Switching dilemma

Discussion in 'The Switchers' Forum' started by A Wonderland, 7 Aug 2018.

  1. A Wonderland

    A Wonderland New Member

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    we started this exercise to reduce our monthly payment and get a little cash back. Our age is a factor where because we both turned 60 recently KBC,EBS and AIB will only give us a 5 year contract. Our current mortgage is with BoI with a current term of 10 years and 7 months with a 3 year fixed rate of 3.6%. that ends in mid Dec of this year. Current buy out is Euro 336. PTSB have offered us 2.95% over exactly 10 years with 2% cash back at signing and 2% cash back monthly for fixed term when fixing for 1,2,3,5 and 10 years. On foot of PTSB offer, BoI have now offered us 2.8% over 1,2,3, or 5 yrs for the same term of 10 years and 7 months. Any advice is welcome.
     
  2. RedOnion

    RedOnion Frequent Poster

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    Hi,

    Could you clarify - have PTSB offered you a rate of 2.95% fixed for any term? i.e. if you fix for 10 years would the rate be 2.95%?

    Red.
     
  3. A Wonderland

    A Wonderland New Member

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    Yes, that is correct. 2.95% x 10 yrs. However, we maybe in a position to make a moderate lump sum payment in 5 yrs to reduce the principle - would something like that incur a breakage fee? I understand from this forum that PTSB can be difficult to deal with and can have substantial breakage fees.
     
  4. RedOnion

    RedOnion Frequent Poster

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    A fixed rate for the remainder of your mortgage would be great for planning cashflow. The monthly outgoing is slightly higher than with BoI, but you've certainty and you'll be paying it off 7 months earlier.

    What balance have you got? I assume the 2% cashback is enough to cover your legal fees?

    Unless you're planning to go into arrears, I wouldn't worry about any bank being 'difficult'.

    PTSB calculate break fees based on market rates. Why you're seeing some large break fees is where people fixed for 10 years in 2013 or thereabouts, before rates fell. What you could do is fix a certain amount for 5 years, and the remainder for 10 so you avoid the risk of a break fee. But there should be a return to normal trends over the next 5 years which should raise interest rates and result in zero break fee.
     
  5. A Wonderland

    A Wonderland New Member

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    Last edited: 8 Aug 2018
    Thanks Red. Balance is 311.5k so yes cash back easily covers fees and breakout. Still tempted towards lower monthly payments although 2nd cash back monthly should bring payments close. Must check that this applies for 10 years if we fix for that term. In addition, I might go back to BoI and ask if they can improve their 10 year rate from 3.2% for us. Disappointed that so many lenders apply age discrimination to their loans. Standard term of 20 years available at any age in US where we had a pervious home. :(.
     
    Last edited: 8 Aug 2018
  6. RedOnion

    RedOnion Frequent Poster

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    I believe the 2% cash back monthly is valid until 2027.

    If you can fix at 3% with BoI:
    The difference monthly, taking in the 2% cash back is 75 euro. However, using you cashback from switching, after legal fees you'll be left with well over 4k, which covers that difference for over 4 years.
    You'll save about 14k interest over the term by switching to PTSB (factoring in the monthly cashback, but not the upfront).

    If you fix at 3.2% with BOI, the monthly difference is only 45 euro.

    Have you contacted Pepper Money to see if they would consider a longer term? I don't know if they would, but worth making a call.
     
  7. Bronte

    Bronte Frequent Poster

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    If you are getting 6K (311K X 2%) then you could use 2K for legals and 4K off the mortgage. Is that allowed?

    I think it's a very good thing that you can't get a mortgage lasting 20 years until you are 80.
     
  8. A Wonderland

    A Wonderland New Member

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    Checked with Pepper who offered 3 and 5 yr fixed at 3.2 and 3.45 respectively. Their variable is 3.25 for our LTV. In addition, went back to BoI re lower 10 yr but they won't budge from 3.2 for 10 yr. PTSB seem best option. Thanks for input.
    Just curious Bronte, when the house is security why not have a loan past 65-70? The property can always be sold to cover the debt if it becomes burdensome and home loan rates are far lower than other borrowings?
     
  9. Bronte

    Bronte Frequent Poster

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    You think banks want to be in the news for evicting 70 year olds !

    Then you have the problem of costs associated with that kind of proceedings.

    And it's bad lending practise and probably not allowed in any case by central bank rules or guidelines.

    Most people when they retire have a lower income and cannot afford mortgage debt. That's why most mortgages only last until 65 or 70.

    It's very difficult when that age to get loans.

    Feel free not to answer this but why do you need or want a longer mortgage? How much is the house worth, your mortgage seems high for 60 years of age.
     
  10. A Wonderland

    A Wonderland New Member

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    Returned emigrant and built shortly before the crash!