Which of these two would you go for?

marathonic

Both 75% LTV (meaning remortgaging after the term shouldn't be a problem unless prices continue to drop rapidly).

Ulster Bank 2.90% 2-year discounted variable reverting to 4.00% with no fees

Bank of Ireland 3.49% 5-year fixed reverting to 4.49% with a £799 arrangement fee.

The mortgage amount is £90,000. I'm not sure how much you can rely on the 'reverted to' fee either as SVR's can change at any time.

marathonic

Just to add, the affordability isn't an issue - I'd be borrowing about 20% less than what the bank's stress-tested affordability calculators are giving me.

harvey115

Try the mortgage spreadsheet to calculate which deal seems a better one for you - https://forums.moneysavingexpert.com/discussion/1157173

marathonic

Well, by adding the arrangement fee of the Bank of Ireland product to the mortgage, the difference in interest over 5-years is less than £60. Therefore, it all depends on what rates you think will be available in 2-5 years.

I want to keep the payments close to £500.

The repayment on the Bank of Ireland product would be £454.07 fixed over 25 years.

I'm considering just going for the Ulster Bank product over 20 years at a repayment of £494.64

harvey115

I think you are better off with the Ulster Bank deal as well.

If you put in the two deals in the aforementioned spreadsheet you will see that Ulster bank deal is £5K better for 25 years term. If you 20 term deal then you are basically saving yourself just over £11K for the whole of the term on either of the deals.

Since Ulster is part of RBS I would not expect the SVR to shoot off massively like other Building Societies do, saying that Ireland Bank may be similarly reliable in that sense. However Ulster's SVR currently is better so choose that if these are the only two choices you have...

Wh05apk

You are not comparing like with like, a 2 year tracker wll always be cheaper than a 5 year fixed, the £800 fee is negligible when spread over 5 years. The difference in rate is just over 1/2% which is nothing, 3.49% for 5 years gives you a nice comfort zone, historically 3.49% is still dirt cheap, I would take it every time.

marathonic

Yeah, that's one of the things that tempts me about the Bank of Ireland rate - I believe it's currently a best buy in the market for 5-year fixes.

The Ulster Bank rate will obviously work out cheaper initially but I'd be depending on house prices rising, or at least not dropping, to allow me to remortgage to another good rate in 2 years time.

marathonic

Any other opinions on whether this is a no-brainer either way or a tight call? There's one vote for each at the moment.

harvey115

It all depends on your taste really, if you are planning to overpay a lot of money than there would be higher ERC's attached with the longer fix. On the same time the longer the fix the less of a Risk...

StuC75

really boils down to if you think a rate increase is likely in the 2 years of the Discounted Variable (Tracker) mortgage - and how that would affect products available afterwards (e.g. fixed rate products would 'likely' move accordingly).. Granted rates 'may not change' in the time; but at present they 'most likely' could only go one way...

getmore4less

Whats the point of a discount tracker, why not get a proper tracker with a decent lifetime rate?

Then compare that against fixing and the costs of a remortgage in 5 years.

then it is what will happen to rates and how lucky you feel.

if you realy don't need to fix, then I would look at you paymnt plans and when you think tou will hit targets for better deals