Key Post Variable mortgage rates - best buys

Discussion in 'Mortgages and buying and selling homes' started by Brendan Burgess, Feb 12, 2016.

  1. Blackrock1

    Blackrock1 Frequent Poster


    the reason it is a best buy is because there is no impediment to switching but the cashback wont offset the higher interest over the life
  2. Sarenco

    Sarenco Frequent Poster

    From the EBS website:-

    "EBS is offering home buyers 2% Back in Cash. That’s a nice 2% of the value of your mortgage if you are a first time buyer, mover, or switching your mortgage to EBS. Yep. That's €5,000 on a €250,000 mortgage, Back in Cash. You're welcome."
  3. Dermotsull13

    Dermotsull13 New Member

    In general how long do banks require you to be with the previous lender before they will be willing to take you on as a switcher?
  4. Sarenco

    Sarenco Frequent Poster

    No lender can legally clawback a cash back offer on an early redemption of a variable rate home loan.

    Personally, I would just go for the cheapest mortgage rate on offer unless you think you are going to be in a position to repay the loan in full in short order.
  5. petitverdot

    petitverdot Registered User

    Excluding cash back gimmicks, excluding Loan to Value ratio offers: For your average mortgage customer looking for a mortgage on the value amount of the actual property; Choosing a standard variable rate lender is still no clearer in my opinion.

    Advice to stay away from KBC as they do not pass on rate reductions to existing customers, however they have one of the lowest Variable rates especially with current account discount, 3.5%

    Advice to go with EBS, however they have also shown in the past not to be a bank who passes on reductions to existing customers when it's big sister AIB did pass them on, Variable rate: 3.7% Yes they offer 2% cash back (e.g.4k on a 200k mortgage) Is 2% really worth it for a short term win for something that you will be paying for avg 30 years without rate cuts passed on? If the thinking is that EBS are the advised ones to go on because you get the 2% and move on to the next bank without penalty then fine, thats short term advice. I imagine people want to know who best to switch to after this?

    Bank of Ireland: Annoyingly allowed to have a high Variable Rate 4.6% to force people onto their Fixed Rate products.

    AIB: Variable: 3.5% passes on to both new and existing customers

    Permanent TSB: Variable Rate 4.3%

    Ulster Bank: Variable 4.3% (3.1% loyalty rate if you switch current account and borrow more than 200k and have <80% LTV)

    So ignoring all these short win cash back offers. With the assumptions not everyone can get lower LTV rates. For the "standard" purchaser looking for the longer term (for now as in next 5 to 8 years) is AIB is the best option? One of the lowest rates and a bank who will pass on reductions makes me think they are the best of the bad lot.
  6. dereko1969

    dereko1969 Frequent Poster

    If I weren't with AIB i'd probably consider them. However, they won't allow me switch to a lower LTV rate (<50%) as when I first got my mortgage from them it was a <90% and they won't allow me to switch as I've already had a LTV rate.
    So I'm going to go to EBS and then perhaps back to AIB in a year.
  7. Sarenco

    Sarenco Frequent Poster

    Yeah, unlike KBC and UB, AIB don't allow existing customers to switch to a lower LTV bracket during the term of a loan. That may be a material consideration depending on a borrower's circumstances.
  8. gnf_ireland

    gnf_ireland Frequent Poster

    I also think its worth considering that its likely Irish mortgage holders will have to become a lot more proactive in managing their mortgage over the coming years. The idea of taking a mortgage out with a bank and keeping it with them for the duration is unlikely based on banking behaviour. I foresee a situation where most people will have to switch providers 2-3 times during the lifetime of a mortgage to ensure reasonable rates.

    It is also possible that LTV<50% (or LTV<40%) will be considered the prime lending group and offered the best rates always. Once this magical number has been reached, I believe all mortgage holders should review their mortgage and switch to one which guarantees to pass on all interest rate cuts to their customers.

    Up to this time (LTV<80% - LTV<50%) it is seriously worth considering paying a small premium to be with a bank that allows you move your LTV bands and drops your rate down. It will make a difference over this period of the mortgage.

    When people first take out the mortgage, rate is normally not their first concern, but can they avail of the finance they require. The 2% cashback is not a bad scenario here for most people, and I accept people pay a premium for this. I also think that this cohort should also consider fixing, until they get used to regular monthly mortgage payments etc. Once the customer gets to a LTV<80%, they should then move to avail of better rates.

    Obviously depends on the financial position and maturity of the mortgage holder. Its also worth knowing at what period over the mortgage do you expect to fall into these categories, assuming a modest or flat house price increase. It will allow you determine the 'premium' you are paying.

    Finally, any fixed mortgage that allows a level of over payment (I know BOI allow 10% over payment) is also worth considering, as it does give some increased benefits to the customer. A mortgage that allows a redraw on over payments can also be very attractive to some, if one can be found.
  9. Brendan Burgess

    Brendan Burgess Founder

    OK, I have updated the first post as follows:

    Bank of Ireland has admitted that they keep artificially high variable rates to encourage people to fix. So they should be avoided.

    permanent tsb too has very high variable rates. They also reserve the right to reclaim the 2% if you switch within 5 years. This might not be enforceable, but why bother with them?

    While Sarenco says that the clawback is not enforceable, and I agree with him, it's still in ptsb's contract.

  10. Sarenco

    Sarenco Frequent Poster

    Hi Brendan

    It seems to have been dropped from their T&Cs:-

    Terms and conditions for 2% cashback
    The following terms and conditions will apply in relation to the mortgage incentive (“the Promotion”):

    1. permanent tsb will only pay the 2% cash back on the amount of mortgage advanced, to loan applicant(s) who received full mortgage Letter of Approval** from permanent tsb between 11 January 2016 and 30 June 2017 or such other extended date as permanent tsb may decide (“the Qualifying Period”) where permanent tsb agree to advance a loan to be secured on the applicant’s principal private residence.
    2. The loan applicant(s) cannot avail of the Promotion if they are a tracker portability or negative equity customer, including any additional funds that may be drawn as part of the new mortgage application. It also does not apply to buy to let, equity release or home improvement mortgage loans. Customers who have already drawn all or part of their mortgage funds on or before 11 January 2016 are also not eligible for this Promotion.
    3. A loan applicant(s) whose mortgage Letter of Approval is dated after the Qualifying Period will not be eligible to avail of the Promotion (and similarly any Letter of Approval amending original Letter of Approval issued post ‘Qualifying Period will not be eligible).
    4. The payment of the 2% cash back will be made by permanent tsb by electronic funds transfer into the mortgage paying current account not later than 20 working days from the date of each stage of loan draw down.
    5. 2% cash back offer is not available together with €1000 offer towards your legal fees.
    6. permanent tsb reserves the right to change any of the conditions of the Promotion as it thinks fit subject to applicable.
    ** Prior to getting mortgage approval from permanent tsb we will need a property valuation. The valuation needs to be completed by a permanent tsb approved valuer and you can contact us to arrange the valuation. You must pay a valuation fee, which will be maximum of €130.00 which includes VAT but excludes valuer's travel expenses. Properties incomplete at the time of the original valuation will require, on completion, a final valuation, the fee for which is €65.00 which includes VAT but excludes travel expenses. In the event that permanent tsb declines your loan application the valuer's fee will be refunded.
    CiaranT likes this.
  11. Brendan Burgess

    Brendan Burgess Founder


    Thanks for the update.

  12. celticbhoy32

    celticbhoy32 Registered User

    I wouldn't be so quick to avoid KBC as you say Brendan. Switching to them and fixing for the year at 2.9% is tempting, especially if you're on a high LTV rate. Obviously you would have to be willing to switch again once your fixed rate expires.
  13. bbari1

    bbari1 Registered User

    Borrowing €300K, LTV between 60% and 80%. is UB (3.10%) not the better option than the AIB (3.30%)? UB passes on the rate cuts to the existing customers same as AIB. LTV bracket change isn't relevant as its 3.10% for all the LTVs.
  14. dave2015

    dave2015 Registered User

    In my experience UB don't automatically pass on, you need to phone up for a new rate list each time. On plus side they've kept competitive with pretty much all offers going the last few years as long as you meet loyalty criteria but you need to keep an eye on it. Also very easy to change bands, they do an online assessment, took 2 mins and as long as you're happy with figure that's it done, no fee.
    qwerty5 likes this.
  15. qwerty5

    qwerty5 Frequent Poster


    Their rate is now 3.0% if you have LTV of 60% or less + owe more than 200K and have a current account.
  16. mojoask

    mojoask Registered User

    Is that done based on the current balance or do they also take into account an updated valuation?
  17. Okokokoknic

    Okokokoknic New Member

    Yes, they no longer have the >350K requirement so:

    For all mortgages above 200K with UB CA
    3.0% LTV <60%
    3.1% LTV >60% & <80%
    3.5% LTV >80% & <90%

    For all mortgages below 200K with UB CA
    3.2% LTV <60%
    3.3% LTV >60% & <80%
    3.7% LTV >80% & <90%
  18. dave2015

    dave2015 Registered User

    They updated the valuation also. In my case they've inflated valuation 25% in 3 years without seeing it, which seems very generous for our location. I don't disagree with it too much as we've pumped a lot of money into interior and insulation etc. but I was expecting to have to at least fork out for a valuer to come inspect that as opposed to someone doing it over the phone. On that basis anyone even coming close to dropping a band should query, might be pleasantly surprised!
    qwerty5 and mojoask like this.
  19. Foobar

    Foobar New Member

    Last edited: Apr 27, 2017 at 9:58 AM
    No, not necessarily. I have been looking at these options recently. Take an example of a 90% LTV mortgage of 315,000 (house 350k). The EBS 2% cashback deal @ 3.7% for the lifetime of the mortgage is *cheaper* when compared to AIB's 3.5% rate.

    Some basic assumptions obviously, that rate doesn't change and that the 2% cashback is taken off the mortgage in month 1 - effectively reducing the mortgage (for example) to 88% with EBS compared to 90% with AIB. Using drcalculator website:

    AIB, total interest : 231,783.51


    EBS total interest: 231,188.00

    Having played around with the calculator at different numbers, the cashback deal more or less does offsets the higher interest rate.

    However, the other benefit of the cashback deal is that you can lower your mortgage amount by 2%. Thus bringing you 2% closer to the next LTV bracket, which would enable you get an even cheaper interest rate sooner that you would have without the cashback offer.
    Last edited: Apr 27, 2017 at 9:58 AM