Which bank & rate to choose

R

Ross23@

New Member
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5
Hi there,
We finally received underwritten AIP from both AIB & Haven. Just wondering which is the best to go with.

Haven(broker division of AIB):



  • Loan amount of €459,000 with a term of 23 years @4.2% 5years fixed= €2,596.34pm
  • €5,000 Cashback


AIB:



  • Loan amount of €459,000 with a term of 23 years @3.85% 4years fixed= €2,509.13pm
  • No Cashback
I see posts saying to be cautious of cashback offers. Is there something else I need to be looking at?

Many thanks.
 
€2,596 - €2,509 = €87 per month by 12 Mths by 5 years = €5,220 so in a sense there is no difference.

Will you have equal freedom to refinance in 5 years ? Obviously you don't want to continue at a higher rate after the fix expires. Most people do through laziness.
 
Thanks yes that’s what I thought.
I wonder is it better to have the 5 years fixed for more security instead of the 4 year with AIB. I have paid for valuation with AIB though so would prefer not to have to pay for another one for haven. Unfortunately it looks like I won’t be able to drawdown either before the rate increase on the 3rd March. So perhaps AIB is slightly better.
 
Cash in hand versus cheaper rate? While the cashback is tempting it would only take 38 months before you would have paid it back in the form of higher interest payments.
 
cremeegg said:
€2,596 - €2,509 = €87 per month by 12 Mths by 5 years = €5,220 so in a sense there is no difference
Click to expand...
That's wrong, the cost is the difference in interest paid, not the difference in monthly payments

The difference is approximately as follows. You are saving 0.35% each year at least for 4 years, possibly 5 but we don't know what rates will be available in 4 years.

4x0.35% is 1.4%. Your average balance over the next 4 years will be ~€426k so you will have paid approximately €5964 in additional interest over 4 years. Plus with AIB, fee free banking on the account you pay your mortgage from is worth ~€100-125/yr. So over 4 years, you are better off by almost €1500.

If rates are still >4.2% in 4 yrs then you will actually be better off by closer to €3k over the full 5 year term

@Ross23@ , Go with AIB 5 year rate
 
Ross23@ said:
Unfortunately it looks like I won’t be able to drawdown either before the rate increase on the 3rd March. So perhaps AIB is slightly better.
Click to expand...
Can you explain what you mean by this? The rates you have been offered will not increase on 3rd March.
 
Yes these are the new rates..there was a chance if we got the loan offer at the start of this week we would be able to draw down by 3rd of March & get the mortgage at a rate of 3.15% from AIB. There was a delay getting AIP (had to go to the head of MLU for sign off or something)so we are still awaiting the loan offer..should have it Monday.
 
Ross23@ said:
So perhaps AIB is slightly better.
Click to expand...

There is another reason why AIB is better than Haven in your particular case: because of a quirk in how AIB calculate their break fees, you are very unlikely to face a break fee/early repayment charge if you overpay your mortgage (or move home) within the next 4 years. See this thread for more details:

Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

Moderator's note: Because of a quirk in how AIB calculate their break fee / early redemption charge, you can make unlimited overpayments on some of their fixed rates without penalty. Or you can break out of your existing AIB fixed rate and re-fix on a different rate, again without penalty. (You...
www.askaboutmoney.com
 
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