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

Brendan Burgess

Founder
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37,836
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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Brendan Burgess

Founder
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37,836
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

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Foobar

Registered User
Messages
32
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.
 
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Brendan Burgess

Founder
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37,836
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
 

Brendan Burgess

Founder
Messages
37,836
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.
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
 

Foobar

Registered User
Messages
32
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.
That is fair enough. I suppose it is simple and consistent. Thanks for clarifying.
 

Foobar

Registered User
Messages
32
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

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.
 

Paul F

Registered User
Messages
25
I know I'm resurrecting a slightly old thread but it is worth noting that, for fixed-rate mortgages:
  • KBC allows you to overpay up to 10% of the outstanding balance just once over the lifetime of the fixed rate. E.g., if you fixed for five years, you could overpay 2% each year for five years. Or you could overpay 10% in the first year but then you couldn't make overpayments for the next four years.
  • Ulster Bank allows you to overpay up to 10% of the outstanding balance each year (not just once).
This may be a consideration for some people.
 

EmmDee

Registered User
Messages
141
Brendan,

BoI have an option of 2.5% 5 year fixed with no cashback - only available for mortgages >€400k.

I'm not sure if there is an overpayment option (I'll be checking) - there is with their other fixed rates. I'll have to look to see at what level the "lower rate vs the cashback option" makes sense

 

EmmDee

Registered User
Messages
141
Hi EmmDee
This rate makes no sense. You are always better going for the cash back.

Brendan
I presume you are looking at it as : 0.5% reduction x 5 years = 2.5% (vs 3% cashback). And even then the 0.5% is on a reducing capital amount

That's what I was thinking. But will see if the numbers are different in real life. They claim it is because of demand but I'm unconvinced
 
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