Choosing lender AIB or Danske?

[Ldo]

Hi all,

We are lucky enough to have mortgage approval with both AIB and Danske Bank and would appreciate some advice on which to choose?

Our choice is between:

AIB: LTV <50% at variable rate of 3.84

Danske:
2 year fixed at 4.2 with discount of 0.45 = 3.75
Or
3 year fixed at 4.35 with discount of 0.45 = 3.9

So, which would you choose and why?

 

[MrEarl]

Hello,

I need to start by saying I am a Danske Bank customer (no other connection, but I'm a happy customer ....).

My own crystal ball, tells me that interest rates are not going up anytime soon and as such, the traditional reasons for taking a fixed rate would not be of particular interest to me, for the two or three year periods mentioned.

However, that said, I like the look of the 3year fixed rate offered by Danske, inclusive of the discount you refer to. Is that the 45bps discount offered, when you take out a Prestige Account (and if so, then you need to consider the annual fee for this current account, along with the package of offerings to see if it's justified as part of your overall mortgage cost - or on a stand alone basis etc) ?

Personally speaking, I'd be tempted to go for the 3.9% for three year fixed, given there's been previous instances where people on Variable Rates have seen their rates increase, regardless of whats happened with the ECB or Euribor rates - so it gives surity here, in addition to protection against the possibility of future increases in money market rates, which may also impact on homeloan rates.

However, another question to put to you is this, what is the proposal from Danske after the initial 3-year period ?

Are they also offering you a 5-year rate and if so, what is it please ?

Also, you need to ask yourself would you be happy with a telephone and internet based bank, becuase by in large, thats what Danske are these days ... for me, it's perfect but for others it may not suit.

Regards

Mr. Earl.

 

[Ldo]

Thanks for your reply. To answer your questions:

1) yes the rate reduction is based on opening a prestige account with Danske

2) after the fixed period the std variable rate will apply, however the discount will be retained for the lifetime of the mortgage so long as salaries are still paid into Danske prestige account. Currently the std var is 4.35 so 3.9 inclusive of discount

3) the 5 year fixed rate is 4.9, less discount is 4.45

You raised a really good point about the fees associated with the prestige account which I looked into further today. Currently these are €31 per quarter so approx €250 pa for both of us. So this wipes out the saving of €260 when you compare the 3 yr fixed against AIB variable (where we have free banking if we maintain current account balance above €2.5k).

Looks like we'll have to sleep on this one again