Which bank has the best mortgage rates for first-time buyers?

If there's one bill you don't want to overpay on it's your mortgage!

Below you’ll find a comparison of the best variable rates currently available to first-time buyers, followed by the best fixed rates.

According to the Banking & Payments Federation Ireland (BPFI) the average first-time buyer loan is around €270,000.

So comparisons were made using a loan of this size, borrowed over 30 years, on a property worth €300,000 i.e. a 90% loan-to-value ratio/10% deposit.  

The best variable rates for first-time buyers

*You can split your loan amount in two - half on a fixed rate and half on a variable rate 

First-time buyer incentives

From the above table, we can see that the lenders offer a variation of rates and keep in mind that they also offer different incentives to sweeten the deal - designed to entice you to choose them over another provider. For instance, PTSB is offering 2% of your entire mortgage back in cash, while AIB offers a discount on your home insurance for the first year as well as free day-to-day banking if you pay your AIB mortgage from an AIB current account. 

Offers such as these are certainly worth considering and it’s particularly easy to understand the lure where cashback is concerned - it’s wonderful to finally secure your dream home with a mortgage but it’s not much good if you have no money to furnish it!

Using the same example from above, if you were to take out a €270,000 mortgage with PTSB you would get €5,400 back in cash.

But before you’re swayed by any lucrative cashback offers, spend an equal amount of time considering their value over the lifetime of your loan. This is because the lenders which offer the best cashback deals often charge higher rates.  

It also hardly goes without saying that the above-quoted rates are variable, so will be subject to change. This means that the cost of your monthly repayments could go up, or down, over the course of your mortgage depending on whether interest rates rise or fall. 

If you'd prefer the predictability of a fixed-rate mortgage, read on…

The best fixed rates for first-time buyers

With fixed rates you have a choice over the length of time you want to fix your rate for. As the name suggests, a fixed rate will not change for the agreed time period.

Usually the longer the fixed rate the more expensive it is as you're paying for the peace of mind, certainty, and costs associated with fixing.

Fixed rates of up to 30 years are now available in Ireland meaning you could have the same repayment for the entire length of your mortgage! However most first-time buyers choose a five-year rate to start with. 

These rates are based on someone buying a home with a BER between C and G. Some lenders offer discounted 'green' rates for those buying a home with a BER of A or B. However BOI now offers a sliding scale discount on all BER rated properties from A to G. 

*must be borrowing over €250,000 to get this rate. Rate depends on the exact energy rating of the property you buy.  

From a quick glance at this second table, you can see that fixed-rate mortgage deals with most lenders are slightly more expensive than variable-rate deals. However fixed-rate customers can take comfort in the stability that fixed rates offer. They can rest easy in the knowledge that their rate will not increase for the duration of the fixed term. Variable rates, on the other hand, can rise or fall, and it could still be the case that the customer on a fixed rate ends up paying less in the long run than those on variable rates. 

In terms of incentives and cashback deals, there are some differences in terms of incentives for fixed-rate customers. For example, EBS is offering up to 3% cashback with its fixed rates and Haven offers a flat €5,000% cashback on fixed mortgages of over €250,000. 

BOI's fixed rates listed here don't come with cashback. However many of its other (slightly higher) fixed rates offer up to 3% cashback.

Fixed rate versus variable rate?

One of the big decisions in the mortgage application process is to decide whether you’re going to choose a fixed or a variable rate. Each has its own advantages and disadvantages which we discusss here but ultimately, the most appropriate type of rate for you will come down to your personal preferences, your financial situation and the value that you put on stability and predictability.

Though variable rates have traditionally been the more popular option in Ireland, the popularity of fixed rates has been on the rise for the past several years and they are now the rate of choice for well over 80% of all new first-time buyers.

Take time to consider all of your options

From the tables above you can say how wide a variation there is in interest rates among the different lenders. Which highlights the importance of shopping around!  

Also, be aware that the above options are not exhaustive and are based on a single example. You might have better options, for example, if you have a bigger deposit and therefore a lower loan-to-value ratio. You might also prefer the added peace of mind of a longer-term fixed rate, over seven or ten years, which tend to have slightly higher rates of interest. 

The BER of the home you're buying, as well as the amount you're borrowing, will also affect the rate available to you.

To be sure that you’ve considered all of the options available for your particular circumstances, run your own comparison using our mortgage calculator. It’s quick, free and easy to do and will certainly help you on your journey to purchasing your dream home.