A Special Report is content that is edited and produced by the Special Reports unit within The Irish Times Content Studio. It is supported by advertisers who may contribute to the report, but who do not have editorial control.

Looking for a mortgage? Shop around

Savvy borrowers can save more than €42,000 over the lifetime of a loan

istock

A homebuyer borrowing €280,000 over 25 years can save almost €150 a month in repayments between the cheapest and most expensive options available.

 

When it comes to a mortgage, there is a lot to be said for shopping around. According to the latest information from the Competition and Consumer Protection Commission, a homebuyer borrowing €280,000 over 25 years can save almost €150 a month in repayments between the cheapest and most expensive options available.

Best value at the moment in variable rates is the Ulster Bank Lifetime Loyalty Flexible Variable mortgage at 3.1 per cent. This works out at €1,150.63 per month in repayments over 25 years. At the other end of the scale is the Bank of Ireland variable mortgage at 4.2 per cent, with a monthly repayment of €1,293.46.

In between these are KBC, Haven Mortgages, AIB, EBS, and Mortgagestore.ie, with rates varying between 3.2 per cent and 4.05 per cent. The monthly repayments range between €1,163.23 and €1,273.44.

To put this in context, over the lifetime of the cheapest and most expensive mortgage on the list below, the difference in total repayments would be an eye-watering €42,892.

Of course, there are terms and conditions attached to all of these rates and individual borrowers may or may not qualify for them so research is essential. Ulster Bank has introduced its innovative TokBox video chat technology to help customers in this regard. The bank has also returned to the broker market.

“Looking at the mortgage market I really don’t think there has ever been a time when broker advice has had as much relevance,” says Karl Deeter of Irish Mortgage Brokers. “Pepper has really good rates and are matching the best out there at certain LTVs. Frank Money will be offering 20-year fixed rates at very competitive rates. There is competition out there and advice from a broker is important in terms of getting the best proposition for individual needs.”

He believes Irish mortgage rates represent good value at present despite some commentary which claims otherwise. “There is a war of attrition going on,” he says. “If the banks can’t get new business they are going after the existing business of the other banks and attracting people to switch. There are some very attractive switching offers out there as a result. Whilst our variable rates might appear high compared to Europe, that’s not really the case. If you do an actual like-for-like cost comparison which includes all the fees involved you’ll find that we all pay pretty much the same in the end.”

There are also some remarkably good fixed rate deals for borrowers who need a bit of certainty. Ulster Bank announced a three-year fixed rate of 2.99 per cent last month. It’s part of the bank’s Loyalty Product range and it applies to new and existing customers. That works out at just €1,136.86 a month – €14 a month less than the variable option

The next best for a three-year fixed mortgage are KBC and Bank of Ireland, who both offer a rate of 3.1 per cent which translates into repayments of €1,150.63 a month. In both cases a better rate than they are offering for variable rates. Indeed, at present the best-value mortgages in the market appear to be the three-year fixed offerings.

“There are some really competitive fixed rates on offer,” says Deeter. “You can get fixed rates that are actually lower than variable rates. The banks want to lock you in for longer by offering you a good rate. You can’t move within the period without penalties. They want your loyalty and they are willing to pay for it. When the bank is paying you to do business with them you know there is something wrong. This is defensive pricing, they would rather take less to lock you in. That’s the way the market is at the moment.”

However, borrowers have to be aware their mortgage will trip into a variable rate which is often considerably higher than the fixed rate once the term expires. Very often there is an option to move to a new fixed rate but the great value which is exists now won’t necessarily be available in three years’ time. The best strategy is to be ready to shop around and even switch to another provider when your fixed term ends.

Variable rate mortgages

First-time buyer borrowing €240,000 for a €300,000 home over 25 years

Ulster Bank Lifetime Loyalty Flexible Variable 3.1% €1,150.63

KBC 3.2% €1,163.23

Haven Mortgages 3.3% €1,175.91

AIB 3.3% €1,175.91

EBS 3.5% €1,201.50

Mortgagestore.ie 4.05% €1,273.44

Bank of Ireland 4.2% €1,293.46

Fixed-rate mortgages

Three-year fixed rates for a first-time buyer borrowing €240,000 for a €300,000 home over 25 years.

Ulster Bank Loyalty 2.99% €1,136.86

KBC 3.1% €1,150.63

Bank of Ireland 3.1% €1,150.63 

Permanent TSB New Business Fixed 3.6% €1,214.41

AIB 3.65% €1,220.89

EBS 3.65 %€1,220.89

Haven Mortgages 3.65 % €1,220.89