# I switched from BoI to KBC



## Carmel (3 Dec 2014)

We bought a house in South Dublin last year with a BoI mortgage at 4.5 percent. It has increased in value since then and we think the loan to value ratio is around 60percent now.
We are considering switching to KBC, it looks like we could get a variable rate of 3.75percent with them or 3.55percent if we changed our current account to KBC. This would mean a sabing of around 100e a month on our mortgage repayments.  

We informed BoI that that we were considering switching and they have come back with an offer of 4.2 variable or 3.95 for a 5 year fixed.

Any thoughts on the pros and cons of switching? I don't know what KBC are like to deal with? Do they have good internet banking?


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## stefg (3 Dec 2014)

Hi Carmel,

I have just switched from AIB to KBC for my current account as we took a mortgage with them and wanted the reduced mortgage offer. 

 I have found KBC to be excellent so far, customer service is excellent as they are very responsive and helpful.  Their online offering is not as comprehensive as the AIB one but it is sufficient for my needs.  I like the ability to use my phone to make payments rather than having to use the AIB calculator-like card reader.  The quarterly fees and transaction charges are much lower when compared to what I was paying to AIB.

KBC also provided us with free house insurance for 1 year with our mortage.

I have also switched my credit card because they offer 1% back on groceries and online purchases up to €10 a month.  I clear the card each month so I'm not sure if their credit charges are higher but it made sense for me to have my credit card and current account in the same bank and to get something back on my spending.

The one thing I have found a little more difficult is to get large amounts of cash.  They are a cashless bank so you can only withdraw cash on your card up to a limit of €700 a day and you can't call into a bank to get more.  I recently needed to pay for something in cash and had to transfer money electronically and then visit a bank.

Overall I'm a lot more satisfied with KBC than I was with AIB.


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## gnf_ireland (5 Dec 2014)

Carmel - can I ask who you approached around this? I rang the mortgage centre at BOI as I am planning to do the same thing and they hold me there were no deals available, even though my LTV is less than 50% 

Next call now is KBC


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## Carmel (5 Dec 2014)

*BoI*

Hi there
I first contacted the person that we arranged our mortgage with, but she forwarded my query to another mortgage advisor. He then told me that it was the mortgage pricing unit who made decisions on mortgage rates. This happened just last week. He told me initially that the last time he had made the inquiry on behalf of a customer was two months ago, and at that time the answer was that there were no offers available. However, when he forwarded my query last week, they came back with that offer, so it may be a new policy.


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## leonmahon (6 Dec 2014)

@Carmel - any idea if BOI's offer has you switched to a lower LTV band or just offered you a new special rate?


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## Carmel (6 Dec 2014)

Hi Leonmahon
I don't know, they just responded to my query with the offer above with different alternatives for a variable or fixed rate.


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## Brendan Burgess (6 Dec 2014)

Carmel

That is great news. Bank of Ireland is actually trying to retain customers.

But they are doing nothing more than offering you the rate which they would offer to a new customer. In other words, they are treating existing customers with some respect.  BoI Rates 

Anyway, you should still switch to KBC - they are .65% cheaper, which on a €300k loan would be almost €2,000 a year.

If more people switched, Bank of Ireland would have to cut their rates to hold onto business and this could cause variable rates to fall towards the euro area average of 2.6% - probably less for low LTV mortgages. 

They are desperate to get customers to fix for 5 years, as they expect these extortionate variable rates to fall, as I do. 

I don't think you should fix. 

Brendan


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## leonmahon (7 Dec 2014)

Brendan Burgess said:


> Anyway, you should still switch to KBC - they are .65% cheaper, which on a €300k loan would be almost €2,000 a year.



Brendan, you have previously advised me to wait and see if BOI reduce their rates before considering switching. Do you think that the waiting time is over, rates won't reduce and I should switch to KBC?


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## Brendan Burgess (7 Dec 2014)

Hi leon

http://www.askaboutmoney.com/showpost.php?p=1406374&postcount=26

That was before the other lenders insisted publicly that they would not be reducing mortgage rates. 

I also suggested that you should ask BoI for a rate cut. 

Carmel is getting a 0.65% reduction by moving. I think that is worth going for. 

But given the banks' public insistence that they will not be dropping their rates and given the failure of the Minister for Finance to do anything about the extortionate rates, I think you should probably switch.  

If there is a big switch, then I think that the banks will cop themselves on and introduce new rates for low LTV borrowers.

Brendan


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## gnf_ireland (7 Dec 2014)

> However, when he forwarded my query last week, they came back with that offer, so it may be a new policy.



Interesting as I rang the mortgage centre directly on Friday afternoon, and was told no deals would be available

I have a LTV of less than 50% currently, a income  to mortgage multiplier of less than 2.5 times, and have been overpaying my mortgage for the last year both in terms of my monthly repayments and also made a lump sum payment against it worth nearly 15% of the mortgage value.

Either way, I am going to talk to KBC and see what happens. Really surprised they were so adamant that there were no deals to be done !


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## leonmahon (8 Dec 2014)

Brendan Burgess said:


> Hi leon
> 
> http://www.askaboutmoney.com/showpost.php?p=1406374&postcount=26



Thanks Brendan. 

@gnf_ireland - please let us know what KBC have to say.


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## Carmel (9 Jan 2015)

Thanks for all the feedback. We have decided to proceed and will be applying to switch our mortgage to KBC. Will post again when we are further down the line.


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## Brendan Burgess (10 Jan 2015)

Hi Carmel

I am a bit confused. Did BoI offer you a deal and then withdraw the offer? Or did you just decide that the offer was not good enough?

Brendan


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## Carmel (24 Feb 2015)

Brendan Burgess said:


> Hi Carmel
> 
> I am a bit confused. Did BoI offer you a deal and then withdraw the offer? Or did you just decide that the offer was not good enough?
> 
> Brendan


Hi Brendan
We decided that the offer from BoI was not good enough. We should be able to get a rate of 3.55% variable with KBC, instead of 4.2 variable with BoI (they also offered 3.95 for 5 year fixed but we don't want to fix). The stage we are at now is that we have approval in principle, had our house valued last week and are just waiting for the loan offer now.


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## Carmel (4 Mar 2015)

Tks Bronte
We have the loan offer from KBC now, 3.55 percent including discount for opening a current account with them.


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## Butter (4 Mar 2015)

Well done Carmel. It's good to see people voting with their feet & wallets. The more people who make an effort to switch for a better deal, the better. Once BoI and AIB start losing market share they'll sharpen up on their SVRs.


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## sadie (5 Mar 2015)

This is interesting. We have a 'small' mortgage with a low LTV. €78k over 24yrs. We have a BOI mortgage at 4.2%. If we got an SVR of 3.55% with KBC, we might think its not worth it because it'd be hassle to switch to 'only' be saving 30 euros per month, but this equates to a saving of over €8k over the lifetime of the mortgage.

Summary
Principal: €78,000 Payment: €430.32
Interest: 4.2%
Start date: Mar 2015 Total interest: €45,932.66
End date: Feb 2039 Total payments: €123,932.66

Summary
Principal: €78,000 Payment: €402.77
Interest: 3.55%
Start date: Mar 2015 Total interest: €37,998.86
End date: Feb 2039 Total payments: €115,998.86 
SAVING: €7934

used https://www.drcalculator.com/mortgage/ie/


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## shoegal (18 Mar 2015)

I've been looking at KBC also regarding a switcher mortgage, the rates do look attractive but I notice on their "switcher" webpage they mention the offer "applies in only the first year", I haven't asked them yet but I imagine the rate would increase after the first year? has anyone else checked this with them?


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## Brendan Burgess (18 Mar 2015)

Hi shegal

There is an asterisk and it refers to the following only. 

[broken link removed]

*50% off KBC Home Insurance for year one* – Available to new residential mortgages i.e First Time Buyers, Movers and Switchers until 31st December 2015.*

*Offer only applies in the first year and excludes Buy to Let (BTLs) properties. Refund equal to the balance of the premium may be sought if the home insurance policy is cancelled within 12 months. KBC Home Insurance products are exclusively underwritten, administered and provided by Zurich Insurance plc, subject to Zurich Insurance underwriting terms and conditions.


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## shoegal (18 Mar 2015)

Hi Brendan, thank you, that would make more sense, their site is a little confusing though as if you look at this page
[broken link removed]

They have two blue panels where they outline the rates, in the second one - at the bottom of the page- they outline the offer where if open a current account you get an extra reduction on the rate and there is a single asterisk there, which seems to point to the text you've highlighted above. I'm planning on calling them this week about it anyway so will double check.


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## shoegal (18 Mar 2015)

Just read their "Important Information" where it says "50% Off only applies in the first year" so it must apply to the Home Insurance offer as Brendan said. Thank you.


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## Fran (24 Mar 2015)

hi We got approval in principle from KBC for 3.55% if we moved current account similar to above situation. BOI just called today offering a reduction from 4.25% to 3.9% rate with immediate effect which equates to €90 saving a month. If we went with the 3.55% offer with KBC we would save an additional €44 a  month but we would have all the costs (roughly €1k) and hassle of moving and their rates may go up at any time also. I think I know the answer but am I better sticking with BOI at this stage and perhaps moving current account to another provider with free fees?


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## Carmel (12 May 2015)

Hi Fran
I started this post when we were thinking of switching to KBC. We went ahead with it and recently paid our first mortgage repayment to KBC, which was 100e lower than our monthly payment to Bank of Ireland. With regards to your query above, we didn't have costs anywhere near €1000. KBC offered us €1000 to cover our legal fees and we got half price home insurance with them. Our solicitor cost less than 1100e and we had to pay 127e for a valuation. So, it was nearly break even by the time we got the 1K back from KBC and took up their offer of home insurance. You do need a bit of cash flow though as the 1000K from KBC is provided within 30 days of the mortgage draw-down.

I know that there is a a bit of hassle doing the paperwork but when you add up the savings they are very good. I work in the public sector and haven't seen a salary increase for quite a while, so I consider 100e extra a month in my account quite a good payback for a bit of paperwork


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## Sarenco (12 May 2015)

Carmel said:


> Hi Fran
> I started this post when we were thinking of switching to KBC. We went ahead with it and recently paid our first mortgage repayment to KBC, which was 100e lower than our monthly payment to Bank of Ireland. With regards to your query above, we didn't have costs anywhere near €1000. KBC offered us €1000 to cover our legal fees and we got half price home insurance with them. Our solicitor cost less than 1100e and we had to pay 127e for a valuation. So, it was nearly break even by the time we got the 1K back from KBC and took up their offer of home insurance. You do need a bit of cash flow though as the 1000K from KBC is provided within 30 days of the mortgage draw-down.
> 
> I know that there is a a bit of hassle doing the paperwork but when you add up the savings they are very good. I work in the public sector and haven't seen a salary increase for quite a while, so I consider 100e extra a month in my account quite a good payback for a bit of paperwork




Just to put Carmel's savings into context, €100 per month deposited in a simple deposit account with an interest rate of just 1.5% APR will result in a lump sum of €36,761.86 after 25 years.  That's a pretty decent return for a couple hours of hassle.  

There's no doubt about it - borrowers should refinance to the lowest possible rate as often as possible - over time the savings are really impressive.


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## Brendan Burgess (12 May 2015)

Sarenco said:


> €100 per month deposited in a simple deposit account with an interest rate of just 1.5% APR will result in a lump sum of €36,761.86 after 25 years



It's well worth switching for the saving, but that is not the correct calculation.

1) The balance will be reducing over the next 25 years, so Carmel will not be saving €100 a month for 25 years.
2) Why would you put it on deposit at 1.5% when you could be using it to pay down your mortgage at 3.5%?

It is always better to assess these switching decisions on an annual basis. This year, Carmel will save around €1,200, so it's well worth doing. 

Brendan


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## Sarenco (12 May 2015)

Brendan

I was simply making the point that a small amount saved over a prolonged period of time compounds into a significant figure.  

The calculation is correct: start with €100 and add €100 per month over 25 years at a compound rate of 1.5% and you will arrive at the lump sum stated above.  

I didn't say anything about the source of the €100 or the best investment option for the €100.

You can think of returns over whatever period you like - I prefer to think of returns over 25 year periods.  

Why is it always better to assess these switching decisions on annual basis?  Why not on a semi-annual basis or once every five years - what's special about 12 months?


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## Brendan Burgess (13 May 2015)

You were clearly commenting on Carmel's situation, so anyone reading it would think that you were calculating the benefit to Carmel of switching.

There are many reasons to assess these on an annual basis

It prevents the type of error that you have mad, which is a very common error.
Most people do not understand the value of money. Had your calculation been correct, what would the €36k represent? It would actually be 2040 euros which would need to be discounted back to 2015 euros to mean anything. 

People's circumstances change - they pay off their loan early, they remortgage. 

And Carmel can revisit the decision annually (or less often.) For example, she might well switch back to BoI in a few months if they introduce a rate for new business.


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## Sarenco (13 May 2015)

Brendan Burgess said:


> You were clearly commenting on Carmel's situation, so anyone reading it would think that you were calculating the benefit to Carmel of switching.



Sorry Brendan - you may have jumped to that conclusion but that was neither stated nor implied in my post.  On the contrary, I was clearly putting a seemingly modest monthly saving into a long term context.

Carmel did not tell us the outstanding principal amount or term of her mortgage so how could anybody have thought that I was calculating the interest saving resulting from the refinancing (assuming the interest rate remains constant throughout the term and the loan is amortised in line with the original schedule)?

I also disagree with you that refinancing decisions should only be assessed on an annual basis (or any other regular interval).  It seems obvious to me that borrowers should refinance their mortgages as soon as it makes financial sense to do so.  In Carmel's case the refinancing appears to have been cost free (when the free house insurance is taken into account) so Carmel should refinance in the morning if a better deal comes along - if there's no penalty why wait?


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## Brendan Burgess (13 May 2015)

Carmel said:


> We went ahead with it and recently paid our first mortgage repayment to KBC, which was 100e lower than our monthly payment to Bank of Ireland.





Sarenco said:


> Just to put Carmel's savings into context, €100 per month deposited in a simple deposit account with an interest rate of just 1.5% APR will result in a lump sum of €36,761.86 after 25 years. That's a pretty decent return for a couple hours of hassle.





Sarenco said:


> Sorry Brendan - you may have jumped to that conclusion but that was neither stated nor implied in my post. On the contrary, I was clearly putting a seemingly modest monthly saving into a long term context.




Carmel said she was saving €100 a month.
You start your post by saying "Just to put Carmel's savings into context" 

I must apologise Sarenco, it was totally unwarranted of me to jump to a conclusion that you were talking about Carmel or her savings.   You just picked a round sum which coincidentally happened to be the amount Carmel is saving and some computer glitch typed "Just to put Carmel's savings into context"  into your post.  

Brendan 

p.s. Please re-read the Posting Guidelines, in particular no 19.


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## Sarenco (13 May 2015)

Brendan Burgess said:


> You start your post by saying "Just to put Carmel's savings into context"


 
Exactly - I was simply putting Carmel's monthly saving of €100 into [some form of] context by using a simple hypothetical interest rate (as you no doubt know, 1.5% is slightly above the average, risk-free, real rate of return on gilts over the last century) and interest period.  I wasn't trying to suggest or imply that the resulting figure reflected the interest that would be saved by Carmel from the refinancing but it would have been very odd to pick a figure other than €100 for the purposes of the example. 

I didn't think anything in my post was particularly off topic but please feel free to delete same if you disagree.


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