The chances of getting a bad deal, or even being ripped off, are huge for both new buyers and those switching mortgage providers.
Here are some of the issues to consider, whether it is your first mortgage or you are opting for a new lender by moving your mortgage.
Be wary of cash deals.
Some banks are offering cash-back deals for new buyers and switchers.
This “cash-in-the-hand” offer is proving very attractive. It can represent up to €2,000 on every €100,000 borrowed.
But you will get lower mortgage rates from the likes of AIB, EBS and HAVEN. This means that typically after just eight years, you would be better off at one of these.
Fixed or variable
Many banks have refused to reduce their variable rates, despite demands from Finance Minister Michael Noonan. They have instead offered attractive fixed rates. But be aware that you are locked in with a fixed rate, for the period of the deal.
Some mortgage experts think variable rates may fall again.
Banks’ history of care
Before opting for a particular bank, ask yourself how good is that lender’s customer care.
Cost is not the only consideration. Standards of service are also important. Has the bank a history of overcharging, and how does it deal with those in mortgage difficulty?
Lenders will insist that you take out mortgage protection insurance, a type of life insurance policy that pays off your mortgage if you die before the end of the term.
Your lender will often offer to sell you a policy, but you don’t have to buy it from them and, indeed, it can be much cheaper to buy elsewhere. Talk to a mortgage broker who may be able to offer more choice.
Term of mortgage
The longer the term of your mortgage, the cheaper the monthly repayments will be. However, stretching out the term means you end up paying more in interest over the life of the loan.
Consider moving your current account
Both AIB and KBC offer interest rate discounts to new buyers and switchers prepared to pay for their mortgage through the banks’ current accounts. This could make these lenders worth considering.
How are existing mortgage holders being treated?
When taking out a mortgage with a bank, make sure that lender is passing on any rate reductions to existing customers.