Fix with AIB or BOI and for how long?

[BMD]

Hi,

I have narrowed down my mortgage options to AIB and BOI (best rates available) and have been approved by both, however I want some advice on who I should go with and how long I should fix for.

My options are as follows;

AIB - 3 year fixed at 3.89%. This is the best three year rate available however it wont be fixed until I draw down the last payment (its a self build) in ~ June 2011. If I go with this, what do you think the maximum their 3 year rate could be in June (I assume it will have gone up by then). After the three years I would move onto their standard variable rate (3.25% at present). Not fixing now might also be a benefit as I could re-asses the economic climate in 6 months time?

BOI - 2 year fixed at 3.4%. This is the best 2 year rate at the moment and I can fix straight away...however is 2 years long enough given the current climate. What could we expect the variable rate to be in December 2012? Again I would be going onto their standard variable rate at the end of the fixed term (3.35% at present)

BOI- 3 year fixed at 4.04%. This might give me the reassurance of getting on a 3 year rate immediately, however its higher than AIB which is putting me off

I have started my self build and therefore need to get this sorted pretty soon as the builder will be looking for first payment soon. I'm a little further down the track with AIB than with BOI wrt submitting documentation etc. BOI also insist on an independent valuation

I'm not comfortable going with a 5 year fix as the difference at present is €200 PM and 5 years is a long time

Any advice anyone has one this would be appreciated.

 

[aishling]

I am also doing a self build, we went with AIB as we were already approved before we realised we couldnt fix before final draw down & didnt want to delay by starting the whole process all over again with BOI...

I did however ring them, Im not sure if you are aware but if you want to fix with BOI you have to fix each draw down that you make as the fixing rates may change between each drawdown. At least that is what I was told. I thought this would make it messy making decisions when the fixed terms expire, as they wont expire together. If going with BOI I would fix the first for 3years and last for 2year (depending how rates look then of course) so they expire closer together.

AIBs rates in general seem to be lower than BOI if only slightly, if we could assume that it will stay that way I'd go with them and fix when you have fully drawn down. Of course no magic ball...it could all change!

 

[BMD]

My offer letter from BOI states that the mortgage rate if fixed at 3.4% over the first 24 installments so should be ok. Maybe they change this if you are going for a three or five year mortgage?

 

[BMD]

Any further advice on this? Have to decide early next week and really don't know what way to go

 

[Greta]

BMD, how much of a rise in interest rates can you afford? If you can afford to pay the mortgage even if interest rates rise before you fix, it might be more preferable to go with AIB than if you really can't pay more that at about 4%.