Taking out a mortgage for the first time.
Property - 750,000
mortgage - 675,000
- BOI - 1.9% green fixed for 4 year (35 year)
- AIB - 2.25% green fixed for 5 year (34 year)
I understand AIB will be much cheaper in the long run but I'd be paying 6000 EUR more with AIB for the initial fixed duration.
@suffixtall
- Bank of Ireland's 4-year green fixed rate (1.9% with no cashback) is the best-value product in your circumstances but only over the next 4 years
- The monthly repayment would be €2,248
- Note that Bank of Ireland discriminate between new and existing customers, i.e., their best rates are not available to existing customers
- For example, if you were an existing Bank of Ireland customer, the best rate you would be able to switch to today is 3.0%
- So if you choose them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
Compared to Bank of Ireland's 4-year green fixed rate:
- Haven's 4-year green fixed rate (2.0% with
€2,000 no cashback) will leave you worse off by about €2,640 over the next 4 years
- The monthly repayment would be €2,283
- Avant Money's 4-year fixed rate (2.15% with no cashback) will leave you worse off by about €6,940 over the next 4 years (versus a 30-year mortgage with Bank of Ireland)
- You would have to choose a mortgage term to 30 years to be eligible for this rate
- The monthly repayment would be €2,546
- AIB's 5-year green fixed rate (2.25% with no cashback) will leave you worse off by about €9,200 over the next 4 years
- The monthly repayment would be €2,370
- And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)
- Bank of Ireland's 7-year green fixed rate (2.25% with no cashback) will leave you worse off by about €9,200 over the next 4 years – but with the longer security of 7 years on a fixed rate
- The monthly repayment would be €2,370
- The same warnings as above regarding higher Bank of Ireland rates in the future apply
- Avant Money's 10-year fixed rate (2.7% with no cashback) will leave you worse off by about €21,360 over the next 4 years – but with the longer security of 10 years on a fixed rate (versus a 30-year mortgage with Bank of Ireland)
- You would have to choose a mortgage term to 30 years to be eligible for this rate
- The monthly repayment would be €2,738
- If Avant won't lend to you and you really want to fix for 10 years for some reason, you could consider Haven's 10-year fixed rate (2.85% with €5,000 cashback)
- Avant Money's "One Mortgage" (a 2.95% fixed rate with no cashback) will leave you worse off by about €27,940 over the next 4 years (versus a 30-year mortgage with Bank of Ireland) – and the interest rate will remain fixed for the remainder of your mortgage term
- You would have to choose a mortgage term to 30 years to be eligible for this rate
- The monthly repayment would be €2,828
- Finance Ireland's 10- or 15-year fixed rate (3.35% with no cashback) will leave you worse off by about €38,400 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
- The monthly repayment would be €2,775
- This product has a benefit in relation to moving home in the future that is explained below
- And your interest rate (initially 3.35%) will fall to 3.15% in 6 years and 4 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). See the section "How we decide rate reductions" on this page.
- And your interest rate will fall further in future years (to 3.05% and then to 2.9%)
- Finance Ireland's 20-year fixed rate (3.45% with no cashback) will leave you worse off by about €41,080 over the next 4 years – but with the longer security of 20 years on a fixed rate
- The monthly repayment would be €2,813
- This product has a benefit in relation to moving home in the future that is explained below
- And your interest rate (initially 3.45%) will fall to 3.25% in 6 years and 5 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). See the section "How we decide rate reductions" on this page.
- And your interest rate will fall further in future years (to 3.15% and then to 3.0%)
- Finance Ireland's 25-year fixed rate (3.49% with no cashback) will leave you worse off by about €42,140 over the next 4 years – but with the longer security of 25 years on a fixed rate
- The monthly repayment would be €2,829
- This product has a benefit in relation to moving home in the future that is explained below
- And your interest rate (initially 3.49%) will fall to 3.4% in 6 years and 6 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). See the section "How we decide rate reductions" on this page.
- And your interest rate will fall further in future years (to 3.3% and then to 3.15%)
The savings estimates assume a mortgage term of 34 years (or 30 years in the case of Avant). You will need to check if each of the above lenders will give you a 34-year mortgage.
All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).
If you're feeling brave, you could consider the strategy outlined in
this thread: draw down on Haven's 2.35% 3-year fixed rate and get the €5k cashback. Then quickly switch to Haven's 2.0% green rate. If it works, you will be better off by about €2,360 in four years' time (versus Bank of Ireland's 4-year green fixed rate). Nobody knows for sure if Haven will allow you to do this, so you might be stuck on the 2.35% rate, but at least you'd have got the €5k cashback.
Or you could draw down on EBS's 2.75% 5-year fixed rate and get the €13,500 cashback. Then quickly switch to EBS's 2.1% green rate. If it works, you will be better off by about €8,240 in four years' time (versus Bank of Ireland's 4-year green fixed rate) – and
you should be entitled to the 1% cashback after five years, but you will probably have to fight for it. Nobody knows for sure if EBS will allow you to do this, so you might be stuck on the 2.75% rate.
Bear in mind that interest rates could rise between now and the time that you draw down, so you should apply simultaneously to two or more lenders for approval in principle (AIP).