Key Post Best Buy mortgage for a switcher

Brendan Burgess

Brendan Burgess

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This is the first draft of this post. I welcome comments - especially from people who use it to switch. Do you find it helpful? Do you disagree with the conclusions? Am I leaving out some other factors? Brendan

There is a bewildering array of products so I am going to pick a couple of products which I recommend based on rate and a number of other factors.

It is usually better to choose a variable rate mortgage, but the Irish mortgage market is dysfunctional, and fixed rates are cheaper than variable rates.

Furthermore, there does not seem to be much of an advantage in having a low Loan to Value ratio.

It might be worth applying to a few lenders for approval.

Rates are changing all the time, so maybe double check with the CCPC mortgage comparison to see if they are still up to date

Compare mortgages - ccpc.ie consumers

Whether you are a first-time buyer, or you're looking to switch or move home, use our mortgage comparisons to find the best mortgage for you.
www.ccpc.ie www.ccpc.ie

KBC 2 year fixed rate 2.3% <90% LTV (2.25% for less than 60% LTV)
  • You must open a KBC current account
  • €3,000 cash back for switchers
If you have a mortgage of €200k, the €3,000 cash back is the equivalent of a reduction of around 0.3% over 5 years, bringing the effective rate down to 2%.

Ulster Bank 2 year fixed rate 2.3% <80% LTV (2.45% for >80%)
  • €1,500 cash back
 
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You should not go for a cash back deal

Factoring in cash back – assuming a mortgage of €200k held for 5 years

4133


If the lenders' current interest rate policies remain in place after 5 years, you will be paying a much higher rate to EBS than you would be to KBC or Ulster Bank - 2.9% vs. 2.3%.


Factoring in cash back – assuming a mortgage of €400k held for 5 years

4134
 
If you want to be really clever...

Some borrowers exploit the cash-back deals on offer by some of the banks.

The get loan approval from EBS, ptsb and Bank of Ireland simultaneously. The loan approval lasts for about 6 months.

Immediately after they draw down their EBS mortgage and get their 2% cash back, they switch to ptsb.

When that is drawn down, they switch to Bank of Ireland.

Further details here

Key Post - How to get cash back 4 times in 6 months

The following lenders give cash back on new mortgages Bank of Ireland 2% EBS 2% ptsb 2% KBC €3,000 AIB €2,000 Ulster Bank €1,500 When you are applying for a new mortgage or when you are applying to switch, I recommend that you get approval from three or four lenders at the same time. These...
www.askaboutmoney.com
 
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What is the best rate for a longer term fix?

If you want to fix for 5 years or more, the Best Buy depends on the term and the amount you are borrowing, so there is no clear best buy.

The following is not a complete list. I have omitted those which are significantly poorer value than one on this list.

4136
 
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Excellent work. However, given that there are fees involved in switching, could the effective rate adjust for a set fee (say 1200 as that is the highest I've seen?) Thanks.
 
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Hi misemoi

The point of this is to do comparisons.

As the legal fees are the same for all lenders, I don't see any point in including them.

Of course, if you are trying to decide whether to switch or not, you should factor in the costs of switching

Brendan
 
Hi Brendan,

This is a useful thread.

Just a comment on potentially confusing wording. In the first post you say, e.g:
€3,000 cash back for switchers
Click to expand...

But in the second post you say:
You should not go for a cash back deal
Click to expand...

I know that you mean, "You should not go for a cash back deal like 'Get 2% of the value of your mortgage in cashback'", but it sounds like you are also steering people away from the KBC and Ulster Bank offers, even though you are not. A change of wording would help.

You should also tell people to click on the "all rates" tab when looking at the results in the CCPC mortgage comparison tool.

Thanks
 
Brendan Burgess said:
You should not go for a cash back deal

Factoring in cash back – assuming a mortgage of €200k held for 5 years

View attachment 4133

If the lenders' current interest rate policies remain in place after 5 years, you will be paying a much higher rate to EBS than you would be to KBC or Ulster Bank - 2.9% vs. 2.3%.


Factoring in cash back – assuming a mortgage of €400k held for 5 years

View attachment 4134
Click to expand...
Hi Bredon,

f you are getting a hight mortgage amount of €450k and have a LTV of 80% I do not understand why I would not look for a cashback deal. I would be receiving cashback of over €9,000.

Is it not as simple of get a cashback deal in one of the banks and once fixed term of 1/2 years is up then go to the next bank that does cashback for another further €9,000 into my bank. What I'm saying in this example is the interest rate is almost irrelevant here for me as it might cost me an extra €100 a month interest but that's only for a year or so until I am gone to the next bank. What do you reccomend for a high mortgage and what am I missing? Maybe it is just not that easy to switch?
 
Edward33 said:
I do not understand why I would not look for a cashback deal. I would be receiving cashback of over €9,000.
Click to expand...

Did you stop at that post and read no further?

I explain all that in this post

Key Post - Best Buy mortgage for a switcher

This is the first draft of this post. I welcome comments - especially from people who use it to switch. Do you find it helpful? Do you disagree with the conclusions? Am I leaving out some other factors? Brendan There is a bewildering array of products so I am going to pick a couple of products...
askaboutmoney.com
 
Do F.I. cover any legal fees? Their 2.45% vs Ulster banks 2.6% doesn't seem worth it if they don't (given that UB give 1500 towards legal).
 
Black_Knight said:
Do F.I. cover any legal fees? Their 2.45% vs Ulster banks 2.6% doesn't seem worth it if they don't (given that UB give 1500 towards legal).
Click to expand...
No they don't. Whether FI makes sense therefore depends on your mortgage size. €200k the rough breakeven point over 5 years

Also, ability to overpay an important feature. FI and UB offer the best here, I believe, both offering 10% per annum without penalty.
 
thedarkone said:
No they don't. Whether FI makes sense therefore depends on your mortgage size. €200k the rough breakeven point over 5 years

Also, ability to overpay an important feature. FI and UB offer the best here, I believe, both offering 10% per annum without penalty.
Click to expand...

How is the 10% calculated? 10% of what per annum?
I currently have a split mortgage with KBC, 25% variable, 75% split. Against the fixed portion, I can overpay by a maximum of 10% of the total value of the original fixed portion of the loan. As it happens, the variable rate is higher so i overpay against that.

I'm considering switching lenders soon though, as i'm increasingly frustrated at having no online access to view the mortgage balance. All i can get are vague statements which do not confirm which portion of the loan has been overpaid or by how much.

Do any banks allow you to overpay by more than 10% against a fixed rate or do those wishing to overpay by more than 10% need to split their mortgage into a variable and fixed portion?

It's really hard to compare apples with apples but i'm leaning towards fixing for 2yrs with Ulster @ 2.3%, if i can get clarification on the 10% overpayments. The free valuation and €1,500 legal fees are a bonus.
 
lledlledlled said:
How is the 10% calculated? 10% of what per annum?
Click to expand...
I've switched to Finance Ireland at 2.4%, and in fact the max early repayment without penalty is 20% (called the Exemption Amount). It is calculated as 20% of the outstanding Loan, and an overpayment up to the Exemption Amount can be made once in any 12 month period co-inciding with the anniversary of drawdown, so no need to split it into a fixed v variable. There is no carry forward to future years of unused Exemption Amounts
UB I believe is 10% of the outstanding loan but there are no limits on the number of payments i.e. you can overpay monthly.

Given I wanted a long fix, rather than being back in teh market in 2 years, I went F.I. 5 year fixed; it made sense to go with them + annual overpayment @ 2.4% with FI versus monthly repayment at 2.5% with UB - particularly as my overpayments were likely to be lumpy anyway. But see previous message for link to all things UB.
 
@thedarkone
Is there any chance you could send me the full details of their break fee calculations / exemptions, and I'll update the key post on fixed break fees?
 
Going to start the switching process with Ulster. Offering 2.3% fixed rate which is excellent. If I get more details Ill post them in here.
 
yop said:
Going to start the switching process with Ulster. Offering 2.3% fixed rate which is excellent. If I get more details Ill post them in here.
Click to expand...

You're probably aware of Ulster Bank's new offering of 2.2% fixed for five years if you are borrowing over €300k.
 
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