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 CSO the median price of a home in Ireland is around €300,000. A first-time buyer would need a deposit of €30,000 so these comparisons were made using a loan size of €270,000, borrowed over 30 years, on a property worth €300,000 i.e. 90% loan-to-value ratio.  

The best variable rates for first-time buyers:

Provider

Interest Rate

Monthly Repayment

AIB 3.15% €1,160
Haven 3.15% €1,160
Permanent TSB 3.40%* €1,197
EBS 3.70% €1,242
ICS Mortgages 3.95% €1,281
BOI 4.50% €1,368
Finance Ireland 5.15% €1,474

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

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, Permanent TSB is offering 2% of your mortgage back in cash, while Bank of Ireland is offering up to 3% cashback. And 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 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 €270,000 mortgage with BOI, the 3% that you would get back in cash would give you €8,100 in total (€5,400 upfront and €2,700 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.  

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 as you're paying for the peace of mind and 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 loan! However most first-time buyers choose a five-year rate to start with. 

Provider

Fixed rate over 5 years

Monthly repayment

BOI 2.20%* €1,025
AIB 2.25%* €1,032
BOI 2.50%** €1,066
Haven 2.55%  €1,073
EBS 2.75%  €1,102
PTSB 2.85%** €1,116
Avant Money 2.90% €1,123

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

**Must be borrowing over €250,000 to get this rate.

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, most of the banks are offering the same incentives to fixed-rate customers as they are to variable-rate customers as outlined above. The exception is EBS which is offering up to 3% cashback with its fixed rates. 

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 over 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-term fixed rate, over 7 or 10 years, which tend to have slightly higher rates of interest. 

Also 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.

And when it’s time to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started.

Our mortgage service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too! 

To find out more about our mortgage broker service, see here.

Get in touch with us

Are you a first-time home buyer looking to apply for a mortgage? If you have any questions, we’d be happy to help. 

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