Image Which bank has the best mortgage rates for first-time buyers?
Image Daragh Cassidy
Head Writer

Buying a home is one of the biggest financial decisions you’ll ever make and your mortgage repayments are likely to be your largest monthly expense for years, so it’s important you find the best deal for you. In this article we compare the best mortgage rates currently on offer to 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 the average first-time buyer is borrowing around €225,000 at present, so these comparisons were made using a loan of that amount, borrowed over 30 years, on a property worth €250,000 i.e. 90% loan-to-value ratio.  

The best variable rates for first-time buyers:

Provider

Interest Rate

Monthly Repayment

AIB 3.15% €966.91
Haven 3.15% €966.91
Finance Ireland 3.15% €966.91
ICS Mortgages 3.15% €966.91
KBC 3.30%* €985.40
Permanent TSB 3.40%** €997.83
EBS 3.70% €1,035.64

*This rate is reserved for customers who also hold a current account with the bank. Find how switching current accounts could help you get a better mortgage rate.

**Discounted rate for one year. Rate reverts to 3.90% from year two onwards.

Best variable rates for first-time buyers

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.

First-time buyer incentives

For instance, KBC is offering a discount of 25% on home insurance, Permanent TSB is offering 2% of your mortgage back in cash, while both Bank of Ireland and EBS are offering up to 3% cashback. Not be outdone, Ulster Bank offers €1,500 to help towards your legal fees as well as a free home valuation.  

Offers such as these are certainly worth considering and it’s particularly easy to understand the lure where cashback offers are concerned - it’s wonderful to finally secure your dream home with a mortgage but it’s not much good if you can’t afford to furnish it!

Using the same example from above, if you were to take out a €225,000 mortgage with EBS or BOI, the 3% that you would get back in cash would give you €6,750 in total (€4,500 upfront and €2,250 after five years), which is certainly nothing to be sniffed at.

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 offer the poorest rates, and as you can see, many of these lenders don't make it onto our table.  

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 with 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.

Fixed rates of up to 20 years are now available in Ireland although most first-time buyers choose either a three or five-year rate to start with. 

Provider

Fixed rate over 3 years

Monthly repayment

Avant Money 2.35% €871.57
KBC 2.35%*  €871.57
Haven 2.55%  €894.88
AIB 2.55%   €894.88
ICS Mortgages 2.60%  €900.76
Finance Ireland 2.65% €906.67
EBS 2.90%  €936.52

Provider

Fixed rate over 5 years

Monthly repayment

AIB 2.25%** €860.05
Avant Money 2.50% €889.02
KBC 2.50%* €889.02
Haven 2.55%  €894.88
ICS Mortgages 2.60%  €900.76
Finance Ireland 2.80%  €924.51
EBS 2.90% €936.52

*This rate is only for customers who also hold a current account with the bank. Find how switching current accounts could help you get a better mortgage rate.

**Only available to those buying a property with a BER of B3 or higher.  

Best fixed rates for first-times buyers

From a quick glance at this second table, it would appear that fixed-rate mortgage customers are getting a better deal compared to variable rate customers. This is true - for now - and fixed-rate customers can take comfort in the stability that fixed rates afford. They can rest easy in the knowledge that their rate will not increase for the duration of the fixed term.

However, it also means that they won’t be able to benefit from falling rates and it could well be the case that the customer on the variable rate ends up paying less in the long run than those on fixed rates. 

In terms of incentives and cashback deals, all the banks are offering the same incentives to fixed-rate customers as they are to variable-rate customers as outlined above. The exception is KBC which is offering €1,500 to help towards legal fees for those who choose a three, five-year or 10-year fixed rate.

I see Ulster Bank and KBC mentioned...

Ulster Bank and KBC have of course both announced that they're planing to exit the Irish market. However for now both lenders remain very much open for new business and both have very competitive offers. And if you take out a mortgage with either bank, any new lender who may eventually take over their business will have to honour the same repayment terms and conditions that you originally signed. So you have little to worry about. 

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 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 last while and they are now the rate of choice for around 80% of all new first-time buyers.

Take time to consider all of your options

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 fixed rate, over 7 or 10 years, which tend to have slightly higher rates of interest and therefore didn't make our list. 

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.