First time buyer and I wonder if anyone has an opinion on fixed rate mortgages?

G

garfas

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I'm a first time buyer and I wonder if anyone has an opinion on fixed rate mortgages. From looking around the best deals at the moment seem to be tracker-rate mortgages but with all the interest rate hikes forcasted, I'm just wondering if I'd be better off going with a fixed? The cost of the property is 330k and I'm looking to borrow around 265k. Would appreciate the help!
 
Hi Garfas,

Welcome to AAM! Have a read of the key post at the top of mortgages section and then browse through some of the more recent pages. This question is one that is posed quite often!

aj
 
Although interest rate hikes are forecast, its worth bearing in mind that a fixed rate may be a more expensive option. You didn't say how long you were looking at fixing for, but a 3 year fixed rate can be up to 1% higher than a variable. Sure you have a guarantee that your repayments will be fixed for 3 years, but at the same time you are paying for this guarantee.

Even with interest rates rising another .25%, as is expected in the next few months, you would probably still be paying more on a fixed rate than a variable. Taking the example of a typical 3 year fixed rate(i.e 1% above variable), interest rates would need to increase by a total of 1% before repayments on a variable rate would rise to the same as a fixed rate, in the meantime those in a fixed rate would have been paying more anyway.

It is my opinion that a variable, or even a tracker variable rate is the best option. I'm sure, however, that others will argue otherwise.
 
I agree. Tracker is the way to go.

Bank of Scotland currently offered me a deal ECB + 0.45 for next 2 years and then ECB + 0.99 after that. Nothing wrong with that.

But I switched my mortgage so not sure if it is available for new House. Give them a call at 1890 81 81 81

hope it helps
 
Thanks to everyone for all the feedback. With regards Bank of Scotland, a few people I know have already recommended them so they're definetly top of my contact list. By the way, has anyone any feelings on mortgage brokers? My gut tells me I'm better off dealing with the banks/institutions directly but maybe I'm wrong! IFG agencies seem to be ok.
 
Don't fix unless you really need to. See the many other threads on this issue and the whole fixed versus variable/tracker question. See the Financial Best Buys forum for details of latest mortgage rates. Shop around. Unless you need extra leverage to borrow more than some lenders are inclined to advance I would shop around independently. On the other hand a broker can save you time and hassle and offer deals on conveyancing and commision refunds etc. Don;t forget to shop around for mortgage protection life assurance, home insurance rather than automatically taking them from the lender (normally more expensive) and to avoid mortgage repayment insirance unless you really think you need it and it's good value for money (usually it's not).
 
You don't really have anything to lose by going through a broker - rate etc will be the same as if you approached the bank directly but at least you will be getting independent advice.
 
You could have if the broker only deals with a subset of lenders on the market!
 
Your LTV is >80%.

This will have an effect on the rate you will be offered, as generally banks offer better deals for LTV <60% or <75% (BoSI) or <80%.
 
Clubman

Personally, I think its better to deal with a broker even if they only have a couple of agencies than dealing with a bank that can only offer their rates and products. But thats just my opinion...
 
One method I recommend is calculating the repayments on, say, a 3 or five year fixed and then saving the difference between this figure and the lower tracker repayment. If rates go up your cashflow will be able to absorb the increase (by decreasing the amount you save), if they go above the 3/5 year repayment then you can use the savings to subsidise the repayments and if they don't you've got a useful sum to pay off the mortgage.

Sarah (a broker and a darned good one!)

www.rea.ie
 
Hel_n said:
Clubman

Personally, I think its better to deal with a broker even if they only have a couple of agencies than dealing with a bank that can only offer their rates and products. But thats just my opinion...
Click to expand...
But it's better to deal/shop around personally with all lenders than to deal with a broker who only deals with a subset. You can generally apply for approval in principle online these days so shopping around manually should not be too onerous. I did it manually by calling into every lender c. 11 years ago and even that wasn't too much hassle. Once you know who will offer whan you need you just pick the best rate on offer. Either way, if you do go with a broker then check how many lenders they deal with. The more the better.
 
Fixed or variable rate?

Could you please offer any advice on whether or not to fix my mortgage rate? Current variable rate is 3.85% as against 4.35% for one yr fixed, up to 5.25% for 10 yrs .. any advice appreciated! Would it be prudent to fix in the long term, given gradual increases in short term?
 
Personally, I have had a lot of problems with a particular mortgage broker. For such a large, well known company their service was shocking! Also, in my opinion, they breached their terms of business. After hassling and hassling them for my loan approvals from the various banks - it transpired that they only went to one lender. So my advice would be to definitely shop around! You have nothing to loose. Even shop around with a couple of brokers if you don't want the hassle of dealing with each bank individually.
 
Re: Fixed or variable rate?

Jeanette.T said:
Could you please offer any advice on whether or not to fix my mortgage rate? Current variable rate is 3.85% as against 4.35% for one yr fixed, up to 5.25% for 10 yrs .. any advice appreciated! Would it be prudent to fix in the long term, given gradual increases in short term?
Click to expand...
Have you read any of the many fixed versus tracker/variable threads that already exist? Your variable rate offer doesn't look like the most competitive on offer as far as I know. Who is your lender? Check out the Financial Best Buys forum for latest rates.
 
SarahS said:
Personally, I have had a lot of problems with a particular mortgage broker. For such a large, well known company their service was shocking! Also, in my opinion, they breached their terms of business. After hassling and hassling them for my loan approvals from the various banks - it transpired that they only went to one lender. So my advice would be to definitely shop around! You have nothing to loose. Even shop around with a couple of brokers if you don't want the hassle of dealing with each bank individually.
Click to expand...
They wouldn't have the letters S and M beginning their name would they? I went to these guys and they did the same to me. Went to one lender only and recommended their "local" solicitior who wanted €400 more than my own one!!

My advice would be to do it yourself. It's pretty easy. Ring the bank and find out what rates they have and apply to the one you want.
 
Re: Fixed or variable rate?

Clubman
Thanks for the advice - will do some more checking around.
 
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