Currently in Ireland there are 9 institutions that offer mortgages: Allied Irish Banks (AIB), Bank of Ireland (BOI), EBS, Finance Ireland, Haven Mortgages, ICS mortgages, KBC Bank Ireland, Permanent tsb (PTSB) and Ulster Bank.
When comparing these different institutions, it is important to consider how much you are borrowing. Depending on what you have saved and your down payment on a property, the amount you are borrowing compared to the total value of the property is called the loan-to-value (LTV) ratio.
For instance, if someone borrows €130,000 to purchase a house worth €150,000, the LTV ratio is €130,000 to €150,000 or €130,000/€150,000, or 87%. Lenders are always looking for lower LTV ratios. This is due to the fact that a higher ratio means more risk for the lender. If you borrow a higher percentage of the property value, the lender is giving you more money and it may be harder to get their investment back. Different lenders have different rates for each level of LTVs.
Depending on your LTV, mortgage rates can be as low as around 2.5% interest but go up to about 4.5%. Lots of lenders also have some cash back incentives. Currently, BOI is offering 3% cash back to all new customers, with no maximum cashback. Similarly, EBS is offering 3% cashback to everyone who switches over to them, and PTSB is offering 2% cashback for all new mortgage customers. Another incentive some banks are going for, is giving money towards legal fees. For clients who switched over, KBC is offering €3,000 towards legal fees. AIB and Ulster Bank have similar offers, with €2,000 going towards legal fees at AIB and Ulster Bank giving €1,500. In addition, both AIB and KBC are offering discounts off home insurance (30% and 25% respectively).
There’s also a question of whether you are looking at a variable rate or a fixed rate. Both types of loans are heavily influenced by your LTV, however there are some other variables that go into a fixed plan. Fixed plans take into consideration the amount of time the rate will be fixed. As the amount of time the rate is fixed goes up, so does the rate itself.
With any major life decision, research is essential in getting the best results for you. Looking at incentives, types of loans and rates themselves can help you decide what institution is best. A very easy way to get all this information, is by using a broker such as the ones at Yes.ie. But a little help, especially for new buyers can go a long way with saving money in the long run.