Advice please,variable or fixed

K

kennygreen1

Registered User
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I have just recieved a letter from Permanent TSB,informing me that my current rate for my mortgage will end shorty.
I need advice on my options please.
My current rate and repayment is 5.50%-753.75euro
Options are as follows
Variable rate 4.69%-706.48euro
2 year fixed 7.25%-862.21euro
5 year fixed 8.75%-961.06

All i would like is a little advice as i know rates can go up and down,also if i was to choose variable,on a later date would i be able to change it to fixed.
Many thanks from a confused person:confused:
 
Really can't advise on whether you should fix or not, it's a very personal decision and related to your own attitude to risk. However regarding being able to switch from a variable to a fixed at a later stage, this is usually available while fixed rates are there, no one knows even the banks themselves whether or not a fixed rate will be available when you want it. When I was working in this area the answer we always gave was, yes you can switch to a fixed rate IF they are there at the time.
 
Hi kennygreen1,

Check your documents in case they stipulate that after your fixed term you revert to a tracker. Thankfully, our mortgage broker had written this into the contracts which we hadn't known until we were at the same stage as you are at now...
 
kennygreen1 said:
2 year fixed 7.25%-862.21euro
5 year fixed 8.75%-961.06
Click to expand...

Those rates are bordering on Usury,do not under any circumsatances fix,the ECB are currently dickering around with an interest rate cut.

ECB rate is currently 1%

Yes you can select variable now and change to fixed at a later date but a 5 year fix @8.75%!!!!,you would want your head examining even to remotely contemplate it.
 
Definitely check if you can revert to tracker (if you aren't sure, it could well be worth paying someone to look at your documents). If not, definitely variable, those rates are insane.
 
7.25/8.75 are nuts. Take your chances with the variable - if it goes above 7.25%, then we are all in trouble!
 
As wbbs says, it's a personal decision. But for what it's worth, this is what I'd do: -

Go with the variable rate but hedge your bets. If you could theoretically afford the repayments on the 5-year fixed rate, then set up a regular savings account paying the difference into it each month - €254.58. If your variable rate repayment goes down, increase the savings. If your variable rate goes up, decrease the savings. If the variable rate repayment goes over 8.75% during the next 5 years, dip into your savings account to subsidise it. My gut feeling - and this is only speculation - is that you'll end up with money in the savings account at the end of five years.

Liam D. Ferguson
 
LDFerguson said:
As wbbs says, it's a personal decision. But for what it's worth, this is what I'd do: -

Go with the variable rate but hedge your bets. If you could theoretically afford the repayments on the 5-year fixed rate, then set up a regular savings account paying the difference into it each month - €254.58. If your variable rate repayment goes down, increase the savings. If your variable rate goes up, decrease the savings. If the variable rate repayment goes over 8.75% during the next 5 years, dip into your savings account to subsidise it. My gut feeling - and this is only speculation - is that you'll end up with money in the savings account at the end of five years.

Liam D. Ferguson
Click to expand...

+1
This should be added to the keypost. Very well explained.
 
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