Purchasing a home is an exciting milestone, but it also involves navigating the complex world of mortgage lending. In Ireland, there are several lenders that offer mortgage loans, each with its unique features and offerings. To shed light on the topic, we spoke to Joe Flanagan, Business Development Manager at Irish Mortgage Corporation, who shared valuable insights into the Irish mortgage market. In this article, we will discuss key differences between lenders including cashback offers, fixed rates, variable rates, overpayment options, and the advantages of using a broker to find the best solution for your needs.
There are currently seven mortgage lenders in Ireland – AIB (including Haven & EBS), Avant Money, Bank of Ireland, Finance Ireland, ICS Mortgages, Permanent TSB & Spry Finance who offer a wide range of rate options, cash incentives and special offers. Here are some of the key aspects of those,
Cashback Offers: A Tempting Proposition
Many Irish lenders entice potential borrowers with cashback offers, which provide a lump sum of money upon drawdown of the mortgage. This can be appealing, especially for first-time buyers who may need additional funds for moving costs, furniture, or home improvements. However, it is crucial to consider the overall cost of the mortgage, including interest rates and fees, as the cashback offer may not always outweigh these expenses in the long run. Consulting with a mortgage broker can help you assess whether a cashback offer aligns with your financial goals and circumstances.
Fixed Rates: Stability and Predictability
Fixed-rate mortgages offer stability and predictability in mortgage repayments. With a fixed rate, the interest rate remains constant for a specific period, usually two to five years. This can be advantageous for borrowers who prefer a steady budget or anticipate future interest rate increases. However, it is essential to note that fixed rates may initially be higher than variable rates. Joe advises that when considering a fixed-rate mortgage, it is crucial to evaluate your future plans and potential penalties for early repayment or switching to another product.
Variable Rates: Flexibility and Potential Savings
Variable-rate mortgages, on the other hand, are tied to the lender’s standard variable rate (SVR) or their loan to value (LTV) variable rate, which can fluctuate with changes in the overall interest rate environment. Variable rates often offer more flexibility, allowing borrowers to make overpayments or switch products without incurring significant penalties. Additionally, borrowers can benefit from potential interest rate decreases, leading to savings over time. However, variable rates may also increase, and thus, it is important to carefully assess your risk appetite and financial circumstances when considering this option.
Overpayment Options: Accelerating Loan Repayments
One key aspect to consider when selecting a mortgage is the ability to make overpayments. Overpaying your mortgage allows you to reduce the overall term of the loan and save on interest payments. While some lenders may impose limits on overpayments, others provide more flexibility. Joe suggests that if you have the financial means to make regular or lump sum overpayments, it is worth considering lenders that offer favourable terms in this regard.
The Value of a Mortgage Broker
With numerous lenders and mortgage products available, it can be overwhelming to find the best solution to suit your needs. This is where the expertise of a mortgage broker becomes invaluable. A broker has access to multiple lenders and can assess your financial situation, preferences, and long-term goals to find the most suitable mortgage options. They can guide you through the application process, help you compare offers, and negotiate on your behalf, ultimately saving you time and potentially money. Also, while there is a perception that your broker will charge a fee for this service, at Irish Mortgage Corporation, we do not apply any fee and we get paid a commission by your chosen lender at no extra cost to you. Only c.15% of mortgage brokers in Ireland have access to all lenders in the market so make sure you choose a broker who will give you the opportunity to avail of the best lender option to suit your needs.
Conclusion:
Securing a mortgage is a significant financial decision and understanding the various options and offerings is crucial. When evaluating banks, consider factors such as cashback offers, fixed rates, variable rates, overpayment options, and eligibility for government schemes. Consulting with a mortgage broker, like the Irish Mortgage Corporation, can simplify the process and help you find the best mortgage solution to suit your needs. By making an informed decision, you can embark on your homeownership journey with confidence.
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