Move to Avant or stick with UB for overpayment

haventabreeze

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We’re currently with UB and overpay our mortgage by the allowed 10% each year. Mortgage is split between to subaccounts (2.3% and 2.6%) fairly evenly so we’re paying approximately 2.45% in interest per year.

We should, in theory, qualify for the 1.95% rate with Avant.

I’m confused as to whether or not we’d be better off switching to the lower rate with no overpayments or sticking with UB for the overpayment allowance.

We’re not in a situation where we can up the Avant repayments to cover the overpayments - the overpayments are made when RSUs vest quarterly and I wouldn’t be comfortable committing to a higher repayment and speculating that stock will do well to bridge the gap over the fixed term with Avant.

Would anyone be able to advise the best way to do the sums to figure out which would be the better way to go. I keep getting muddled as there are unknowns (how would the RSUs perform if I left them alone over the term) or maybe I should still cash RSUs in but keep them in a savings account and pa a lump sum at the end of the term.

Or maybe it’s a simple as moving to Avant and getting a break fee each time we have a lump sum?

TIA
 
Fixing all at 1.95% definitely lowers your rate but the 10% UB overpayment is a nice option which helps with faster payment and may ultimately lowers cost

I'm not sure if Avant offer the ability to spilt mortgages across the various fixed-rate terms but you could lower your blended rate and still have an explicit prepayment option. The aim would be to fix what you can't touch but have it role onto variable about the time you can pay it off.

Such a calculation could be tailored to specific details. However for that you'd need to provide mortgage term, loan amount and how much you'd comfortably be able to overpay.

However, as a general example, why not fix 70% (20% for 3 years, 20% 5 years, 30% 7 years) and keep 30% variable.

In such an example your weighted average mortgage rate would be 2.12% (70/30 @1.95%/2.5%) in year 0. You could overpay up to 30% in the first 3 years (i.e., the variable rate element). In 3 years time the balance on the 3 year fixed (something slightly less than the original 20%) would roll onto a variable rate. You've 2 years to overpay that before in year five a further 20% rolls off fixed.

As an alternative to overpaying you could try and refix - not sure if they offer that ability and you'd also be at risk to a rate increase in the interim.

In the example above your blended rate would steadily rise (as total mortgage goes down the share that's variable goes up) given the current rates on offer you should still be below your UB rate.


If it's really any better going to all this trouble rather than just fixing the whole lot would depending on how much you could be overpaying. However, the general point is you wouldn't have to tweak much to get similar flexibility at lower rates
 
Thank you for that Scrooge, I hadn’t considered a blended rate with Avant. I considered moving straight to their variable rate as it wouldn’t be much of a difference in my current rate and I’m in a position to overpay by more than 10% however a chat with a broker confirmed they don’t offer the variable to new customers.
 
That's interesting that they don't offer variable rates. Though you could probably still get a variable rate by fixing and breaking straightaway.


Regardless, the same logic applies. Something like a 50/20/30 for 3/5/7 years. You could fine tune with early repayments requests (if not too expensive).
 
Would you be able to get the 5 year high value fixed rate from ulster? (over €300k)

This is 2.2%, so difference for €300k over 5 years with avant is about €3,500, or about €1500-€2,000 after costs.
 
Actually, I know that they won’t offer me that...I requested break fee info last week and that rate wasn’t offered. We’re under 60% LTV too and lowest rate offered was 2.3%
 
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