Fixing Mortgage

Folks,

Is now a good time to fix your mortgage? We have been offered 3.99% for 3 years with KCB homeloans which means an increase of €45 a month. Are interest rates due to go up anytime soon?

Cheers

Derek.

hi goalie

the rates are due to go up but the when and how quickly they go up is anyones guess .

its kinda up to yourself . fixed rates are good if you want to know how much your mortgage will be each month for the next 3 years . i dont know if it will save you money over the 3 yrs cause no one knows what will happen with rates

Thanks househunter, its hard to know what to do. Since we went variable last september it saved us 150 euro a month but as you say its hard to predict when they will go up and for the sake of 45 euro I think it might be worth fixing.

It might be an idea to fix in on half the mortgage as therefore it gives some degree of flexibility if you want to overpay or make a lump sum repayment with out being penalised.

The trouble with fixed rate mortgages is the bank needs to factor in the extra risk in interest rates rising so you probably will be paying more, especially if you choose fixed rate over the long term. Apparently though they profit as much from fixed rates as variable rates, and they charge fair penalties for customers switching from fixed to variable rate.

If you can comfortable afford to pay a significant rise in interest rates variable will seem like the fairer deal. The interest rate will hopefully be more correlated with the ecb rate and you have the flexibility to increase or skip payments without penalties. In the shorter term (<2 years) your payments will likely be lower too.

But especially for people just starting out and have their finances worked out to the penny, fixed rate gives you added security and protects you against hikes in the interest rate. And when interest rates are low this is reflected in a lower fixed rate.

I'm not too up to date on what all the banks are charging but it looks like you're getting a good deal with the 3.99% fixed for 3 years.

Don't fix. Best advice I can give you is advice I've been given.

Pay the extra 45E a month into your variable mortgage now and if interest rates rise and you are a bit stuck for a while you will have the extra money you paid to fall back on.

I don't think fixing for 3 years is long enough for you to see yourself saving in the long term. Friends of mine fixed at 5% and are really regretting it.
The one friend who didnt was stretched as it rose but it didn't stay like that for long. Pay how much you could afford to fix at and know the money is there if you need it/need to skip a payment.