"Should I fix, and if so, how long should I fix for?"

Brendan Burgess

Founder
Messages
37,957
This is a very interesting question.

As of May 2018, it is right to fix your mortgage rate, as there is very unlikely to be any penalty if you want to break out of it before the end date. So if interest rates rise, you will be glad you fixed. If interest rates fall, you can break out and avail of the lower rate.

For a 90% LTV mortgage

upload_2018-5-21_14-37-41.png


If you are with EBS, the decision is easy. The rate is the same for all available periods, so you should fix for 5 years.

If you are with Bank of Ireland, you can fix for up to 5 years at 3% or for 10 years at 3.5%.
Is it worth paying the extra 0.5% to fix the rate for 10 years?

What is the likelihood of a fixed rate breakage fee?
Very small. The lender would have to change its methodology and get that approved by the Central Bank.

I think it's well worth taking the risk.

Is the decision on a 50% LTV loan any different from a 90% LTV loan?

upload_2018-5-21_14-52-48.png


I think that the Bank of Ireland 10 year fixed rate is the best one to go for here.

If you break out after 5 years, your effective rate will be 2.7%, but you have the "option" to renew for a further 5 years at 3.3%. I suspect that in May 2023, have a further 5 years at 3.3% will look like great value.
 

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BusinessFailure

Registered User
Messages
12
Hi Brendan,

Thanks for the post. Do you think the BoI 10 year 3.3% is still a good deal without the cashback? I'm an existing customer, and don't get the cashback offer.
 

RedOnion

Frequent Poster
Messages
3,138
Hi Brendan,

Thanks for the post. Do you think the BoI 10 year 3.3% is still a good deal without the cashback? I'm an existing customer, and don't get the cashback offer.
If you've a low LTV, there are 2 options:

1. Try negotiate a better rate with BOI - maybe try to get them to match KBCs rate, or
2. Just switch to KBC - they'll cover your legal fees.

One benefit of the KBC offering is that you can make an early repayment of 10% of the starting balance without then checking if a break fee is due. Now, it's highly unlikely you would ever pay a break fee given how low interbank rates are now, but it's nice to have the right to do this. By comoacompa with BoI you can increase your monthly repayment by 10%.
 

qwerty5

Frequent Poster
Messages
250
Another thing to bear in mind. If you fix, don't just forget about it for the 5 or 10 years.

I fixed with UB in Jan for 4 years and 3 months at 2.6%.
In March they changed the end date of their fixed term to Sept 2022. So I contacted them and got the rate sheet + breakage fee letter (€0).
So now I'm fixed until Sept 2022. So that's 4 years and 9 months for me at 2.6%.

If they update their end date in Sept this year to add on another 6 months I'll be doing the same again.
 
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toby2111

Frequent Poster
Messages
184
The only bank giving me a mortgage is PTSB. I know they're not recommended in Best Buys thread but should I fix for 3 years(3.15%) or 5 years(3.25%)?
 

Sarenco

Frequent Poster
Messages
5,530
The only bank giving me a mortgage is PTSB. I know they're not recommended in Best Buys thread but should I fix for 3 years(3.15%) or 5 years(3.25%)?
PTSB may not be listed in the "Best Buys" thread but, depending on your circumstances, they do offer some of the best fixed-rates in the current market.

For example, PTSB's High Value 3-Year Fix <60% LTV has a notional rate of 2.95% but an effective rate over three years of only 2.17% when you allow for the cashbacks (2% at drawdown, plus 2% of each monthly mortgage payment).

I obviously can't predict future rate movements but personally I would opt for a 5-year fix @3.25%, over a 3-year fix @3.15%.
 

Gordon Gekko

Frequent Poster
Messages
3,644
That’s really good advice about keeping an eye on the availability of the term.

I fixed at 2.5% for 5.5 years around 6 months ago but I’ve kind of forgotten about it.

That’s something I should keep an eye on.

Thanks.
 

username123

Frequent Poster
Messages
1,440
Apologies from dragging an old post, but i've read @Qwerty123 's post a few times and don't quite get it, regarding the extending of the end date. When you ring up and say you want to extend your existing say 3 year fixed to the new end date of the availability of the fixed rate term, does that mean you are breaking your current fixed term and getting a new one? In other words, is it a new mortgage term/agreement or are you just "extending" the existing one? I notice you mention breakage fee letter (€0), which somewhat implies youre breaking out your current fixed rate?

I've never heard of this before reading this thread, so thanks for that either way!
 

Aodhán

Frequent Poster
Messages
51
What is the likelihood of a fixed rate breakage fee?
Very small. The lender would have to change its methodology and get that approved by the Central Bank.

I think it's well worth taking the risk.
BofI two weeks ago said they would charge me over €5000 to break my existing 5-year fixed rate with them (and move to Ulster or KBC). Indeed, they offered me a 2.9% rate for 5 years if I stayed with them - as opposed to my existing 3.1% fixed rate - but again said there would be a €5k plus fee for breaking the fixed rate even if I were to move to another BofI mortgage.
 
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