,219 per month - 3.4%
2,390 per month - 4.1% but if you include the cashback it works out as 2,016 per month

Looking at the monthly repayments is not a good idea. This thread (on a slightly different topic) explains why:

Key Post - How to evaluate if it's worth fixing, switching or breaking out of a fixed rate

Almost every post on this topic is wrong. No matter how often it is pointed out, people look at the wrong figures. They use mortgage calculators when they don't need them. Most of the time, you can do the figures in your head. Do not look at the monthly repayments – they are misleading. Do not...

www.askaboutmoney.com

 

[Pinoy adventure]

The danger of course is that
a) the rates go up in two years' time
b) you stay on a higher rate once your fixed rate expires



@Paul F if you fix on any lender let’s say at 4% and after your fixed rate is over and the current rate is less than 4%, do you stay on 4 or do you automatically drop too the lower rate ?

@Paul F

 

[skrooge]

if you fix on any lender let’s say at 4% and after your fixed rate is over and the current rate is less than 4%, do you stay on 4 or do you automatically drop too the lower rate ?

You will automatically go to the variable rate regardless of what your fixed rate was or what the prevailing fixed rate will be at the time .

 

[Paul F]

You will automatically go to the variable rate regardless of what your fixed rate was or what the prevailing fixed rate will be at the time .

@Pinoy adventure As skrooge says, this is what will happen at the end of your fixed rate – by default you will go onto the lender's variable rate. What @markodaly may have been referring to when he said "a higher rate once your fixed rate expires" is that some lenders' variable rates (BOI's and PTSB's) have been much higher than their fixed rates over the last several years.

It's important to review your mortgage about once a year, which will stop you from going onto a high variable rate at the end of your fixed rate due to not paying attention.

It can sometimes make sense to break out of your current fixed rate and switch to another lender, or to switch to another fixed rate with your current lender. The latter is very easy to do.

If you are considering breaking out of your fixed rate early, first get a break fee quote. Then use this thread to ask for guidance on whether it makes sense to switch.

 

[Pinoy adventure]

@Pinoy adventure As skrooge says, this is what will happen at the end of your fixed rate – by default you will go onto the lender's variable rate. What @markodaly may have been referring to when he said "a higher rate once your fixed rate expires" is that some lenders' variable rates (BOI's and PTSB's) have been much higher than their fixed rates over the last several years.

It's important to review your mortgage about once a year, which will stop you from going onto a high variable rate at the end of your fixed rate due to not paying attention.

It can sometimes make sense to break out of your current fixed rate and switch to another lender, or to switch to another fixed rate with your current lender. The latter is very easy to do.

If you are considering breaking out of your fixed rate early, first get a break fee quote. Then use this thread to ask for guidance on whether it makes sense to switch.

AIB fixed rates is at least 1% higher than variable rate so a fairly big difference to start off with.
With the lower rate variable seems to be the one to go for ?

 

[RedOnion]

AIB fixed rates is at least 1% higher than variable rate so a fairly big difference to start off with.
With the lower rate variable seems to be the one to go for ?

AIB variable rates are currently less than the ECB lending rate. Do do think that will continue to be the case?

Their 3, 4 & 5 year rates are less than the 1 year rate, so have a look at those too.

 

[markodaly]

You should definitely do this.


The problem is that even if you have got AIP from a few lenders and completed a few more of the steps, you will then have to instruct your solicitor which lender to try to get full approval (a letter of offer) from. That's because the solicitor needs to engage with the lender on certain matters. It's unlikely that a solicitor would try to get full approval from multiple lenders. You could ask them if they would do that but they might want a higher fee.

So the best you can do is try to get AIP from one or two other lenders (apart from BOI) and complete whatever other steps you can. Then tell your solicitor which lender to go with.


Looking at the monthly repayments is not a good idea. This thread (on a slightly different topic) explains why:

Key Post - How to evaluate if it's worth fixing, switching or breaking out of a fixed rate

Almost every post on this topic is wrong. No matter how often it is pointed out, people look at the wrong figures. They use mortgage calculators when they don't need them. Most of the time, you can do the figures in your head. Do not look at the monthly repayments – they are misleading. Do not...

www.askaboutmoney.com

Thanks for that @Paul F

It's undoubtedly an eye-opener alright, and perhaps you are right, repayments don't really matter, its the amount of interest you pay and what principle you have left over.
Cashbacks are handy but at the end of the day, you end up paying for it.