AIB Vs BOI variable rates

L

lotus17

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I am interested in buying a house in the near future. I have my eye on one in particular which is coming up for auction.

I applied to both AIB and BOI for mortgage approval.

AIB have approved me for a maximum mortgage of €245K (based on 92% of €266K purchase price). 30 year mortgage.
BOI have approved me for a mortgage of €288K (based on 90% mortgage of a €320K purchase price). 30 year mortgage.

The house I am interested in will probably sell for somewhere between €270K and €320K. I have the 10% deposit in savings. The house will require some work and have a gift of €50K available to me for the work.

It looks like I will be forced towards BOI mortgage to enable me to purchase this house as AIB approval will probably not be enough. However BOIs standard variable rate is 1/2% higher than AIBs. Is this differential likely to continue? I understand the mantra "rates may rise as well as fall" etc.

Who knows, in 5 years time, the situation may be reversed and AIB rates could be 1/2% higher than BOIs? Does it seem foolish to go with BOI as you are starting off with a more expensive option?
Of course, if I had a crystal ball here, I would calculate which would be cheaper over the entire life of the mortgage which is the most important factor!!

Guidance/advice/thoughs appreciated! Many sensible people on here....what would you advise?
Also it would appear that BOI are more amenable to providing some finance for rennovations whereas AIB seems less willing to play ball. Overall, BOI seem much more interested in my business - but they are dearer!
 
Good question, I may be facing a similar option in the near future.
Hopefully someone here will have some useful advice.
 
Hi am in a similar position to the OP. Again, BOI seem more interested in my business and am thinking of going with them for convenience sake as they seem much easier to deal with so far.

As the OP said, as far as interest rates go, it may be a crystal ball situation but if anyone has any advice or comments I would be interested to hear them.

Thanks
 
A very interesting question indeed.

I think that the AIB rates are unsustainably low. The government got itself into a cul de sac by insisting that they pass on ECB rate cuts not realising that they were already by far the cheapest in the market.

I have wondered if they are actually doing new business or if they are just pretending to. I presume that they must be doing business.

AIB were always much more conservative in giving out loans. They lent out lower multiples of salary and required higher deposits. They rarely if ever did 100% mortgages.

Having said all that, AIB is virtually 100% state owned and so will be under political pressure to keep rates low. The state owns only 15% of Bank of Ireland, so there will be a lot less interference.

On balance, if you have a choice, go with AIB.

Brendan
 
I'd agree with Brendan' comments on interest rates. But at a practical level, AIB aren't very accomodating for borrowing for renovations. They insist that you buy the house first and then re-apply for a top-up for renovations. :rolleyes:

I think they just don't want this type of business. ICS (who deal with brokers and I'd imagine Bank of Ireland, their parent who don't) have a much better system - you can get approval at the outset for the full amount you need including renovations.
 
Thanks for your responses. Very hard to know what way interest rates will go but your comments are v helpful.

I might have to consider sticking with BOI for convenience sake - as stated AIB more conservative and do not appear as willing to lend as BOI. We haven't formally applied to AIB yet and am worried they will be looking for us to jump through hoops so to speak.

There is a difference of around €600 per year in interest between AIB and BOI and considering that we will be receiving TRS for the first few years (we are first time buyers) there might not be that much difference in the end, if we look at switching after TRS ends.
 
Hmmmmm......AIB are still cheaper after todays announcement of rate increases but......is one still better to go with them if you have a choice?
 
It's easy to have a cheaper rate if you're not processing mortgages. BOI seem to be the only active player in the market.
 
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