Which is the best lender for a first time buyer?

[paulie]

Reading through these (very informative) threads it seems like all major mortgage providers are charging two separate variable rates.
One for existing customers fixed at whatever they signed on with and one for new business.
Given that rates are falling, this effectively means that any "variable" rate you are offered is effectively fixed. In the event rates rise then it's really upwards only.
This applies for KBC, EBS and BoI from various threads I've seen so far.
Am I misunderstanding things?
I'm looking to get a first time buyer's mortgage and have to say the whole thing is very confusing!
With rates falling, it would seem to be best to ignore the current "variable" rates on offer and just go for whoever actually adjusts rates equally for new and existing business?
Yet everyone still seems to focus on the rates on offer, what am I missing?

 

[Brendan Burgess]

Hi Paulie

It's a very good question and very hard to answer. Here are my current thoughts on it.

Ulster Bank treats its existing customers exactly the same as new customers, so if the rate difference is not too big, then I would go variable with Ulster Bank.

AIB and ptsb pass on rate reductions to existing customers as well. However, if you start with a 90% LTV mortgage, and you later reduce the LTV to 80% or 60%, they do not allow you to avail of the lower rate. Ulster Bank does allow you avail of the lower rate.
(permanent tsb does not offer existing customers fixed rates, but that should not be a factor in your decision, as it will be remedied shortly.)

Bank of Ireland is tricky. They have not cut their Standard Variable Rate. Existing customers have no right to move to a lower LTV rate - however, if you threaten to leave, then you will be able to get a lower rate. To make matters more complicated, they give 2% cash back to new customers but you must stay with them for 5 years. And they have competitive enough fixed rates if you want to fix. ( My personal view is that fixing at rates around 1.5% to 2% above the Eurozone average is not a good idea, and this is debated elsewhere.)

KBC offers new customers rates which are lower than other lenders, but they screw existing customers. Avoid.

 

[paulie]

Thanks Brendan, very informative.

Everyone I have spoken to just goes straight to KBC based on the advertised rate, not knowing about the true cost of these terms.
I agree that Ulster Bank seem better value with this in mind.
And if you have a large deposit AIB can actually come out on top.

One thing for sure is that customers are probably losing out due to all this complexity.
Describing these so-called variable rates as "upwards only" might be a good way of increasing awareness of the problem!

Cheers,