Avant, Ulster and Co.

music

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Dear all, I hope you can advise us.

We are a couple (married with kids) with a variable mortgage with PTSB, not delighted with the 3.6% rate and have wanted to move for a good while but never got the paperwork together (yes I know). Finally we have got organised. Our current mortgage is €170K on a house in the Dublin area worth 750K and the term is 16 years. We are or were, considering Ulster Bank fixed rate for 4, 5 or 7 years 2.35% for 4 and 5 year fixed 2.8% for 7 years. Their rates seemed attractive for a 4 or 5 year fixed. They are also offering €1500 towards solicitors fees. The fact that you can overpay on the fixed by 10% is also good.
Given their recent news to exit the market, maybe we would be as well to go with them and take their fixed rate to the new owners? I feel it will be an Irish bank, maybe even PTSB themselves. Or should we look for a better rate from someone else like KBC. or PTSB (again)....

We are also looking at Avant. I am aware with our low LTV we would qualify for Avant fixed rate 1.95% for 3, 5 or 7 years. You have to go through a broker for Avant and they seem to be mentioning solicitor fees of approx €600-700 plus outlays plus VAT. No word of cashback. I'm not sure how long their process is. - maybe they're deluged with Ulster mortgage refugees. Also I havent a clue if any of their brokers are any good, they are all just names on their website.
We only want to switch once, the whole business is a headwreck. So we would appreciate all advice.
 

RedOnion

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5,689
If switching once then Avant is your only sensible choice. 1.95% is a no brainer.
With respect, it's far from a 'no brainer'.

The OP has a relatively small mortgage, so the interest rate difference doesn't have as much of an impact over a short term. It's only if they fix for longer than 5 years that they would see a saving.

If they switch to KBC, they'll get 3,000 cash back. They qualify for lowest rates if they switch current account also.

170k, 16 year term remaining (I've ignored the 3k cashback impact on calculations).

3 year rate:
BankRateTotal Interest 3 years
KBC2.25%10,586
Avant1.95%9,157
1,428 Difference


5 year rate:
BankRateTotal Interest 5 years
KBC2.4%17,723
Avant1.95%14,333
3,390 Difference
 

RedOnion

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5,689
Thank you for your advice. So Ulster should not figure at all then?
The best UB rate is 2.2% over 2 years. That's 0.05% less than KBC. You save about 300 in interest, but KBC cashback is 1,500 higher.
Similarly, their 4 year rate is 0.05% lower than the KBC 5 year rate.

There are some other considerations:
With KBC, you can overpay 10% of the balance over the entire fixed period, before they calculate a break fee.
With UB it's 10% per annum.
You know for certain that UB are exiting the market.
 

skrooge

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269
Remember regardless of what the lender offers you are entitled to break part or all of a mortgage. The fee may be small or zero - all will depend on where rates go in the future.

Another option would be to discuss with the lender about structuring the repayments to take account of higher repayments - only really works if your overpayments are permanent. Reducing the term is an easy way of doing this this will reduce your flexibility in the future. However a lender might be willing to lock in a higher payment for the duration of the fix only.
 

PebbleBeach2020

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157
With 16 years left on the mortgage and he stated he was only switching once, I repeat, it's a no brainer that he chooses Avant. He is down 3000 euro over KBC, but KBC cheapest rate is 2.25% and he must switch his current account or set up.a current account at least with KBC to get this. Otherwise, the best rate available would be 2.45% with KBC.

Let's assume he sets up the current account. On 170k he's paying 0.30% more the first year, so that's 510 euro extra he'll pay. He's still up 2490 euro switching to KBC over Avant after 1 year.

But in year two, he'll owe over 161k, so that's 483 euro extra he'll pay. He's still up 2007 euro switching to KBC over Avant after 2 years.

This will continue as he's said he only wants to switch once. I don't envisage in the near future that KBC will be offering lower rates than Avant.
 

PebbleBeach2020

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157
Care to explain why not? I've outlined my reasons above.

You did see that there's 16 years left on mortgage and he wants to switch once and once only didn't you?
 

RedOnion

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5,689
The bit about you ignoring the fact the poster wants to move once and once only.
I'm not ignoring anything. It's fairly simple maths. It's only for periods greater than 5 years that Avant comes out better, on current rates and without any overpayments. If the OP overpays, that period becomes longer.

I repeat, it's far from a 'no-brainer'.
 

PebbleBeach2020

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157
Well I went on the basis of what the opening poster asked advice on based on a mortgage of 170k with 16 years remaining and him only switching once in his life.

The best option is something else if you ignore what he asked advice on. That's a good point.
 

RedOnion

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Well I went on the basis of what the opening poster asked advice on based on a mortgage of 170k with 16 years remaining and him only switching once in his life.
You're making an assumption that Avant rates will continue to be lower than KBC over the 16 years.

Re switching once, etc. 5 years is a long time in the life of a mortgage.

If you're going to state something is a 'no-brainer', make sure it actually is first.
 
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music

Registered User
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47
Thank you all for your replies and enthusiastic debate of the best way forward. Maybe we should look at switching more than once now you've debated the pros and cons... The pain was in getting the paperwork organised. We will try and be more pro-active in future.

So, not to prolong things but should we start to remortgage with KBC then?
I dunno, Avant, they are a bit of an unknown. All I've seen so far is a website and a email with a broker whom I dont know at all, and talk of €700+ for the conveyancing.
Thank you again.
 

RedOnion

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5,689
and talk of €700+ for the conveyancing.
The conveyancing cost will be standard, regardless of who you switch to.

Personally, I would suggest that if you want to fix for 7 years, go with Avant and lock in that rate. But knowing that if you overpay more than 1% of the balance each year it could trigger a break fee.

If you are fixing for a shorter term, I would be going with KBC, and then review towards the end of fixed term, or if rates change dramatically.

The most important thing is that you do something, quickly. We're debating a few hundred euro between options, or what might happen in 5 years time, while you're currently paying 3.6%! That's 200 per month more interest than you should be paying.
 

music

Registered User
Messages
47
Hi,
thanks again to you all. Your advice is very good. Sometimes in the analysis of banks, rates etc you lose sigh of the wood for the trees. Of course most rates are better than what we have right now. It will be well worth the hassle changing. Who knows, we might get used to it and become serial changers. Well, maybe not. But anyhow, thanks, much appreciated.
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