PTSB 4 year fixed switcher rate of 3% ?

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TheReflex

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Let me start by saying I understand very little about mortgages...but this year I decided to take a good look at the yearly letter we got from AIB instead of just filing it straight from the envelope

We've started paying this house in 2017 and it's worth quite a bit more now. We still owe approx 110k but house is now worth around 260k

Since AIB's letter states at the top "Interest Rate Lending @ 4.150%" and 2 pages more suggesting that we switch to one of their other rates (3.750% seems to be their lowest for our case) I decided to check on switcher.ie for ongoing rates and I found there's a 3% rate fixed for 4 years here. https://www.ptsb.ie/mortgages/switcher-mortgage/ .

Probably silly questions but... should I switch? Can I switch? I do have my current account with PTSB if that makes a difference.

Thanks in advance!
 
There are 2 things that you can do which are:

1. Stick with current provider AIB
2. Switch to any other lender (e.g. PTSB)

Staying with AIB is the easy option. You immediately get a better rate and it is a simple form to tick, sign and return. You will save 0.4% which is ~€440 next year based on your mortgage balance

However, if you decide to switch to another lender then this is a completely new mortgage. You will need to go through the full approval process (affordability, 6 months payslips, salary certs etc) and have a solictor involved to facilitate.

It could cost you €1.5 - €2k between solictor fees and valuation which needs to be balanced against the interest savings from another lender.

In your case, you can save a further 0.75% between AIB's best rate or PTSB's rate. That's an interest saving of €750.

Some lenders (inc PTSB) offer cashback which generally covers the cost of switching but I believe it doesn't apply to the 4 year 3% rate ( but you should check this)

If the cashback doesn't apply then it will take 2-2.5 years of interest saving to break even on the cost of switching.

In very general terms, the lower your mortgage is then the more likely it is that potential interest savings won't justify the costs involved to switch. But you might come out slightly better off with the right offer
 
_OkGo_ said:
Staying with AIB is the easy option. You immediately get a better rate and it is a simple form to tick, sign and return. You will save 0.4% which is ~€440 next year based on your mortgage balance
Click to expand...

Thank you _OkGo_ ! So if I understand correctly, just asking AIB to switch to a lower rate is a no hassle option here, right? Does the bank in these cases demand "you need to be with this rate for X years?"

I'm assuming they need a house valuation to validate the low LTV. Will that cost more than the 440 eur savings?
 
TheReflex said:
asking AIB to switch to a lower rate is a no hassle option here, right? Does the bank in these cases demand "you need to be with this rate for X years?"
Click to expand...
Yes, it's the zero hassle option. Fill in the form, select the rate and sign it. Two signatures if it is a joint mortgage.

No your existing bank will not ask any questions .

TheReflex said:
I'm assuming they need a house valuation to validate the low LTV. Will that cost more than the 440 eur savings?
Click to expand...
It looks like AIB's 3.75% rate is already based on an LTV of <50% so you probably won't need the valuation but still worth doing if required

Sorry I assumed 3.75% was a fixed rate but it looks like it is their <50% variable rate. If that is the case then you roll onto it by default, what rate are you currently on and when does it end?
 
_OkGo_ said:
Sorry I assumed 3.75% was a fixed rate but it looks like it is their <50% variable rate. If that is the case then you roll onto it by default, what rate are you currently on and when does it end?
Click to expand...

Do I roll onto it by default? Sorry I really know little of these things. The letter leads me to believe I can opt in for it by signing a form. Maybe it's only after I provide evidence that I am indeed owing less than the 50% LTV?

I am at 4.150%, that's the only thing the letter mentions - no "end date"

Again apologies for my lack of knowledge
 
TheReflex said:
I am at 4.150%, that's the only thing the letter mentions - no "end date"
Click to expand...
Ok so the only current rate that AIB have at 4.15% is their variable rate for LTV >80%.

You probably drew down the mortgage on this LTV >80% variable in 2017 and haven't changed since, correct?

Most lenders require a valuation to change between LTV bands but have a detailed read of the letter you received. If you fill it in and tick the 3.75% variable LTV <50%, the worst that can happen is they ask you for a valuation.

The bank requested valuation are normally ~€150 so it is still worth your while doing it.
 
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