BofI mortgage: 3% fixed for 3 years. What to do?

Discussion in 'Mortgages and buying and selling homes' started by Aodhán, Apr 4, 2017.

  1. Aodhán

    Aodhán Frequent Poster

    Bank of Ireland have offered us a 27-year mortgage, with the first three years fixed at 3%. I would prefer to have the certainty of a longer fixed period as my crèche fees are over €2000 per month for the next few years and I'll be watching every cent. Should I look for a 5 or 10-year fixed?

    I am expecting a mortgage broker to come back with an offer from Ulster Bank at the end of this week but until the details of that are known I'm trying to assess the BofI offer. My big fear with BofI is that after the fixed rate ends I'll end up with their comical variable rate. The BofI person keeps emphasising that we can switch after 3 years but I wonder is it that easy.

    All feedback will be welcome.
  2. Delboy

    Delboy Frequent Poster

    I'm fixing with BoI right not after having come off a 1yr fixed. I'm going for the 3yr fixed option as it's the best value they have.
    When you come off that you will then have the option of fixing again for any of the selections available or going with a variable rate.

    Where will rates be in 3 years time is speculation but I'd hazard a guess they'll be higher than they are now. So fixing for longer than 3 years might be a wise move. Especially with 27 years at play here.
    Aodhán likes this.
  3. PGF2016

    PGF2016 Frequent Poster

    It's impossible to predict the rate in 3 years.
    Aodhán likes this.
  4. Aodhán

    Aodhán Frequent Poster

    If all your payments are up-to-date and your income has not declined, how difficult would it be to change providers after 3 years? Also, is it much of an additional expense?

    I'd be afraid to be at the mercy of the BofI variable rate.
  5. WorstPigeon

    WorstPigeon Frequent Poster

    There's always a danger of Property Crash 2, Electric Boogaloo. I'd hate to be reliant on switching in 3 years.
  6. skrooge

    skrooge Frequent Poster

    ECB rates have never been lower so there are only really one way for interest rates to go. Over the next 5-10 years they will surely go up as will fixed-rates. In saying all that its a mugs game trying to guess where rates will be in 5 and ten years

    The way I look at the choices of fixing is to look at how sensitive your lifestyle will be to changes in your mortgage repayment. For example:

    1. If you had very little overheads and had a lot of money sitting around after paying the mortgage and bills I'd say interest rates wont hurt you too much - at least not to the point of doing you out of a home. In this case I'd say over the life of a mortgage you would be better off staying variable and overpaying your mortgage. You'd take a hit on rate increases but at the same time the overpayments could see you reduce the life of your mortgage considerably. Over course how successful this is really depends on interest rates and your excess funds at the end of the month.
    2. For someone with very little excess funds that person is going to be very sensitive to changes in interest rates and with little left over they are not going to get the same level of benefit from overpaying. There of course will be some benefit but it's the difference between a trickle and a stream. In this case fixing might be the better option
    I'm guessing with 2K out going you're more a type 2 then a type 1 family right now - correct me if I'm wrong. The question is what type of borrower do you think you'll be in years 5-10. If the 2K can be redirected towards the mortgage after the 5 years then the shorter fixed term might suit you better. If you are worried that this wont be the case perhaps the 10 years is better. The thing with the 10 years is you will pay more but you'll have certainty for longer. What price for piece of mind ;)
    Aodhán likes this.