Fixed rate switcher- KBC 10 year 2.95% or UB 4year 2.6%?!!

[Ndiddy]

2 kids in crèche (ages 1.5 and 3.5)/ we are 39 and 38/ both wife and I working with 40k salary each/funding DC pension AVCs in full to 20%/ total retirement savings about 480k/ no debt/ 23k cash savings/ interested in FIRE so still want a cash cushion built up for the next bear market

Currently 203k/26years left on a 350k house on UB fixed at 3.2% and struggling to make a decision on KBC 10 year or UB 4 year fixed...no cash back to sweeten either deal as already with UB and if I were to switch to KBC, drawdown will not be in time before the end of March when 3k deal ends. Have some cash now so we can afford to drop the mortgage amount a bit and shorten term so thinking either:
A) 200k(min loan to qualify for 2.6%) with UB fixed for 4 years out of a 20 year term but with rates most likely going up in the future, lowest rate now but afraid what kind of rates will be available in 4 years time.
B) smaller 195k loan with KBC fixed for 10 years of a 20 term at the slightly higher rate of 2.95% but at a minimum the payment won't be more than this for 10 years.
OR C) don't shorten term to keep flexibility of a smaller payment in case of trouble?

Hope to keep overpaying a bit each year, but just can't decide. Thanks for any help/opinions!

 

[gnf_ireland]

interested in FIRE

Not sure what you mean by FIRE here if I am being honest

Ok, everything in this post is all what I would if I was you - but its really up to yourself as to what works best for you

we are 39 and 38/

I would target reducing your mortgage to 21 years so you are mortgage free by 60
I would also set a stretch target of being mortgage free 5 years before that at 55 - when your eldest is likely to start university, as this would effectively be the best means of saving for university

drawdown will not be in time before the end of March when 3k deal ends.

There is a chance this will be extended or be re-initiated at a time in the future. Cash back deals are very popular at the moment and banks don't seem to be able to complete on interest rates alone - if you look at AIB for example, they have some of the lowest variable rates and are still struggling for market share
*Edit in bold*

lowest rate now but afraid what kind of rates will be available in 4 years time.

This is the million euro question - will interest rates be above 2.95% in 4 years time? This is the decision only you can make

My understanding is both KBC and Ulster Bank allow 10% overpayment on fixed mortgages. But these have to be regular overpayments to my knowledge and not lump sum overpayments.

So if I was you I would shorted your term to 21 years so you are mortgage free by 60, and then overpay by 10% if you can afford that.

Whether you go for the 4 year fixed term or the 10 year fixed term is personal choice as where you think interest rates will go in the next few years.

For the record, we recently fixed for 10 years with KBC.

 

[Sarenco]

Not sure what you mean by FIRE here if I am being honest.

FIRE = Financially Independent Retire Early.

AIB for example, they have the lowest rates and are still struggling for market share.

I can't agree with you here GNF. If you look at the effective rates in this link it looks pretty clear that AIB actually have some of the most expensive rates in the market and that's why, IMO, they are losing market share:-
https://www.askaboutmoney.com/threads/fixed-rates-best-buys.204420/

Personally, I think the KBC 10-year fixed rate looks like a pretty good deal at the moment.

 

[gnf_ireland]

FIRE = Financially Independent Retire Early.

Thanks - learn something new every day and its not even 7am yet

I can't agree with you here GNF. If you look at the effective rates in this link it looks pretty clear that AIB actually have some of the most expensive rates in the market and that's why, IMO, they are losing market share:-
https://www.askaboutmoney.com/threads/fixed-rates-best-buys.204420/

Ok, should clarify that they have pretty competitive variable rates and claim to be the lowest in the market here (edited above to include the word variable).
For LTV>80%, they are 3.15% variable
For LTV<50%, they are 2.75% variable
These are some of the lowest variable rates available. I accept they are not as competitive as others in the fixed rates area.

https://aib.ie/our-products/mortgages/mortgage-interest-rates