Different types of house buyers need different types of mortgages
At the outset, there can be confusion as to why there are so many different types of mortgage products available.
When we explain to our customers that not all house buyers are the same, they begin to understand.
For example, consider a first-time home buyer and their requirements compared to a person who is looking to remortgage to add an extension to an existing property. Their needs are completely diverse.
Taking into account different mortgage categories, there are five types of mortgages to be had. Our website has mortgage calculator tools for each one.
Mortgage rates come with options too
Along with the five different types of buyers listed above, lenders also offer fixed rate mortgages and variable rate mortgages.
A fixed rate mortgage keeps your monthly repayment fee exactly the same for the duration of the mortgage term you sign up for. Knowing what to expect in terms of a standing order every month can be helpful for our customers who prioritise budgeting.
A variable rate mortgage offers more flexibility than a fixed rate mortgage. The repayment fee you pay each month will change after an initial term. You have the option to renegotiate your mortgage for a better interest rate if you know there are better deals to be had. Customers like variable rate mortgages for the options they provide to overpay mortgages without penalties.
Variable rate mortgages will also reflect what is happening in the wider interest rate market at any time.
If the economy is generally in a low interest rate phase, a variable rate mortgage can be more affordable. However, the inverse is also true. If interest rates begin to rise, variable rate mortgages will reflect that increase and cost more money. Therefore, you need to build flexibility into your budget if this is the type of mortgage you sign up for.
The CPCC (Competition and Consumer Protection Commission) shares more details on interest rates here
Mortgage cashback offers
Lenders are in the business of creating (among other things) mortgage products and selling them to buying customers.
To do this, they need to make their mortgage offerings as attractive as possible.
One of the ways lenders do this is by offering cashback deals on the mortgage products they provide.
Cashback deals differ too.
Some lenders might offer a straightforward sum to be deposited back into your account once you have drawn down your mortgage sum.
Other lenders might offer a percentage of the mortgage you have qualified for to be paid back to you in a few different instalments.
Some lenders also offer assistance with legal fees.
These different sweeteners contribute to the 250+ mortgages we see available in the Irish market.
And this is where we work closely with our customers to find the ideal mortgage deal for them.
It can be attractive to think that you’ll get back a large cash sum as part of a cashback deal. However, this needs to be balanced against the other elements of the mortgage you’re taking on.
We work with our customers to understand:
- The duration of the mortgage term
- The interest rate
- Whether it is a fixed or variable mortgage