Avant Money launches a new mortgage today from < 2%

_OkGo_ said:
Again you are correct in that instance but the difference is smaller (~€1k) when principal write down is included
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Identical principal repayments are made in both cases to arrive at the ~€2k differential in the cost to the borrower of €300k over the 5-year term.

I don't know of any lender that doesn't allow borrowers to fix a proportion of their mortgage, while keeping the balance on a variable rate.

The bottom line remains the same - Avant are significantly cheaper than all other lenders for borrowers with an LTV of less than 60%.
 
.Are avant offering exemptions? Surely they have no argument that they will run out by the end of the year (and at this point it is not even a valid argument for the established banks)
 
Sarenco said:
Identical principal repayments are made in both cases to arrive at the ~€2k differential in the cost to the borrower of €300k over the 5-year term.

I don't know of any lender that doesn't allow borrowers to fix a proportion of their mortgage, while keeping the balance on a variable rate.

The bottom line remains the same - Avant are significantly cheaper than all other lenders for borrowers with an LTV of less than 60%.
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Just FYI, not sure if this is a definite but I was in contact with a broker and they've said Avant allow you overpay by 1% of the balance of the mortgage each year. Don't know the full details as we are only in initial stages but thought it might be helpful here.
 
Gordon Gekko said:
I’m starting to look like a dope for fixing at 2.5% for 5.5 years...
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Ditto - I'm also feeling like one :( I'm with AIB on 2.45% fixed for 5 years (<50% LTV). I've asked them about the breakout fee to switch to their latest lower rate. I was told things are very busy and they will be back in touch with me in the coming days. I'll post back what they come back with.
 
First of all, it’s great to see new competition. However, as pointed out by others, you need to do the calculations and decide what suits best.

For example:
KBC (current account mortgage) switcher, €3k cashback
250k, 20 year term at 2.25% (LTV<60%) = €1295/month.

Avant
250k, 20 year term at 1.95% (LTV<60%) = €1259/month.

Although the difference is €36/month or €432/year with Avant, it will take almost 7 years to match the €3k cashback.
 
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Sarn said:
KBC (current account mortgage) switcher, €3k cashback
250k, 20 year term at 2.25% (LTV<60%) = €1295/month.
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If you are going to make comparisons based on a 20-year term, I think you have to take account of the fact that KBC's roll-to rate is materially higher than the roll-to rate offered by Avant.

I think the easiest way to take account of cash back offers is to simply deduct it from the opening loan balance. So, in this case €[email protected]% versus €[email protected]%.
 
€3k cashback is the equivalent of €1k interest per year. The difference in rates is 0.3%

€1000/0.3% = €333k

If borrowing above €333k, Avant is better value. Below €333k then KBC is better.

This does not account for follow on rates or change in circumstance that could prevent switching in 3 years. So while KBC is better on the lower amount, you run the risk of getting caught on a higher variable at the end of the fixed term as Sarenco points out
 
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Brendan Burgess said:
Hi Gordon

Which lender?

Did you ask what the break fee is?

It might be worth breaking out.

Brendan
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Hi Brendan,

Ulster Bank. I’d need to check but I’m only 1-1.5 years into a 5.5 year deal, so the break fee must be huge I’d have thought. But I’ll check for good order.

Many thanks,

Gordon
 
_OkGo_ said:
This does not account for follow on rates or change in circumstance that could prevent switching in 3 years. So while KBC is better on the lower amount, you run the risk of getting caught on a higher variable at the end of the fixed term as Sarenco points out
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Getting caught on a higher rate is a possibility at the end of the fixed period, equally it is possible that you could move to a better one after 2 or 3 years.
 
I suppose what I could do is a ‘multiple switch’...go somewhere that pays me 2% of the value of the mortgage, and then immediately go to Avant.

The 2% would put a chunk in the break-fee.

UB say that the break-fee is the lesser of two amounts:

1) Six months’ interest

2) [Redeemed Amount x (R - R1) x Days Left] / 360

R equals the interest rate available to the bank on money markets for the duration of the fixed period

R1 equals the interest rate available to the bank on money markets for the remainder of the fixed period

So let’s say 1) is €2,500 per €100,000 (I know it’s not)

And for €100,000, 2) should be [100,000 x (Negative - Negative) x 1,460] / 360,

So is 2) a negative number, and therefore zero?!

The rates that Irish financial institutions get on money markets for 1-5 year deposits are negative, so how can the formula throw up a positive number?

And I fixed for 5 years but it turned out to be 5.5 years. Is it 5 years or 5.5 years for the purposes of the calculation (which may be a moot point)?
 
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_OkGo_ said:
If borrowing above €333k, Avant is better value. Below €333k then KBC is better.
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That seems to check out over the three year fixed-rate period but bear in mind that the €3k cashback from KBC is only available to switchers.

Where it's a relatively close call, I would be inclined to opt for the lender that has demonstrated an intention to compete on rates alone.
 
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