Key Post Mortgage rates - best buys

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

  1. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Feb 2, 2017
    EBS is now clearly the Best Buy

    If you are taking out a new mortgage or considering switching, you should apply directly to EBS. It's important that you go directly to EBS as this deal is not available through mortgage brokers.

    Their rates are slightly higher than AIB's, but they give 2% cash back without any conditions. In other words, if some other lender cuts their rates after a few months, but EBS doesn't, you can switch to the other lender and you do not have to give the cash back.

    upload_2016-8-22_14-18-27.png

    EBS Mortgage Rates


    The EBS 2% Back in Cash mortgage offer

    upload_2016-10-26_10-3-42.png



    All rates are the quoted rate, and not the APR. The difference is not significant.

    Local Authority Home Choice Loan
    AIB Rates
    Haven
    Ulster Bank
    ptsb - ptsb also gives a 0.5% discount in the first year which is not in the above tables
    KBC
    Bank of Ireland

    The only other lender is Pepper, but as they don't publish their rates, it's unlikely that they are good value. However, they may be the only option if you can't get a loan anywhere else due to a bad credit record. They cut their rates in July.

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

    KBC treats its existing customers with contempt. They cut their rates to attract new business but do not cut rates for existing customers. Today, you are a new customer. Once you draw down the loan you are an existing customer and will not benefit from any future rate cuts.

    While there is no guarantee that AIB will pass on rate cuts, they have done so in the past. Ulster Bank has given a commitment to give existing customers the same rates as new customers.

    Avoid KBC

    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?
     

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    Last edited: Feb 2, 2017
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  2. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Sep 18, 2016
    Summary of incentives for new customers

    EBS
    Pays 2% cash back - no restrictions
    Haven
    None


    AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC
    None

    BoI
    2% cash back and another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year

    Summary of incentives for switchers

    EBS
    Pays 2% cash back - no restrictions
    Haven
    The Irish Times reports that they pay €2,000 towards legal fees

    AIB
    Pays €2,000 to customers who switch to AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC Switchers
    €2,000 legal fees - clawback if you switch from them within 3 years
    50% discount on KBC Home Insurance for first 12 months
    BoI
    2% cash back and another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year
    Summary of incentives for movers

    EBS
    Pays 2% cash back - no restrictions

    Haven
    None


    AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC Home Movers
    50% discount on KBC Home Insurance for first 12 months

    BoI
    2% cash back + another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year
     
    Last edited: Sep 18, 2016
  3. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Aug 22, 2016
    You should not take out a fixed rate mortgage

    Irish variable mortgage rates and fixed mortgage rates are around 2% higher than they are in the rest of the Eurozone. New lenders are expected to come into the market in the near future. When they do, mortgage rates are expected to fall. So you should not take out a fixed rate mortgage. If you take out a mortgage where the rate is fixed for two years, you will not be able to switch to a new cheaper lender.

    Bank of Ireland in particular will try to encourage you to fix. But don't.

    You do not need to go to a mortgage broker

    Mortgage brokers do not have access to the best deal as the EBS 2% cash back is only available to customers who apply directly.

    Mortgage brokers get paid commission by the lenders. Some pay more than others. So they may well steer you towards the lender which pays them the best commission.

    Only use a mortgage broker if you get turned down by a lender.
     
    Last edited: Aug 22, 2016
  4. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Aug 22, 2016
    You should look for long-term value and not go for a deal which is attractive in the short-term with the intention of switching later.

    Many people who availed of a first year incentive with the intention of switching after the first year, never got around to switching and ended up paying high rates for the full term of the mortgage. So don't rely on switching.

    Many others found that they could not switch for one of the following reasons:
    • Mortgage arrears
    • Lower income due to new job, or maternity leave or redundancy
    • Change in family circumstances e.g. more kids or separation
     
    Last edited: Aug 22, 2016
  5. Brendan Burgess

    Brendan Burgess Founder

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    30,717
    How much can I borrow?

    As a first time borrower, you can borrow up to 90% of €220k and 80% of the balance.

    upload_2016-3-10_8-59-57.png


    There is also a limit of 3.5 times your income. So if you have an income of €50k, the maximum loan would be €175k.

    It's probably best to apply for mortgage approval early in the year

    The lenders can make exceptions to these rules, but they are subject to strict quotas from the Central Bank for the amount of exceptions they can make. These quotas are on a calendar year basis, so if you apply for an exception towards the end of the year, you are unlikely to get it as they may have used up their quota.

    If you can keep your borrowings to 80% of the value of the house, you can get a much lower interest rate

    I recommend AIB who charge 3.75% for loans in excess of 80% LTV and 3.55% for loans less than 80% LTV.

    But the difference is even bigger for Ulster Bank which charges 4.3% for loans in excess of 80% and 3.7% for loans of less than 80%.

    And if you are borrowing more than €250k and less than 80%, you can get a rate of 3.35% with Ulster Bank.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    The media have reported that a new lender will be in the market within a few months. I understand that they will be charging 2.95% for 80% LTV mortgages and 2.8% for 60% LTV mortgages.

    They will also be allowing borrowers whose LTV has fallen to move to the lower rate.

    They may have a cap on their rates e.g. "The rate will not exceed 5% within 10 years".

    They will also have fixed rates.

    I don't know how often I have to say it. But people should not be signing up to BoI or KBC for 5 years.

    I don't think that they should be fixing either.

    Brendan
     
  7. Brendan Burgess

    Brendan Burgess Founder

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    30,717
    Folks

    I have updated this thread. Let me know if you spot any errors.

    I have included a quick post on incentives, but I have not had the time to check this out. So I would particularly welcome clarification of the up to date position on incentives. For example, do they apply to all customers or just to switchers?

    Brendan
     
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  8. Brendan Burgess

    Brendan Burgess Founder

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    KBC stays on the Avoid List, as they are not automatically passing on rate cuts to existing customers.

    Brendan
     
  9. ned official

    ned official Registered User

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    21
    But surely they are if u arrange apt with them and get valuation done. only takes 20 min and 120e not so hard
     
  10. Brendan Burgess

    Brendan Burgess Founder

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  11. Bazz71

    Bazz71 New Member

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    2
    Brendan

    i take it you still think EBS are offering the best value at the moment with the cash back offer even though rates are higher than AIB.
    Two thoughts:
    1. do EBS offer reduction in rates to all customers
    2. historically my impression is that the "building societies" such as EBS were not consistently competitive.
    I am with BoI (since March 15) and on a rate of 4.3% on mortgage (LTV 68%) of over 500k and they did not budge on the variable when i threatened to move so i want the next move to be a longer affair!
     
  12. jim

    jim Frequent Poster

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    I disagree with Brendan in that KBC should be avoided. I continue to find them better to deal with than any other Bank - that's just my personal experience but good customer service counts for a lot. They have a very competitive rate for new customers and they are now offering rate reductions to existing customers as long as the LTV has dropped and this is supported by a valuation costing €130. Paying €130 for the valuation is a no brainer if it results in significant monthly savings which I suspect it will for most existing customers. Its also very easy to arrange.

    So I don't see why they should be avoided.

    I would avoid AIB and BOI as they are a nightmare to deal with and arguably are not as competitive as KBC.

    EBS does seem to be the best deal presently.
     
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  13. Gordon Gekko

    Gordon Gekko Frequent Poster

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    1,677
    The KBC "concession" isn't enough though.

    Everyone's rate should drop when the reference-rate drops...plain and simple.

    Personally I found Ulster Bank great to deal with; 3.1%, rate changes automatically passed on, and €1,500 towards my legal fees.
     
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  14. Markel

    Markel Registered User

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    While I agree with you, the fact is they don't! I think the revised KBC offers look fair - they have the right idea from what I can see (no gimmicks like cashback, just a competitive rate). For those borrowing 80%+ KBC are good value now that they are extending rate drops to new customers (with a small administrative burden thrown in for good measure).
     
  15. Brendan Burgess

    Brendan Burgess Founder

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    Hi Markel

    Have you looked at KBC's terms and conditions?

    They have it set out quite clearly that existing customers are not entitled to new customers' rates. So while today, you can apply for the new customer rate, they may pull that at any time.

    And why should they exploit customers' inertia? Why should a borrower have to be on alert all the time to watch their rates and pay for a valuation every time KBC cuts their rates?

    That is a gimmick. They cannot be trusted. Unless they give a commitment to treat existing customers fairly.

    Brendan
     
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  16. Sarenco

    Sarenco Frequent Poster

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    For the sake of balance, Ulster Bank introduced a new loyalty rate last year which wasn't automatically passed on to eligible existing ("loyalty") customers.

    At this stage, is there a single mortgage lender that doesn't offer some kind of incentive to new customers that isn't also extended to existing customers?

    At least KBC now allow existing borrowers to move LTV brackets - that's certainly not the case with all lenders. I also like the fact that KBC compete on the basis of the rates offered.

    Frankly, I wouldn't "trust" any lender - I doubt many would given our recent history. All banks exploit customer inertia - that's the nature of the beast.
     
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  17. Brendan Burgess

    Brendan Burgess Founder

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    Is this the product for current account holders with a mortgage over €200,000?

    If so, you are technically correct on this one product, and presumably on the €350k + product as well.

    But if Ulster Bank cuts the rate on that product, I presume that they will cut the rate for existing customers as well.

    The difference is that KBC cuts rates for new customers and does not pass them on to any existing customer.

    Brendan
     
  18. paddy1234

    paddy1234 New Member

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    3
    Am I right in saying that EBS is only better than AIB if you switch your mortgage after getting the 2% cash back. The 2% cash back doesn't offset the extra 0.2% higher rate over the lifetime of the mortgage?
     
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  19. HouseHunter2016

    HouseHunter2016 Registered User

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    Brendan, will EBS offer the 2% cashback to a customer who currently has a mortgage with them, but who will be moving house with a new EBS mortgage? It's the idea of "new" customer that i'm unclear on.

    I am currently approved in principle with AIB as their variable rate is good, but I'm considering trying for a cashback option and then switching to AIB.
     
  20. Brendan Burgess

    Brendan Burgess Founder

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    I understand that they do give the 2% to movers, but you would have to check with them directly.

    Brendan