Mortgage holders could save €37,000

CONSUMERS are being urged to shop around when it comes to mortgages — amid claims first-time house buyers could save €37,000 by doing so.

New research comparing mortgage products from the eight leading mortgage providers in the market — undertaken by independent mortgage broker Simply Mortgages — is based on a €227,000 loan on a house valued at €320,000 over a variety of different terms.

The potential saving of €37,000 arises if the difference between the best and worst tracker rates were maintained for the duration of a 30-year term.

The best value rate available was 4.42%, or €1,222 per month, currently provided by NIB. The highest rate was 5%, or €1,325 per month currently charged by Halifax and EBS. The difference between these two offers is a potential saving of €37,080 over the lifetime of the mortgage.

According to the research the most competitive three-year fixed rate was 5%, provided by Bank of Ireland.

The highest fixed-rate mortgage was from AIB at 5.18%, a difference of €12,600 over the test case lifetime.

The biggest potential saving was found to be with those who opted for a five-year fixed rate.

The most competitive rate offered for a 35-year mortgage of €227,000 over this timeframe was 4.94% a month, provided by First Active and Ulster Bank.

The highest rate was 5.25%, again charged by AIB. This equates to a potential saving of €19,320 over the lifetime of the mortgage.

With saving money on your mortgage payments heightened in importance since last week’s latest European Central Bank (ECB) interest rate hike, the survey is aimed at highlighting the importance of ongoing assessment of mortgage borrowings and lending rates.

“We’re not advising homeowners to switch provider every year but we are saying that an annual review will ensure they switch mortgage provider at the right time,” according to Peter Bastable, managing director of Simply Mortgages.

“This is a point-in-time survey. It’s obvious that rates will change and the differences between rates will rise and fall over any mortgage term. However, it does highlight the point that many people could be saving a significant amount of money by conducting a regular mortgage audit,” he added.

“As mortgage interest rates creep upwards it is vital that homeowners are aware of what rates are available in the marketplace and where the best value can be found. If homeowners are thinking of fixing, or coming to the end of their

current fixed term, they should consider the options available in order to achieve the best deal, bearing in mind that banks will soon amend their rates to take into account the latest ECB rate rise,” he said.

According to research, more people are now opting in favour of tracker mortgages or short to medium-term fixed rates rather than standard variable rates.