Fixed rate mortgages: Ulster bank 4 yr or KBC 10 yr?

M

Mcgoony

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Hi there
I have just finished the application process for Ulster banks 4 year fixed mortgage rate of 2.6%. We were planning on switching from AIB variable 3.1% and were due to sign loan documents this week or next. However now I'm having second thoughts and wondering whether we should go with the KBC 10 yr fixed of 2.95%. How would I go about comparing which would be better value? Thanks
 
Search Karl Jeacle mortgage calculator.

You could split mortgage say 50% 4yr fixed and 50% variable with UB. Gives you the option of holding out for lower rates on part of your financing in the future or cutting lump sums out of the mortgage.
 
UB won't let you do that unless you have two separate loans. I.e a top up.

In same boat, I'm with UB already and have the 2.6 ready to send for a couple of weeks now. Put off my limit of 1k on overpayment per year and seeing if this competition drives further drops. Hate costing myself guts of 100 euro a month though.
 
Factors to consider in the decision:
1. Is any bank likely to offer a term longer than 4 years @ 2.6%? If so, what is it likely to be. Bearing in mind the current term with Ulster Bank is until 31st March 2022, so more than 4 years
2. Where are interest rates likely to be in March 2022 - that is the big question that no one knows
3. Do you want to overpay, and if so by how much. Both banks limit the amount of overpayment
4. How big is the mortgage and what is the opportunity cost of waiting to see what happens next with the banks ... how much is it costing you per month to wait?
5. How long have you left on your mortgage? If you have ~10 years, is it worth turning it into a lifetime fixed rate? If not, what rate would you be rolling onto from both banks? This needs to be crystal clear given the whole issue with trackers at the moment
6. What is the break cost to get out of both mortgages, how are they costed and can you get clear numbers from them on this, especially KBC after the 4 year bank (for comparison)

Personally, my crystal ball thinks BOI will reduce the rates of their 10 year fixed to around 3.2%, continue to offer the 3% cashback, so still leaving it slightly more expensive than KBC, but better cashflow in the short term. I am not sure any of the other banks will react to this

Option is to start the switching process with KBC and see where you end up, as it will take a while to go through the process and see if any bank reacts in the next 4-6 weeks ....
 
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