Setting up mortgage rate

Hi, I’m new to this site in the last week. Fantastic advice on here.

We are taking out a mortgage of €380,000, probably over 30 years. We are first time buyers and going to meet lender to discuss setting our rate in the next few days.
What do you think would be the best way to set up our mortgage rate? Fixed, variable or split?
Thank you.

Split, as in run, get away, escape while you still can. The fantastic advice doesn’t seem to have sunk in, so let me sum it up. Putting yourself in hock for 30 years for a fast depreciating property is nuts. If you chose to go ahead, then it really doesnt; atter what option you take, your screwed.

If at all possible do not take out any mortgage - at least wait until after the next budget (December).
Let alone price reductions / possible stamp elimination on 2nd hand properties etc any cash you save is effectively coming off the principal.

If you absolutely must take out a mortgage then take out a shorter mortgage (max 25 years)

Regarding rates I can say honestly that over the course of time variable rate holders have paid less than fixed rate holders.

  • Banks are not charities

Our combined salaries would be €115,000 approx. Therefore the mortgage we are taking out will be approx €35,000 more than our salaries multiplied by three. Would this be considered a safe and sensible amount to be borrowing. Also the property is one that we could see ourselves in for the next 20-30 years.

I’ll give you a piece of advice. Do not look for serious financial advice on bulletin boards.

How about waiting for a year and getting a mortgage for €280,000 instead?

I will give some advice also… Don’t look for serious financial advice from the banks!!! :unamused: You will not be told anything like the truth…

Absolutely true too!

Yes we could wait- but the property has already come down approximately €115,000.
We are also fed up renting and are monthly rent payments are higher than what are mortgage repayments will be.
By the way-thanks for the posts.

Don’t go into the Bank. Stay OUT. Say your wife or girlfrind slipped and - broke - her ankel - going to work - or fell off her bicycle. Say you are ill. Do not get a Mortgage NOW. You will be in NEGATIVE EQUITY - FOR THE REST of your Life and your Childrens. GO GO NOW - while you can - DO something else. Get a Camper Van and go places. Best regards - your friend. Do you wish me to tell you a few Horror Stories - that I could NOW!!

Is that on the discount rate or on the current SVR? What will the interest amount of the repayments be when the rate resets?

What I think you need to do is go through the costs of each option over the next three years for the following scenarios:

  • current interest rates (benign scenario, they are unlikely to go lower)
  • +2% (medium scenario)
  • +4% (stress scenario)

Make sure you will be able to afford the repayments under those scenarios. If it doesn’t hit either the stress or the medium scenario, then you will be quids in. Which choice you make sort of depends on your attitude to risk, but I would counsel not making a choice where you would be unable to afford repayments.

You should also bank on losing 15% of your net takehome over the next two years in extra taxes, IMO (hence why people are counselling to wait until after the budget).

Be honest with yourself. This is the largest purchase you will ever make (apart from another house!). It is thirty years of debt you are talking about.

Yes very true! Some Kant comes to mind.

“Enlightenment is man’s emergence from his self-imposed immaturity. Immaturity is the inability to use one’s understanding without guidance from another. This immaturity is self-imposed when its cause lies not in the lack of understanding, but in the lack of resolve and courage to use it without guidance from another. Have courage to use your own understanding!”

So following this advice myself, I’d have a look at the house you have in mind, work out how much it cost to build it… decide if some of this cost should be written off for depreciation, out-datedness, deterioration etc… decide if a premium should be paid for the use of the land the house is sited on (location, view, services etc) - keeping in mind that there is currently talk in the air about paying this ‘land-fee’ through a yearly tax.

Then, see what the bank are going to do for you to help you acquire what you desire. But do keep in mind that maybe they don’t have your best interests at heart and may be trying to milk the proceeds of thirty years of both your working lives for the benefit of their own estates and other cronyistic insiders who are part of the scam that consists the mortgage industrial complex… But maybe it also makes sense to forget about all this and decide to go with the flow and just get on with living your life? Maybe I’m coming around to that way of thinking myself… Must be getting old!

If you don’t mind old bean PLease do not mix the quotes up… I was the one who suggested that the OP do not trust the banks!!! :nin . As for listening to advice from boards well at least there is less of a Vested interest from people here I find, so the advice has been good and informative…

You just can’t wait to get that 380K rock on your back for the next 30 years.
A sentence for murder is shorter.

Never mind 30 years - let us look 5 years down the line.
Do you intend having children ?

Creche fees in Dublin are a grand per kid.
Now, shall your spouse give up work to look after these putative kids or will you be paying the 2K per month from your combined after tax salary ?

Never mind 5 years - let us look 6 months down the line.
The government is currently spending 2 euros for every 1 euro it is earning.
Normally politicians lie and say that things will be rosy, but this government has actually told us it that it needs incrementally more money from us in the next 2 budgets.
If you can’t wait till December at least wait 3 weeks-ish until the Commission on Taxation and an Bord Snip reports come out.

If you are determined to give a poster advice on such a crucial decision please at least think about what you are writing. As to the original post, who can know what the future will bring. Based solely on my own experience, the more leverage you have with the bank the better a deal you can get. For example, I had a variable, managed to pay down a good portion of the principal and then negotiated a very favourable tracker. But that was me, everyone’s circumstances are different.

And some people are afraid to crawl out from under a rock and take a chance in life.

but I’m not going to take any of it…

Stick to the topic please…

Before you “take a chance in life” that will have 30 year consequences it is prudent to refer to both geography and history.
Compare our house prices with other cities in Europe.
Compare current Irish property prices with historic Irish property prices (and this doesn’t mean just the previous 2 years)

Fixing is pretty expensive as the banks arent very competitve with their fixed rates. Try finding out about buying an interest rate cap - this is an insurance policy unrelated to the loan which pays out if rates go above a certain level. The shorter the term, the cheaper.

Anyway as YM said, do your own stress testing. It’s your debt not the banks.

As P Moriarty said think of the cost of children. I have two young ones, 2k per month for the creche plus the living costs. The first four years are a fucking nightmare financially. I move from running a deficit to a surplus for the first time since 2006 now that the first one is starting school.