Switch for cashback, switch to fix, or stay with AIB, advice needed please

Discussion in 'The Switchers' Forum' started by monkey80, Apr 20, 2017.

  1. monkey80

    monkey80 New Member

    Posts:
    6
    I'm looking on some advice regarding whether to switch mortgages and if so, to what?

    We currently have 240k to pay back on our mortgage, they house is valued at 300k, so mortgage is 80% of value. We are with AIB, 3.4% variable (1146 per month), we can switch at any time.

    I think we have 3 options and would like your advice on what is the best thing to do.

    Option 1. Switch to EBS at 3.5% variable for the cash back 4800e, minus solicitor's fees and valuation. We have been approved in principle. (1179 per month, 33 euro more than AIB, but we will have the option to pay back fortnightly, which will be a bonus)

    Option 2. Switch to the new Ulster bank fixed loyalty plus rate of 2.99%, 3 years. I have not applied for this yet but I think the repayment will be around 1007, saving me 139e a month; so should have the solicitor's fees and valuation paid back in around a year, then the switch will be saving me money.

    Option 3. Stay with AIB and hope that they drop their rates to compete with Ulster bank.

    Option 4. Something else????

    note:- my wife maybe moving from full time to part time work in August which may mean that we are less likely to be approved by another bank if we leave it until then.

    What should we do? Any and all advice would be greatly appreciated. Do you think other banks will drop rates to compete with Ulster bank? Should we forget the cashback option? Is fixing paramount due to ECB upping interest rates in future?

    Thanks in advance :)
     
  2. Chef Harold

    Chef Harold New Member

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    6
    I like the idea of fixed rates, particularly if there is going to be a change in family circumstances. At 2.99% it seems like a decent rate for the security over 3 years. You would probably want to get your skates on as switching could take 3 months to complete, and they will check employment etc. at the point of switching.
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    31,887
    If your ability to switch in the future might be limited, you should stay with AIB as they have been the cheapest for some time, and are most likely to be in the future.

    EBS did not pass on the last rate cut and will try to recoup the 2% cash back in some way.

    You should not fix while Irish mortgage rates are 1.5% higher than in the rest of the eurozone. That gap will be reduced either through competition or through some form of a legal cap.

    Brendan
     
  4. Sarenco

    Sarenco Frequent Poster

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    3,859
    Ulster Bank would actually give you €1,500 cash back, which should comfortably cover the cost of switching.

    I would probably opt to stay put in your shoes but I do think a three-year fix @2.99% looks pretty attractive at this point in the interest rate cycle.

    You pays your money and you takes your chances...
     
  5. Sarenco

    Sarenco Frequent Poster

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    3,859
    That's not strictly true - KBC has lower effective variable rates at most LTVs.

    Prediction is very difficult, especially about the future!;)
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    31,887
    AIB has been the cheapest for some time.

    KBC advertises lower rates for new business customers but does not pass on those rate cuts automatically to existing customers.

    You should avoid KBC, permanent tsb and Bank of Ireland.

    Brendan
     
  7. Sarenco

    Sarenco Frequent Poster

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    3,859
    Well, KBC offers lower effective variable rates to new customers than AIB at most LTVs and explicitly allow existing customers to avail of those lower rates on presenting an appropriate valuation.

    Until recently, AIB did not allow existing customers to move to a lower LTV bracket - although they appear to have recently allowed some customers to do so.

    PTSB and BoI have very competitive fixed-rate offerings, with generous cash-back incentives. Neither lender has a competitive variable rate offering.