Which mortgage, 150k needed

Discussion in 'Mortgages and buying and selling homes' started by Panthera Tigri, 6 Jan 2019.

  1. Panthera Tigri

    Panthera Tigri Registered User

    Posts:
    14
    Hi,

    Can anyone help me choose best mortgage for my situation. I read best buy but a bit bewildered.
    36 years old, single.
    58k salary.
    150k mortgage needed.
    250k savings going towards house.

    I want to borrow over shortest time possible even if it means stretching myself.
     
  2. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    36,813
    This is the wrong approach.

    Under Irish law a borrower is entitled to repay a variable mortgage in part or in whole without penalty.
    So you should apply for a normal 25 year loan and then overpay if you wish.

    The worst thing for you is to stretch yourself and then hit a bump e.g. a rate rise or loss of income and go into arrears. You will not be able to switch to another lender if that happens.

    Brendan
     
  3. Panthera Tigri

    Panthera Tigri Registered User

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    14
    Thanks Brendan,

    The best buy section recommends fixed though. Do same rules apply?
     
  4. RedOnion

    RedOnion Frequent Poster

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    2,598
    The reason is, with the exception of AIB, the banks are offering better value fixed rates.

    With UB, you can repay 10% of the balance early each year without penalty.
     
    NoRegretsCoyote likes this.
  5. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

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    244
    I'd agree with @RedOnion .

    There's nothing wrong with a twenty-year mortgage term over a thirty-year one. Particularly if you want to retire early and have no kids or other big outgoings. Lower than twenty years would push you, although Irish banks are generally very relaxed about interest-only periods and other types of restructures if your circumstances change.

    Variable rates give you the option of repaying early but at the moment the value is all in the fixed rates.

    I have a one-ear fixed rate term with BoI and they allow the repayment of 10% per month without penalty. It means I'll finish paying a 30-year term about six years early.

    I'd recommend a 25-year term with UB or BoI and overpay from the start. If you have extra lump sums you can bank them til the fixed-rate term ends, transfer to variable for a week, pay off the lump sum, and then revert to a fixed rate.
     
  6. Panthera Tigri

    Panthera Tigri Registered User

    Posts:
    14
    So Brendan's recommendation on fixed is invalid?
    Thanks,

    How long would the fixed term last with UB?
     
  7. Panthera Tigri

    Panthera Tigri Registered User

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    14
    Im looking at the UB 2 year fixed at 2.3 percent.

    Can anyone tell me what happens after the 2 year period. Do you just move to a variable rate or can you go back to fixed?

    Thanks
     
  8. newirishman

    newirishman Frequent Poster

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    756
    If you don't do anything, you will go onto the standard variable rate. However, you can chose any other rate (fixed or variable) that might be applicable for you at the time.
    This is assuming Ulsterbank will have anything on offer of course, which seem however likely.
     
  9. Panthera Tigri

    Panthera Tigri Registered User

    Posts:
    14
    Thanks, so as long as they are still doing fixed rate offers at the time mine runs out I can just switch to one of them?
     
  10. RedOnion

    RedOnion Frequent Poster

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    2,598
    Yes, exactly.
     
  11. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

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    244
    At the moment the yield curve is pretty flat: meaning it is nearly as cheap to borrow for a short period as a long one.

    Normally you have to pay more for the privilege of a longer term. Essentially it is insurance against interest rates rising.

    But the difference between one and ten year rates at the moment is very small.


    Also, nearly all banks are pricing their variable rate higher than their fixed rates. It used to be the opposite. A variable rate was lower, but you ran the risk of it rising and you having to pay a lot more.


    Anyway, this is the specific retail interest rate situation that pertains in the Irish mortgage market at the moment. All of this could change! Make sure the choices you make are robust to changes in the marketplace.