Good deal on mortgage or not

M

monkeyman

Registered User
Messages
21
I've been offered a mortgage with ICS for 400K at a rate of 0.85% discount off their variable rate of 3.75 for the first two years. Its a offer through Barker Mortgage Brokers. So currently I'll be getting 2.9%. Term is 35 years.

From looking around this looks to be a great deal. Anyone have any reasons why it would not be? Or any hidden things to look out for?

Thanks.
 
The long term rate isn't good at ECB + 1.5%. If your loan to value is over 75% Bank of Scotland offer ECB + 1.25% with a 0.55% discount for two years so 2.95% going to 3.5%. Alternatively ICS offer ECB + 1% for the life of the mortgage for loans in excess of €400,000 and ECB + 1.1% is available from a number of lenders. In the short term your offer is good but not after the discounted period ends.

Sarah

www.rea.ie
 
What are your options when the discount period is finished? Are you tied to ICS for a period at a rate of their choosing?. I presume that if the variable rate rises, as does the rate you will pay? Is the 2.9% rate the nominal rate or the APR? What tracker rate are ICS willing to offer for the same term and amount borrowed? Did the broker discuss any other options with you?

On the face of it, it does appear to be a good deal. Get your hands on yesterday's Irish Times and have a look at the Property Supplement-all rates available direct from the lenders are listed, so it's a good way to make comparisons. If you have looked around and are confident you have a good deal, go for it.

Edit: As Sarah W has pointed out, it is a good deal in the short term, but thereafter ICS may not be the best option. You need to take a longer term view than 2 years.
 
2.9% seems to be the nominal rate. If the variable rate rises, yes this 2.9% will also rise. After 2 years, I will have the option of going to variable, tracker or fixed. I can also switch my mortgage at any time. Broker has also come back with offer from AIB which is higher. I'm going to ring another broker also and ask what is the best he can get.

I have gone through a switcher mortgage last year for my original house and that was completely painless. Cost me €35 in the end, so I think I will go with this deal and after the 2 years, start playing them off against each other again.
 
Forget about nominal rates when comparing different mortgages with each other. Concentrate on APR and/or cost per thousand (for the same term - e.g. 20/25/30 years). Also forget about new business (usually) one year discounted rates. They are often loss leaders to lure naive punters into higher than normal year two onwards rates. Just concentrate on getting the most competitive tracker/variable margin for your situation. I am assuming that you don't need to fix.
 
So just look for the best value tracker margin for your situation. Check out the best buys forum. Keeping the term short and LTV (loan to value) ratio low (e.g. by subsidising some of the cost from savings) can also help minimise the amount of interest that you pay. However if you have other uses for the money and/or would otherwise find yourself borrowing at higher than mortgage interest rates then make as full use of the cheap mortgage credit as necessary. Also shop around for best value in mortgage protection life assurance, home insurance, solicitor (a reliable/trustworthy one with competitive charges is the ideal - don't shop on price alone) etc. Good luck.
 
You must log in or register to reply here.
Back
Top