Key Post Best Buy for <50% LTV mortgages i.e. the lowest mortgage rates available

Discussion in 'Mortgages and buying and selling homes' started by Brendan Burgess, 6 Nov 2017.

  1. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: 26 Jul 2018
    Updated 26th July 2018 for KBC cuts which apply from 3rd September

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    Best buy for First Time Buyers or new customers

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    In my opinion, Ulster Bank is a clear best buy.
    • The rates are low
    • They have led the field in cutting rates
    • They have led the field in committing to offering existing customers the same deals as those on offer to new customers
    • If you default to variable rate after after the fixed rate ends, it won't be as high as Bank of Ireland's rate
    The main decision is whether to go for the two year fix at 2.3% or the 4 year fix at 2.6%. It's a very close decision and neither will be far wrong. My gut feeling is that the 2.3% is better as rates may well fall again and it would probably be cheaper to get out of a 2 year deal than a 4 year deal. (If you are borrowing more than €500,000 Ulster Bank has a rate of 2.5% fixed for 5 years.)

    Best buy for switchers

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    Default variable rates after the fixed rate expires
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    Permanent tsb
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    permanent tsb is not recommended as it has very high rates for existing customers. Although Bank of Ireland has very high variable rates for existing customers, the fixed rates are attractive. After you fixed rate period with permanent tsb expires, the only option will be to switch lenders, which most people won’t get around to doing.
     

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    Last edited: 26 Jul 2018
  2. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: 26 Jul 2018
    I have updated the Key Post for the KBC cuts.

    I have also prepared the following new tables. I got a bit befuddled preparing them, so I would appreciate if someone checks my arithmetic (and conclusions.)

    Thanks

    upload_2018-7-26_10-7-48.png
     
    Last edited: 26 Jul 2018
  3. Foobar

    Foobar Registered User

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    Last edited: 26 Jul 2018
    Hi @Brendan Burgess I think you should state the term of the loan used for the calculations. Baring in mind that a 35 year term is typically only available for FTBs, so maybe you could use 30 years as the term for both.

    Regarding the Best Buy for switchers on a 300k mortgage, how did you arrive at the interest amount of 27k for BOI/EBS @ 3%? Over 3 years based on a 30-year term, I got 26,165.72 (using Karl's Mortgage Calculator). With a 35 year term, I still got less than 27k over the three years. I am sensing maybe a rounding error?

    Anyway, using the same method as I used for the above, KBC @2.55% / 30 year term, the interest over three years came to 22,187.85. Less the 3k cashback, this works out at 19,187.85, much less than BOI/EBS and roughly the same as Ulster.

    I could be wrong though.
     
    Last edited: 26 Jul 2018
  4. Brendan Burgess

    Brendan Burgess Founder

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    Hi Foobar

    Interesting point. I took a simplified approach. For example:

    for switchers on a 300k mortgage, how did you arrive at the interest amount of 27k for BOI/EBS @ 3%?

    €300k @3% a year = €9,000 per year or €27,000 over three years.

    It's not absolutely correct, as the capital repayments will reduce the amount of interest paid. However, as it applies for all lenders, the comparison is still valid.

    Brendan
     
    Foobar likes this.
  5. Brendan Burgess

    Brendan Burgess Founder

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    Foobar, you could be wrong, but you are not. I was wrong.

    I have now replaced BoI/EBS with KBC for a switcher of a €300k mortgage.

    Thanks for that.

    Brendan
     
  6. Foobar

    Foobar Registered User

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    32
    That is fair enough. I suppose it is simple and consistent. Thanks for clarifying.
     
  7. Foobar

    Foobar Registered User

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    32

    The new KBC 5 year rate @ 2.6% poses an interesting question between it an UB. If one were looking for a fixed rate of 4+ years, then KBC with the enhanced cashback would trump the UB rate (excluding BOI for this comparison). But what is the cost for a switcher of 300k mortgage taking the 5 year rate from KBC vs taking 2 year rate from Ulster, over the first 2 years?

    Total interest paid on 300k over first 2 years, less cashback offers.

    KBC @ 2.6%: 15,600 - 3000 = 12,600
    UB @ 2.3%: 13,800 - 1500 = 12,300


    You would pay just ~ 300 extra with KBC to have the security of 3 more years at 2.6%. A great deal, unless you are adamant that rates will continue to drop.