Advise on Mortgage - Fixed or Variable?

L

lisand

Guest
At present I am on variable, costing 1448.00 pmTo go on Fixed would cost me 1500.00 (?) pm for 3 years do you think i should go with the fixed i was on fixed till this month paying 1200 pm so as you can see its going to jump alot (worried)
 
If you are worried about rising rates, then you should consider fixing. The rates seem fairly stable at the minute, but anything could happen over the next 3 years.

But I really advise that you look around for the best fixed rate and not just take what is offered to you by your existing lender, which could be substantially higher than the best in market.
 
You will be better off in most cases by going on an ECB tracker rate instead of the "standard variable" rate. All lenders tracker rates are lower than their "standard variable" rate. Regarding the fixed rate - it will give you peace of mind and fixed repayments but it may not save you money. The fixed rate did save you money over the last 3 years - but it may not be the same story over the next 3 years. No one knows for sure - but it looks like rates may even start to come down again early next year.
 
irishlinks said:
You will be better off in most cases by going on an ECB tracker rate instead of the "standard variable" rate. All lenders tracker rates are lower than their "standard variable" rate. Regarding the fixed rate - it will give you peace of mind and fixed repayments but it may not save you money. The fixed rate did save you money over the last 3 years - but it may not be the same story over the next 3 years. No one knows for sure - but it looks like rates may even start to come down again early next year.
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irishlinks - ECB tracker never heard of it can you explain please
 
There are many existing threads on the fixed versus variable/tracker question. And also on ECB tracker mortgages. Do a search. See my signature link for instructions.
 
An ECB Tracker is usually referred to as a Tracker Mortgage - it tracks the ECB (European Central Bank) rate.
 
A tracker rates work in the same way as a variable, insofar that the rate can rise and fall in line with the European central bank
a variable rate is generally set at the discretion of a bank and is usually more expensive than a tracker.

Tracker rates vary depending on the size of the loan to the value of the property and the bank you are with.

i suggest you seek independent financial advice before committing to any 3 year fixed rate

Good Luck

Robert
 
I got a letter from PTSB today telling me that my fixed rate was ending and would I like to fix for up to 10 years @ 5.6%.

I would assume it would be madness to fix for 10 years.
 
bond-007 said:
I would assume it would be madness to fix for 10 years.
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I certainly think it would - what if you want to accelerate the repayment of the mortgage, or move house/lender, or are so financially comfortable that you can afford fluctuating variable/tracker repayments etc.?
 
10 years can be very restricive as clubman points out.
Keep in mind that you would be penalised if you break it at any time throughout the fixed period.
 
Sorry to steal the thread but maybe the author doesn't know either.

If you go with a tracker rate, can you fix the rate at any time?
Also, if you go with 1yr discount tracker, do you have to stay on it after 1 year passes?

Thanks in advance.
 
You can choose to switch from a tracker rate to a fixed rate at any time. Some lenders do not offer a full range of fixed rates though. You can overcome this problem by switching lenders if your lender does not offer the fixed term you desire.
Lenders are quite happy for their clients to sign up for a fixed rate even if you have been on a discount tracker as it means you will most likely stay with them for the fixed period at least!
 
When your fixed term is up the bank will write to you confirming the current variable rate which will automatically kick in. It is then up to you to negotiate after that. You can choose to move the a tracker which is recommended. If your LTV (Loan to value ratio) is <80% i.e. the balance of the loan is less than 80% of the property value then you will be offered a better tracker rate.

Interestingly IIB homeloans reduced their rate by 0.1% last week. Their current 2 year fixed rate is 5.15%, 3 years fixed is 5.25% and 5 years is 5.39. The fact that hte 5 year rate is not that much more kind of tells a story i reckon.
 
Ok, thank you. What about the discount rate then?
Let's take AIB's 4.6% rolling to 5.1% for example.
Could I go with this 4.6% for the first year and then get onto a regular tracker rate of 4.95% (or fix it) or will I be obliged to stay on 5.1%?
Thanks again.

P.S. Would you say fixing for only 1 year makes sense knowing that ECB could go either way (maybe even lower rates) next year?
 
Hi,
If you take the discounted tracker rate, you will be obliged to accept the associated "go to" rate. If this was not the case then everyone would opt for the 1 year discount.

With regard to opting for a 1 year fixed rate, this is really down to your own take on where the money market is going. Many economists are now predicting a drop in interest rates in 2008 but a significant number still see the possibility of an interest rate rise in 2008 - I don't have a crystal ball so I can't answer your question! The best 1 year fixed rate at the moment is with Bank of Scotland/Halifax at 4.75% which is a good rate compared to many tracker rates available at the moment

Regards

Sean
 
Mortgageman said:
If you take the discounted tracker rate, you will be obliged to accept the associated "go to" rate. If this was not the case then everyone would opt for the 1 year discount.
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There is nothing on the AIB website to say anyone is obliged to go on the variable rate after the discount is over. I would be interested to know if a anyone else been on a 1 yr discount and then asked to go on to the tracker rate rather thn the variable?
 
Every discount tracker rate has an associated "go to" rate which MUST be quoted on the loan contract when you sign up (required by law). It would be entirely incorrect just to assume that either
a) you can choose your own rate (from lenders available rates) at the end of the discount period or
b) that the lender casually puts you on their standard variable rate.

The only possible exception to the above would be if you "put a gun to the head" of the lender and threatened to switch if they didn't give you a better arte at the end of the discount period. I stronly suspect that you would need to have a large loan before they would cave into such a threat.
 
You can break a variable or tracker rate at any time without penalty.
 
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