Don’t overlook the fixed rates offered by an existing or new lender — as switching to a fixed-rate mortgage from an expensive variable one could save you a lot of money. Some lenders have cheaper fixed mortgages than variable ones and some of the fixed mortgages available are amongst the cheapest mortgages around. Since the start of this month for example, KBC has been offering a 10year fixed mortgage of 2.99pc to those borrowing between 60pc and 80pc of the value of their home.
Ulster Bank offers a four-year fixed rate of 2.6pc to customers borrowing €300,000 or more — as long as no more than 80pc of the value of the home is being borrowed. Bank of Ireland offers a two- and three-year fixed rate of 3pc for those borrowing up to 80pc of the value of their home.
Only consider fixing your mortgage, particularly if it’s a seven or 10-year fixed rate, if you don’t expect to move home. This may not be the case if you recently bought your first home. “If this is your second or third home, you’re unlikely to move again so you could consider KBC’S 10year fixed rate,” said Michael Dowling, managing director of Dowling Financial.
The main advantage of a fixed rate is that you know exactly how much your repayments will be for a set period of time. There is an expectation that interest rates will start to rise again in the coming years and homeowners on fixed mortgages would be shielded from such rises as their repayments would remain the same. However, should interest rates fall, those on fixed mortgages lose out on the benefit of rate cuts as only those with variable mortgages would get such cuts passed on (depending on the lender).