It emerged last week that Irish mortgage-hunters are among the "best-informed" in Europe: they apparently know exactly which questions to ask of their lender before agreeing to a loan and thus should always be confident of agreeing the best deal that could possibly be on offer.
As with all such market surveys however, there will always be a small number of consumers who will fall outside what we're told is the norm, and will continue to face the mortgage market with little idea of what they actually need or want to take from it.
For these individuals, one of whom contacted The Irish Times just hours before the above-mentioned research was made public, the notion of ever being on top of all that mortgage advice is simply laughable.
The mortgage-hunter in question, a professional who is a first-time buyer, had presented a broker with all the employment and bank-related documentation needed before a loan application can be considered. He was then contacted by the broker in question to be told that he had been mortgage-approved by X lender for X amount of money. This information, which came in an e-mail, was presented in a rather scant form, with the broker offering no information on rates, terms or other lenders.
The customer, who was happy to be told he had received any kind of mortgage approval at all, was at a loss over exactly what else he needed to know. And so the information gulf that we are told no longer exists was in clear evidence. The good news is that it does not have to be this way.
The process of gaining knowledge begins at the very root of the mortgage hunt, with the consumer's choice of the brokers or lenders he/she wants to approach arguably the most crucial step in the whole business.
The basic principle to keep in mind here is that it will always make sense to shop around, no matter how tedious this might be. Brokers can help to share the burden in this regard, since they will be able to present your details to a range of lenders on your behalf.
This can be more or less effective depending on the broker chosen, with those who maintain relationships with a large number of lenders offering more opportunity for shopping around than those who have links with just a few. Consumers should also be aware that some lenders - EBS and National Irish Bank for example - do not offer their mortgages through brokers, and must thus be approached on an individual basis.
Once an adviser has been chosen, it is important to ask as many questions as possible about the kinds of mortgages that may be on offer in the market. If you do not understand the difference between fixed and variable rates, for example, you should ask your mortgage adviser to explain the matter until it is clear. You should also ask them to explain other structures that might be on offer, such as tracker mortgages or current-account loans.
The next thing to consider will be the mortgage rate, and how this will vary according to product or lender.
Most lenders will make an extra effort to offer a low rate to new customers for the first year, so it will always be important to look at how this could change when the loan moves into its second year. The shift could make repayments substantially more expensive.
Consumers must also think carefully about how long they would like their mortgage term to be. In theory it can be any length up to 40 years depending on the lender and the amount borrowed, but most people will limit themselves to multiples of five - i.e., 20, 25 years and so on. Put simply, the longer the term, the more costly the mortgage will be over its life. The flipside of this is that longer terms will entail lower monthly repayments.
This basic information is only the start. After the mortgage will come the health insurance, the survey and valuation, the house insurance and all sorts of other little financial delights. As with the mortgage, the principle of shopping around is guaranteed to bear fruit in each of these areas, as will the ability to ask questions, no matter how unappealing this may seem.
