Trading up – best mortgage

[Detones]

Hi There,

Looking for some advice please. We have a BOI tracker and are looking at options to get a new mortgage to facilitate a move. Our house is currently on the market. We will be looking to borrow up to 420k. .This is an absolute maximum and we will ideally be borrowing the 350k mark. We are both 44 and have joint earnings of €125k. We will be looking at a 25-year mortgage. We are looking at houses in the 550 to 600k range and will have equity and savings of circa 230k to go towards to purchse. I will have a healthy pension when I retire, I am paying into AVC to boost my current pension, so I believe if we do keep 25-year term we will afford repayments. However, in reality we plan to clear the mortgage before I retire at 65 with either inheritance or my pension lump sum ( Currently estimated to be worth 120k at 65). We have no childcare costs or any other borrowings.

BOI have outlined to keep tracker and switch mortgage they will add 1% to ECB rate, making our rate 2.1%. This seems a very bad deal with current rates. I'm not even considering this to be honest.

I would apricate any advice or opinion on our options. I have broken down our choices.

1. Stay with BOI and fix for 7years at 3.55% for new borrowings. ( No cashback)
2. Stay with BOI and fix for 10years at 4% for new borrowings.
3. Mover to Perm TSB and Fix for 5 years @3.5% ( 2% Cashback)
4. Move to another lender (from my own research no other rates are as competitive, maybe I have missed some, given the feedback on ere towards BOI and Perm TSB I would be intersted in other options )
5. Given likely increases with ECB don't take out new mortgage or move and wait till rates ECB reduce back to circa 2%

Existing tracker margin. (This is set in your mortgage contract.): ECB + 1.1%
3) Amount outstanding on your mortgage: €190,000
4) Remaining term: 17 years
5) Lender: BOI
6) Value of your home: 400k
7) Might you trade up or overpay your mortgage? Trade Up
8) Do you face any barriers to switching? No
9) What rates are you considering fixing at? Considering Fixing at 3.5 for 5 years when we take out new mortgage.
10) Does your house have a high BER rating which might qualify it for a lower rate? No.
11) How well could you handle a further 2% rise in the ECB rate? Moderate

 

[Paul F]

@Detones Assuming you will have a loan-to-value (LTV) ratio of 80% or less on your new house, you are eligible for the following rates. (The BOI 10-year rate you quoted seems wrong.)

You (or your broker) should apply to two or three of the cheapest lenders simultaneously. It might take some time for your loan offer to materialise, and today's Best Buy may no longer be the Best Buy when you draw it down.

Review the information in this thread (if you haven't already):

Best Buy - Which lenders have the lowest mortgage rates? (Updated April 2023)

While I wrote the original post on this, Paul F has edited it and made it far easier to read and has kept it updated. Brendan You (or your broker) should apply to two or three of the cheapest lenders simultaneously. It might take some time for your loan offer to materialise, and today's Best...

www.askaboutmoney.com

 

[Detones]

Thank you so much Paul F. The post you linked is very informative.

 

[NoRegretsCoyote]

I would apricate any advice or opinion on our options. I have broken down our choices.

1. Stay with BOI and fix for 7years at 3.55% for new borrowings. ( No cashback)
2. Stay with BOI and fix for 10years at 4% for new borrowings.
3. Mover to Perm TSB and Fix for 5 years @3.5% ( 2% Cashback)

I agree that a 2.1pp margin over the ECB rate is not worth going for.

When it comes to the fixed rates on offer A mortgage of €350k over 25 years at 4% is about €1,850 a month which on your net pay of €7k (before pension contributions) isn't onerous. Whether you go for a five- or ten-year fixed rate is is really down to your own level of risk tolerance and certainty around your own income. My own rule of thumb is that if your mortgage is around 30% of net income then it's worth paying to fix for long for certainty.

Some people don't like to pay the premium and only you can decide if it is worth it. Nobody knows where interest rates will be in five years. Just remember that if we return to a zero-interest rate world in a few years you would be stranded paying a high mortgage and would pay a big break fee if you want to get out of it. OTOH if rates stabilise at 6% or so you'll be insulated against this for another five years.