3 year fixed rate mortage coming to an end

B

Bonnie2013

Registered User
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20
Hi All,

When I bought my first home I went with a 3 year fixed rate mortage paying €963.32 (4.34%) and it is now coming to an end and I have been offered the following by ICS and I would like to ask your advice please:-

Existing Variable LTV Rate PDH - (4.80%) - €1,011.50

2 Year Fixed PDH - (4.99%) - €1,029.82

3 Year Fixed PDH - (5.19%) - €1,049.29

5 Year Fixed PDH - (5.69%) - €1,098.78

10 Year Fixed PDH - (6.49%) - €1,180.33

Money is very tight so not sure which one to go for.

Many thanks :confused:
 
If money is very tight, go for the most expensive option in the above list that you can afford. I know this doesn't make much sense but the fact is, if you can just about afford the 5-year fix at 5.69%, you won't be able to afford a rise of 1% in the SVR.

To counter the risk of rates rising, I'd be looking at a minimum of the 5 year fixed rate if I could afford it. This is assuming you have no intentions of moving home in the next 5 years (there would probably be penalties for early repayment of a fixed rate).
 
Hi Bonnie
If money is tight go for the fix term that best suits your circumstances namely, work situ, current expenses, for example current childcare could be gone in 3 years with schooling so factor these issues into your decision and you should be ok. The cost difference between 3 and 5 is not too big and gives you certainty for a longer period so I would agree with Ronaldo but factor personal circumstances also to come to the best decision for you Good luck
Padraic
 
Thanks for the advice, I really appreciate it. There will be changes in work so not sure about my job at the moment. If I do fix again and need to to ask for interest only would I be able to do that on a fixed rate?
 
Bonnie2013 said:
Thanks for the advice, I really appreciate it. There will be changes in work so not sure about my job at the moment. If I do fix again and need to to ask for interest only would I be able to do that on a fixed rate?
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Interest Only is going to be difficult on any rate at the moment. Probably slightly less so on the variable rate but you are likely to have missed payments and a thrashed credit history by the time a bank agrees to put you on interest only.

Things may not be that bad, I'm just speaking from what a friend experienced last year and things change month-to-month with the banks these days.
 
The ECB rate has just come down again and, currently, it looks like that way for the foreseeable future, therefore I would not fix. In any case those fixes are riduculous.

Any chance of more details, term, your age, NE or positive equity. I'm just wondering if adding a few years to the mortgage might ease things. Doesn't sound good when you mention interest only as an option. Is your credit rating sound and your job secure employment.
 
If money is tight then you need to make every penny work as best it can for you. Therefore I would take the cheapest variable which is only 50 or so euro higher than your current payment.
Instead of 'giving' the bank a higher interest rate by moving to a fixed rate, I would then overpay up to the most you can every month, so for example the highest fixed is close to 1200. You could try overpaying by 150 euro a month which is going directly to capital instead of being the cost of credit margin the bank gets.
 
Just a point of clarification re "fixed rates". The Bank does not achieve a higher profit on these rates. In offering a fixed rate a Bank will hedge the associated risk by buying forward on the market. This cost is then passed on to the client. The margin achieved by the Bank remains constant!
 
'The market' and the 'the bank' are pretty much the same to the customer.
It's the margin they are being charged, and it would be better used to their advantage than paid to the 'lender' :)
 
Mrmr said:
If money is tight then you need to make every penny work as best it can for you. Therefore I would take the cheapest variable which is only 50 or so euro higher than your current payment.
Instead of 'giving' the bank a higher interest rate by moving to a fixed rate, I would then overpay up to the most you can every month, so for example the highest fixed is close to 1200. You could try overpaying by 150 euro a month which is going directly to capital instead of being the cost of credit margin the bank gets.
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+1 for this option.
 
Just a few more details:- I am 47 and mortgage will be paid when I'm 70 so cant add more years to the mortgage. House is not in negative equity. At the moment my credit rating is good but do have a massive credit card bill (€15,000) to pay off. At the moment paying the minimum amount rougly €425 per month. I earn €35,500 PA and live alone.

Thank you all for all your help. Think I need a second job.......
 
Bonnie2013 said:
Just a few more details:- I am 47 and mortgage will be paid when I'm 70 so cant add more years to the mortgage. House is not in negative equity. At the moment my credit rating is good but do have a massive credit card bill (€15,000) to pay off. At the moment paying the minimum amount rougly €425 per month. I earn €35,500 PA and live alone.

Thank you all for all your help. Think I need a second job.......
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That doesn't sound good.

Your monthly taking home pay should be around €2,325. If you're only paying €425 towards your mortgage, what do you spend your other €1900 on? What did you buy with your €15k credit card debt?
 
Bonnie2013 said:
. At the moment my credit rating is good but do have a massive credit card bill (€15,000) to pay off. At the moment paying the minimum amount rougly €425 per month. Think I need a second job.......
Click to expand...

I too agree with MMR on overpaying the mortgage, especially now you've told us you will be 70 by the time your current mortgage is paid off.

But before you tackle the mortgage, you really need to sort out the credit card. That debt is very expensive. So as you mentioned a second job, why not, it could be an excellent time to get one for the xmas season, in a supermarket/restaurant/pub etc. Use the extra cash to pay down the credit card, a really good goal that. Then you'll have a lot more spare cash and won't feel the stress of the mortgage.
 
I agree Bronte, I really need to sort my credit card debt. Used my credit card to help out family and never got it back so no more being a soft touch, second job is the answer. I have decided to go with the variable as I like the option of being able to overpay the mortgage.

Thanks everyone
 
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