Ze Germans do things differently


Overly-cautious ?
I think I read on this site some time ago that variable-rate holders usually come out on top.

Also, would there be an appetite for 20-year fixed in Ireland ?

People certainly have it in their heads that variable rate borrowers come out ahead because “shure the banks aren’t going to lose money by locking in”

There’s be no rigorous analysis here that I’ve seen. No one even considers that margin rates might be different, that [cautious] bond buyers might lock in rates or more pertinently, that default rates might be lower among cautious types who fix their rates and consequently don’t get caught out as much.

Look at the age of the buyer though Mr. A. 42.

Long clean credit record.

She may have rented and could prove 20 years of paying rent.

24% deposit.

Stable and good employment.

Ze Germans not only do things differently - they do it better.

I lived in Germany for quite a while (late 80’s/early 90’s) and recall being asked by a risk manager for a bank, why “the Irish” bought their homes and hired their cars and TV’s.

He couldn’t quite get his head around that logic.

The notion that a 20 something year old single person with no kids, would take out a mortgage and buy a home would be considered (or at least when I lived there) complete madness - incomprehensible to Germans.

I have a 20-year fixed. It’s expensive (with the benefit of hindsight), but gives me close to complete confidence in my ability to pay back the mortgage in a specific amount of time.

Do you have significant penalties for overpayment or early redemption? That’s the main argument against fixing in Ireland and the UK, given the terms that are often attached to fixed rates.

Is it a great deal, I bought my house when I was 26 and now am 42 like the Claudia. I will have my mortgage paid off when I am 49, I pay significantly less for my mortgage than rent for a similar property. I will have 13 more years of free rent/mortgage than Claudia if we live to the same age.

There is no such thing as a free lunch :slight_smile: As such It is always more expensive to hedge an interest rate than to carry the risk.

The problem with fixing your interest rate is that you have to take the good with the bad.

When interest rates are high the mortgage holder benefits and does not complain

When interest rates are low the mortgage holder loses out and complains when he realises he cannot switch to a lower rate.

Somebody tell that the irish mortgage holders, direct democracy ireland chancers. Or somebody tell claudia she’s a fool, sure the cute hoors in ireland don’t be bothering with all that pay your way, savin malarky.

No penalties but I can only adjust upward once a year and the increase in the repayment must be 10% or greater. Similarly, I can only pay off one lump sum per year, again must be 10% or more of balance outstanding.

You cant fix for 20 years in ireland. So what are we comparing.

Can ask with a 20 year mortgage can you ever move house with in that 20 year period?

If the German property pin site had a thread called “De Oirish do things differently” some of you would be outraged :wink:

Saving for longer, having a lower LTV, and fixing rates for longer may not be better for the individual but it is better for the country as a whole. When I lived in Germany I had the conversation with German friends about the lower rates of home ownership, where people buy much later in life for the first time, and buy fewer houses on average in a lifetime (people may buy their first and only house in their 40’s). I was told that it’s not that people don’t want to buy, they can’t afford to buy, without saving a long time and having a record of saving and deposits with a bank.

There’s lots of reasons why the German system is better. The main one is that it didn’t lead to a major crash in the economy which resulted in the IMF being called in.

I’ve sold twice and paid off the outstanding balance, then got another mortgage. Hoping not to move again for 15 years or so, it’s an expensive business.

And that is exactly why the Germans are very happy to fix the rates as it balances out throughout the lifetime of the mortgage.

@firstbass - not sure if I would agree with that reasoning alone, purely from the point of view as someone who was married to a German and lived there for a number of years. Buying a home is simply not on the horizon, my husband left college and then had to work for 3 years as an apprentice in his chosen profession (pretty much like the jobsbridge), by the time he was earning a decent wage, he was about 28.

This was pretty much standard when I lived there.

Buying a home is viewed as a one off thing, not something to do every few years, also the idea of being “static” whilst still in training/education is just not something that would make sense to them.