Fixed or Variable Rate?

MissPiggy19

Registered User
Messages
11
Hi all
I am currently getting mortgage quotes for approx. €250k mortgage (purchase value €400k). Just looking for some advice on whether to go with a fixed rate or variable rate? I would hope to pay of the mortgage early but would initially go with a 15 or 20 year term. I have one quote so for from aib and they are quoting 2.95% variable.
Fixed rates seem to be a lot less from what I can see but just wondering if there is a catch with this.
I am a first time buyer
Thanks in advance
 

galway_blow_in

Frequent Poster
Messages
1,426
Hi all
I am currently getting mortgage quotes for approx. €250k mortgage (purchase value €400k). Just looking for some advice on whether to go with a fixed rate or variable rate? I would hope to pay of the mortgage early but would initially go with a 15 or 20 year term. I have one quote so for from aib and they are quoting 2.95% variable.
Fixed rates seem to be a lot less from what I can see but just wondering if there is a catch with this.
I am a first time buyer
Thanks in advance
Surely variable rates are cheaper?
 

MissPiggy19

Registered User
Messages
11
No. Ulster Bank's fixed 2 year 2.3% is cheapest on market currently.

Comparitively AIB's best variable rate is 2.75% (for low LTV).

@MissPiggy19 Have a read of the key posts stickied to the top of this forum.
Thanks for the reply. I did and apologies if I’m missing something but the information on fixed vs variable seems a couple of years old so wasn’t sure it was still relevant?
 

RedOnion

Frequent Poster
Messages
3,132
It's not that old! ;)

So, AIB have used the message of 'fair' mortgage rates to win share. They've the lowest variable rates.

There are much better fixed rates - you've the security of knowing exactly how much your repayments will be for the period. Very useful when starting out, as there'll always be unexpected costs.

There's also an option to overpay. I recently updated the first post in the following thread, and it shows the amount that each lender will allow you to overpay without calculating if a break fee applies: https://www.askaboutmoney.com/threads/understanding-fixed-rates-breakage-costs.204427/
 

MissPiggy19

Registered User
Messages
11
It's not that old! ;)

So, AIB have used the message of 'fair' mortgage rates to win share. They've the lowest variable rates.

There are much better fixed rates - you've the security of knowing exactly how much your repayments will be for the period. Very useful when starting out, as there'll always be unexpected costs.

There's also an option to overpay. I recently updated the first post in the following thread, and it shows the amount that each lender will allow you to overpay without calculating if a break fee applies: https://www.askaboutmoney.com/threads/understanding-fixed-rates-breakage-costs.204427/
Sorry, I missed the 2019 updates. Had a quick scan of those and will read in detail. Ulster Bank sounds like it might be a good option as it seems they allow you can pay a lump sum every year without a fee. I think they have low fixed rates too......
Thanks for your help
 

RedOnion

Frequent Poster
Messages
3,132
Yes, UB looks best for you.

I know your LTV is 65%, but most fixed rates apply to all LTV bands now, so take a look at the best buys:
 

MissPiggy19

Registered User
Messages
11
Thanks, I just did a quick check on an online calculator and it shows that after the Ulster bank fixed term is up the rate is then 4.3% i.e. way higher than say the aib variable. Maybe this isn’t correct though - what decides the rate after the fixed terms end or are there different options to choose from?
Thanks!
 

RedOnion

Frequent Poster
Messages
3,132
UBs SVR is 4.3%. but at the end of the fixed rate, you avail of whatever rates are available then. Or switch.
There's no guarantee with any bank long term, but competition is getting hotter.
 

MissPiggy19

Registered User
Messages
11
Ok, so could you start a new fixed term say?
And is it possible to predict at the outset the cost of switching if for example Ulster Banks rates were higher than the others at the end of the fixed term?
 

RedOnion

Frequent Poster
Messages
3,132
No, there's no way to predict what rates any lender will have on offer in 2 or 4 years time.
If there's a crash, AIB are just as likely as any other bank to have a high rate.
My advice is to take the best rate available now, and don't forget to stay on top of it coming to the end of the fixed rate.
 

HollowKnight

Frequent Poster
Messages
134
Ok, so could you start a new fixed term say?
And is it possible to predict at the outset the cost of switching if for example Ulster Banks rates were higher than the others at the end of the fixed term?
The cost of switching is usually a valuation and solicitor fees. ~ 1500 max
 

MissPiggy19

Registered User
Messages
11
Ok thanks all. I presume you mean take the best rate now regardless of whether it’s fixed or variable? And then deal with whatever happens down the line?
 

HollowKnight

Frequent Poster
Messages
134
Ok thanks all. I presume you mean take the best rate now regardless of whether it’s fixed or variable? And then deal with whatever happens down the line?
That's been my attitude in 4 or so years I've been a homeowner. (switched mortgage twice now for better rates)
 

MissPiggy19

Registered User
Messages
11
Ok so I think I have narrowed it down to UB fixed rate and just trying to decide between 2 years at 2.3% and 4 years at 2.6%. Anyone have any thoughts? Thanks!
 

skrooge

Frequent Poster
Messages
174
Both rates are good. It's more do you think its worth paying 0.3% extra for 2 years of certainty in terms of interest rates.

Looking at the numbers you would pay between €1,434 - €1,457 more in interest over the first 2 years if you went with the longer fix. However, to put that into context the if the banks variable mortgage rate or 2 year fixed rate were above 2.74% (in 2021) you would be better off with the longer fix. To put that into context their current best variable rate is 3.1%.
 

MissPiggy19

Registered User
Messages
11
Thanks for that.

The latest update is that Ulster Bank have now advised they cannot give me their 2 or 4 fixed term rates (2.3 and 2.6%) because I am looking for “an exception” i.e. the max loan is normally €234k and I want €250k. I am paying €190k myself so find this so disappointing especially as I’m only finding this out now after getting a long way down the application road!

Any advice?! Thanks!
 

RedOnion

Frequent Poster
Messages
3,132
the max loan is normally €234k and I want €250k. I am paying €190k myself so find this so disappointing
Do you absolutely need the exemption? E.g if you drew down the max, and take a 6 month payment break straight away to get yourself sorted? The rate differences are huge.

We were discussing UB criteria for these rates for another reason earlier this week, and it's not clear when you would be able to switch to their better rates if you draw down at higher rate.
 
Top