Which mortgage provider to choose? BOI or KBC?

Moo said:

Thanks to everyone for all your input and points to consider. It has been really helpful.

Just to update on our situation... after telling BOI that we would be proceeding with KBC and organising valuation etc with KBC, BOI came back to us at the 11th hour with an offer of 4% variable plus the 2% cashback. They have stated that should their variable rate drop, our rate will drop in line with this. I've asked for written confirmation of this and we've decided to go with their offer. Even being tied in for 5 years, the difference between what they've offered vs what KBC are offering is very little in terms of rate and a lot in terms of cashback. I went back to KBC to see if they could improve their offer but all they could say was their variable rate "might" be dropping in july, they couldn't say yet by how much.

We're delighted with the reduction in rate and I'll be keeping a close eye on things over the next 5 years.

Thanks again to you all - this really is a brilliant site.

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Thanks for the update.

All in all that looks like a pretty good deal but I think you should look for confirmation from BOI that your loan agreement will specifically provide that you will be charged a discount of at least 0.5% on BOI's SVR throughout the life of the loan (or at a minimum for the five year tie-in period) and this % discount cannot be varied to your disadvantage during that period.

Banks (and BOI has particular form in the UK in this regard) will exercise whatever contractual flexibility they have to adjust interest rate margins where they judge this to be in their commercial interest.

Hi Moo,

Just wondered how did you fare out with BOI?

Did they give you writtin confirmation on this?

Or did you take the advice of Sarenco and ask for "onfirmation from BOI that your loan agreement will specifically provide that you will be charged a discount of at least 0.5% on BOI's SVR throughout the life of the loan (or at a minimum for the five year tie-in period) and this % discount cannot be varied to your disadvantage during that period"??

Hi Toshsmith,
I did indeed request written confirmation of the above from BOI and spoke to three different people but it wasn't forthcoming unfortunately. The information I did receive back both written and verbally was as follows:

Person 1 in the mortgage HQ advised that our rate is a negotiated rate and therefore has nothing to do with the SVR. They said that our letter of loan offer is a legal document reflecting our rate (4%) and that they cannot alter this (so can't just put us back to SVR). If rates go up by e.g. 0.5%, our rate will go up by this amount, if they go down ours will go down by same amount. She felt that our loan offer letter reflected what I was asking for (ie confirmation of our negotiated rate for life of mortgage).

Person 2 (manager in local branch) said that he checked with mortgage department who told him that they cannot legally put up our rate beyond the amount all variable rates might go up by, but they are not obliged to pass on decreases in rates to us. He said he thought it would be unlikely that they wouldn't pass on a decrease and that he has never seen it not passed on as "they wouldn't have a leg to stand on".

Person 3 (mortgage advisor in local branch) emailed me to say that our rate is negotiated for us and is applicable unless there is a change in BOI's variable rate for mortgages falling within our LTV bracket. If our LTV increases, we will revert to SVR. Our LTV is 80%.

So, all in all a bit confusing as to where we stand! Unfirtunately we haven't been able to draw down yet due to complications with our purchase which have side-tracked us a bit from the above. I'll let you know of any more developments.

Thanks for the update.

I'm not at all surprised by the conflicting responses that you received to what you would imagine was a reasonable request for clarification. This is actually the reason I suggested you look for a written confirmation of what you were initially told - that your rate would move in line with BOI's [presumably standard] variable rate.

It seems to me that the recent proliferation of mortgage products (and individually negotiated rates) is causing considerable confusion amongst consumers and bank staff. I would have thought that this is an area where the Competition and Consumer Protection Commission could usefully get involved.

In the meantime, I think borrowers need to be very careful to ensure that they understand the terms of their loan offer. Keep asking questions until you are fully satisfied that you understand precisely what terms are on offer - don't wait until you need to draw down the loan. If in doubt, ask your solicitor.

Best of luck and do please let us know how you get on.

Sarenco said:

I'm not at all surprised by the conflicting responses that you received to what you would imagine was a reasonable request for clarification.

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Me neither.
BoI are terrible to deal with even on such basic requests for info.
At best it's bureaucratic incompetence - at worst it's a way for them to keep the customer in a perpetual state of confusion.

Hi Moo,

Thnak you for the update,

I am considering switching to BOI - However, i have my resverathions!

I just wish they would give a straight answer to a simple question.

My situation is

I am currently with EBS on a fixed rate of 4.9% this is finished in February 2017.


My loan is for €180,000


The breakage charge is approx. €1,450.


I was considering switching to BOI as their 2% cash back looks good – for me this accumulates to €3,600 back.


My solicitor fee is €850 and the valuation is €150 – so after paying for everything I stand to gain €1,150.


+ I stand to save about €100 a month between now and Feb 2017 = €1800


Total gain is €2,950


I know you are thinking this is a no brainer – However, I have some concerns with BOI. I found out yesterday if I switch to BOI I must stay with them for 5 years. If I move lender within the 5 years I must repay €3,600.


What are people’s opinion of BOI? Are they a good bank?


From the treads I see they do not include current customers with new rates – is this true?


FYI


My LTV will be below 60% so I was going to go variable to see what will happen in September??


With my LTV at <60% is should get a SVR of 3.9%?


Any advice would be appreciated

Am a customer of BOI and given their rip off rates, I feel more like a feudal serf. Seeing BOI's ads and their 2% cash back makes me fume - it's little more than bait to get you where they want you. My advice is don't be taken in by the advertising campaigns - BOI will extract every drop of blood from you.

I'm probably going to get shot for saying this but I actually have some sympathy for the bank staff here. These various new mortgage products were imposed "from above" under tremendous political pressure and I strongly suspect that the banks simply have not worked out all the details yet.

The possible clawback of BOI's 2% "cashback" offer is a good example of a term that I would definitely want to clarify before I drew down a loan with BOI.

BOI's website says that the Bank "reserves the right to seek repayment" of the cashback payment if the mortgage is paid back within 5 years. What does that mean? The amount is either repayable or it's not. The Bank can "seek" whatever they want but what exactly will the loan agreement say?

My advice? Keep asking questions.

Hi,

I'm in a similar situation to the OP.

My broker (suspiciously pushing KBC) recommends I go with them, says most of his clients do!

Anyway, from what many on here have said KBC does not pass on any rate reductions to existing customers. KBC does have the .2% reduction if you switch your current account to them But their fees are high I think, 30c per atm transaction, so it's seems they could claw back a nice bit of the .2% they offer in bank fees.

My current bank doesn't charge fees because I lodge €1500 per month.

AIB will be offering 3.5% from 01.10.2015 SVR. Lower than KBC with offer included.

Should I go with AIB? And keep fee free banking with my current account with PTSB.

It seems the best thing to do right now.

I'm looking at 80% LTV over 20yrs.

Weirdly broker also asked me to submit my CV along with the application form!

KBC don't charge for transfers so I've kept my existing account. I get my wages paid into KBC and transfer out to my normal account and use its card. It means I'm paying for a KBC account I don't really need but for the .2% reduction it's worth the hassle. I've never used the KBC bank card. The only transactions on my KBC account are
Pay in.
Mortgage out.
Spending money transferred to my daily bank account.

I think if you take cash out during a transaction (in a shop) then you don't pay fees.

Moo, it is your personal decision whether to go with BOI or any other bank, but as a mortgage customer of BOI I can only say that is is difficult to imagine a worse bank there is, I personally feel like a character in Michael Moore's documentary or something. They were openly deceptive at the time when I took the mortgage taking advantage of my inexperience, and they had been awful ever since. They treat their existing customers qualitatively differently from the new ones (worse), have the highest SVR rate on the market among bigger banks , a rate that is totally detached from their funding costs, and they treat you like their personal property once you signed the contract. On top of that, they appear incompetent when you have some very basic queries. If you browse through this forum you will find BOI's customers' complaints all the time, don't make the same mistake we did, you still have a choice, we don't. 2% offer is a gateway drug, stay away from them if you can.

I've read this thread with interest, particularly as it relates to the BOI 2% cash back. I hope it is OK to continue the discussion here.

My situation is that I have been offered a 450K mortgage with BOI. This represents an LTV of about 69%. I'm currently with AIB on their variable rate (for me its 3.75%). AIB have been pretty good to deal with though I do have a sticking point with them in that despite my property value increasing since the mortgage was drawn down (market + renovations) they are keeping me on the >80% LTV rate. However, it seems they have a much better policy with regards to variable rates than BOI. Even though I am on an AIB >80% LTV it is significantly lower than what BOI are offering me at 4.2% despite the fact that this rate is in the 61-80% LTV bracket.

So, if I consider variable rates, even though the ~9K cash back would be nice - it doesn't make that much sense - I should stick with AIB. Part of this feeling is that I am quite concerned that a bank is charging this amount more for a variable rate in the first place.

However, if I consider fixed rates, the situation appears to me to be a bit different. Their 3 year fixed rate comes in at 3.6%, their 5 year at 3.8%. Not that different from AIB's 3 year at 3.65%

I would be very interested in anyone who has a view on this. It seems to me that perhaps this is mostly a decision around variable vs fixed? If I go variable, seems like sticking with AIB is the way to go. However, should I decide to fix, perhaps the cash back swings it in BOI's favour? I am genuinely worried about their approach to variable rates. Enough worried to fix for the full term of the claw back (5 years). At the end of this, I guess I should be able to switch if I need to.

From what I can gather, rates will continue to stay low / perhaps drop lower for the medium term. I know nobody has a crystal ball but let me know if you think I am off base on this? I wonder, given the ECB rates being so low, whether a bank like AIB will continue to drop their variable over the coming months - getting closer to other Euro countries.

In summary, I have the following thoughts and questions - and if you have any advice, I'd certainly appreciate it

- I'm leaning towards BOI on the basis that a reasonable fixed rate might be OK. Without a cash back in play, I wouldn't fix at all - but taking this into account, it seems the small premium (at the moment) could be worth it. Having said that, were someone to convince me variable rates are likely to drop considerably and stay reasonably low - I would stay variable

- I'm sufficiently concerned by BOI's approach to variable rates that I would likely fix for the 5 year term that the clawback is in place

- A final question I have (and I have not yet tried this) is whether BOI would improve on their variable offer if I pushed them or whether AIB might do something for me if I was serious about switching

Thanks in advance

The 2% cashback applies where you draw down by 31 Dec 2015, so given it's mid-September now, I wouldn't bank on draw down by then. In same boat myself, I'm going to fix for five years as I think rates will go down in the next year, up thereafter, but that's pure speculation on my part. Am a bit wary now reading about people's experience with BOI, I would assume all banks are broadly similar/evil.