New lower variable rate from KBC

Another downward rate change this week, which is always welcome.

KBC just launched a new variable rate 2.59% (APR 2.62%) for new business - re-mortgages, trader uppers & FTBs. Max LTV 80% for FTBs & trader-uppers and 60% for re-mortgages.

Not the best variable rate in the market but KBC do offer the facility to re-draw overpayments - you can make regular or ad-hoc overpayments but can ask for them back at any time, which is a nice feature.

They'll also do some refinancing of existing debts on re-mortgages, which AIB won't.

New fixed rate for First Time Buyers

ICS have announced a new two-year fixed rate at 2.75% (APR 2.7%) which is available only to First Time Buyers. AIB already have a two-year fixed rate just five basis points higher at 2.8% (2.84%) for all mortgage customers, First Time Buyers, trader-uppers, those switching lender etc.

At around €410 per month per €100,000 borrowed over 30 years before tax relief, these rates seem like a reasonable bet for someone who wants a bit of security for the next couple of years.

That said, I will repeat two of my old mantras about fixing - (1) Don't fix in an attempt to beat the variable rate, unless you really believe you know more than the bankers. Predicting the long-term movement of variable rates is well-nigh impossible. Fix if you want the peace of mind of knowing what your repayment will be and then forget about it. (2) Don't Don't DON'T give up on a good tracker variable rate to avail of a fixed, unless you're very close to the end of your mortgage term. Chances are you'll never get your tracker rate back and the variable rate options at the end of your fixed period may be far higher than the tracker you have now.

Tax Relief on Life Assurance

I'm surprised that life assurance companies don't spend more money advertising this, but if you want something done, you might as well do it yourself! There is a form of life assurance policy that can qualify in full for tax relief at your highest rate, which can therefore knock up to 41% off the cost. In some instances you can also claim back Employee PRSI relief on the premium.

Such policies are available to the self-employed and those in non-pensionable employment (i.e. in employment but not in an Occupational Pension Scheme.) One fact that is not widely known is that if you contribute to a PRSA, you are deemed by Revenue to be in non-pensionable employment, even if your employer contributes to your PRSA. So you would still be eligible to hold a tax-efficient life assurance policy.

Some points to note about life assurance policies on which you can claim tax relief: -

(1) They only provide cover on death and have no value except on death.

(2) They cannot be assigned so you can't use them as security for a mortgage or other loan.

(3) You cannot have a joint policy, although if you and your partner are both self-employed or in non-pensionable employment you can each have such a policy.

If you're eligible and are seeking to protect your dependents at a reasonable cost, this is definitely worth enquiring about.