First Time Buyer - Fixed or Variable?

A

Abbeyman

Registered User
Messages
1
HI

First off, I signed the mortgage forms with BOI last week but will not be drawing down for 6 to 8 weeks.
Can I go back and make changes to it?
If so,
Should we set the fixed term for a long or short period?

Background:
Married couple - First time buyers - income €100 combined.
Loan to Value 90%.
Current contract 5 yr fixed at 3.75% - Variable was 4.45% on that day.

I had been advised that with ECB rate pretty much as low as possible (Maybe 1 more drop) that in reality it will rise in about 2 years time so the fixed for 5 yrs made sense, however I heard a little of the guy on the Matt Cooper show on Wednesday saying the ECB may be coming to the Irish banks and telling they must lower their rates to become competitive and he advised not fixing any mortgages for more than 1 year.

What do people think?

Thank you.
 
If you want certainty of what your monthly mortgage payment would be then fixed is the way to go.

Personally I would choose variable as the safer bet to save money over the fixed term time period.
 
I have a key post on the topic.

Aib is clearly the best lender. Take a variable rate with them ,


Avoid BoI - the 2% cash back is luring people into a trap they don't understand.

Avoid fixed rates. Irish rates are artificially high and will come down.
 
Abbeyman said:
I had been advised that with ECB rate pretty much as low as possible (Maybe 1 more drop) that in reality it will rise in about 2 years time so the fixed for 5 yrs made sense, however I heard a little of the guy on the Matt Cooper show on Wednesday saying the ECB may be coming to the Irish banks and telling they must lower their rates to become competitive and he advised not fixing any mortgages for more than 1 year.

What do people think?
Click to expand...

The truth is that nobody knows what way rates will go. If you want the secure knowledge of what your repayments will be for 5 years then you can fix. But I believe that Irish fixed rates are too high and that they will come down. If you fix for 5 years you are then in the situation of being stuck with that bank with no option to switch without paying a high penalty.
 
Brendan Burgess said:
I have a key post on the topic.

Aib is clearly the best lender. Take a variable rate with them ,


Avoid BoI - the 2% cash back is luring people into a trap they don't understand.

Avoid fixed rates. Irish rates are artificially high and will come down.
Click to expand...

What do you mean by this?

I'm going with ptsb and availing of 2% cash back. I am aware I cannot redeem the mortgage withing 5 years.

What is the trap I'm missing.
 
Brendan Burgess said:
I have a key post on the topic.

Aib is clearly the best lender. Take a variable rate with them ,

Avoid BoI - the 2% cash back is luring people into a trap they don't understand.
Click to expand...

Rates have changed since this post, but would like to clarify what the definition is of the best lender, is it purely on lowest rate?
I'm assuming for LTV less than 80%, Ulster Bank is the best option at 3.2% (with 1500 cash back), AIB is 3.3%. Is the basic rate the most important thing or are there other aspects I should factor in?

I'm also unclear what the trap is with BOI and the 2% offer? Is it just the 5 year commitment?

Feedback appreciated. First time buyer looking to borrow less than 80% and have 2 good options, first option gives slightly lower repayment but the other option works out cheaper for the first 8 years or so and is then more expensive.
 
gomango said:
What do you mean by this?

I'm going with ptsb and availing of 2% cash back. I am aware I cannot redeem the mortgage withing 5 years.

What is the trap I'm missing.
Click to expand...

perhaps 'trap' is a strong word but what i believe Brendan is trying to say is that the 2% saving as upfront cashback could pale into insignificance against the money you could save over time with a lower rate but a lot of people go for the instant money 'trap'
 
Brendan Burgess said:
I have a key post on the topic.

Aib is clearly the best lender. Take a variable rate with them ,
Click to expand...

is AIB the best lender (for Ltv less than 50%) considering the EBS cashback offer that is without restrictions? I am in the process of deciding between the 2.

Would it take much hassle / cost to switch from EBS to AIB if AIB reduced their rates and EBS didn't? I know that they are the same bank while still
Being separate banks (if that makes sense) and wonder if anyone here has switched between them?
 
Last edited:
You must log in or register to reply here.
Back
Top