Advice Sought on Mortgage Options (Have to go with First Active)

Hello Folks,

Myself and my partner went to First Active today to get mortgage approval for our affordable house. Because it is through Dublin Docklands First Active are the only bank offering mortgages so we have to use them, which isn't great but there is no other option at the moment.

The two options seem to be fixed (2,3 or 5 years) or tracker mortgages (the loan advisor said the variable rate was a terrible idea). I was just wondering on what the general consensus is at the moment as to which is the better option?

The current rates are:

Residential Fixed Rate
2 Year Fixed 6.6%* APR
3 Year Fixed 6.5%* APR
5 Year Fixed 6.4%* APR

Tracker Variable Mortgages
Residential Trackers < 80% LTV 6.4% APR
Residential Trackers > 80% LTV 6.6% APR

We are taking a loan of €207,000 probably over 25-30 years. Current rent is €1300 a month so we would be looking to pay roughly the same as this including extras.

The loan advisor seemed to be pushing us towards a fixed rate of 3 or 5 years, was just hoping to get a bit of impartial advice on the matter here.

I know it's not possible to predict what's going to happen with the ECB rate but any advice would be much appreciated. My economist friend is out of the country and we need to make a decision in the next few days

Oh and they also seemed to be pushing their Mortgage Repayment Protector. Is this worth availing of, I read through the terms and it didn't impress me much but it's not an area I know anything about.

I'd appreciate any help. Thanks in advance

It's really terrible that you have to go through just one bank.
Evidence of that is that I've been offered 5.99% for an affordable housing mortgage because they know I could go elsewhere!?

Have you thought about their 50/50 mortgage? We are going 20% variable and 80% fixed for 2or3 years - can't decide which yet. The 20% variable works for us because we'll be in a position to pay off a lump sum next year. Might not suit you, but just thought I'd mention it.

There are several lenders that offer Affordable Housing scheme mortgages. Is the First Active restriction something that's unique to the Docklands?

If you do a search on Askaboutmoney for Mortgage Repayment Protection, you'd probably dig up some useful discussions on it. On the one hand, it's the only form of protection available against redundancy. On the other, it only pays out for a maximum of twelve months and only if you're out of work for each of those twelve months, which isn't great.

Depending on your circumstances, Income Protection can sometimes be a better option. Only covers against illness or accident but will continue paying right up to retirement age and the premium qualifies for tax relief in full at your highest rate.

Thanks for the replies,

The mortgage only being available through First Active is unique to the Docklands Affordable Housing Scheme, none of the other lenders have agreed to the terms.

It's not ideal but at this stage, after waiting so long, we will go ahead with it anyway.

Will look into income protection, redundancy is unlikely to be an issue in either of our jobs so I'm not that keen on the mortgage protection.

Any suggestions on whether the tracker or fixed mortgage option is the better one would be much appreciated.

We have to make a decision in the next day or so!

Thanks

Any last minute advice would be much appreciated.

Thanks

blobert said:

Any last minute advice would be much appreciated.

Thanks

Click to expand...

It's hard to say - it depends if ECB rates rise any more in the next 2 /3 years. If they do - then the fixed rate would be the better option obviously - but no one knows for sure. There was a report out today that mentioned forecast of ecb cuts to 3.75 in 2009 . But some of those forecasts aren't worth the paper they are written on.
The fixed rate would mean peace of mind for 2 or 3 years - with the downside that you would lose out on any ecb rate drops - if they happen.

It seems Ulster Bank have signed up as well now however a quick glance at their rates suggest they are about the same if not worse than First Active.

Hi Blobert,

It's been some time now since you undertook the mortgage. How is it going for you? I am about to sign into smth similar myself & if you could share any feedback would be most appreciative.

Thanks,
BB2008