1 year or 3 year fixed?

T

TheBigD

Registered User
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Hey all,

Looks like I'm about to finally get on the property ladder after a few false starts. Hope to go sale agreed on a property later this week.

I've AIP with AIB and I know how much I need to borrow, I'm just trying to decide whether to go with a 1 year fixed or a 3 year fixed mortgage. 1 year fixed is 2.4% (at time of writing) and 3 year is 3.1%.

2.4% is a great rate imo, but I'm wondering am I better off paying the slightly higher rate for 3 years. My thinking is that Eurobank rate can't get much lower (they seem to be giving the impression that they don't want to drop to near zero rates like the UK or US), so could there be a chance that rates will be rising by the time my 1 year rate is up? Would I be better off with a three year fixed, that while is more expensive, is still a great rate.

Opinions please! :)
 
on our first mortgage we went fixed for the first few years. it gave us a sense of security knowing the definite amount to pay every month and 3.1 is a good rate but now i'm no expert on this, just my opinion.
 
Yes there is some appeal in knowing what you will have to pay for the near future. But there is always the risk that rates do fall further and you're paying more that you could be.
 
3.1% is historically an excellent rate. I would go for 3yrs. I doubt you will get anything close to this in a year's time on a variable rate. (Reason being, Irish banks are in trouble and need earn some money going forward)
 
Why not consider breaking up the mortgage into two (or more) units? You do not have to have the mortgage all in one lump. This is called a "split" mortgage. Many banks offer this on a 50/50 split of standard variable rate and fixed rate. However it should be possible to negotiate a split that suits you. This is one of the easiet ways to hedge the risks of large mortgages but that is consistently overlooked.
 
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