THE JOURNEY TO your first home is an exciting time, but one that can lead to a lot of questions. How do I know I’m getting a good deal on my mortgage? How long will it take me to pay everything back? And what does LTV mean?
Most people find the process “overwhelming” to begin with, notes Ciara Ryan, a Mortgage Consultant with permanent tsb. That’s normal, she says:
With all the new terms and acronyms it can almost feel like learning a new language.
Taking some time to ask questions and get to grips with the basics can make the process a lot simpler in the long run.
Use the sliders below to build a picture of your mortgage know-how, see how you compare to others, and get some expert insights along the way. Each time you give a rating, you’ll see how your number matches the overall reader average. Let’s start at the beginning…
Already know what’s what? Nice one! If you’re not so sure, here’s a run-through of the two main mortgage types available to first time buyers.
Fixed rate: With a fixed rate mortgage, your interest rate and the amount you pay monthly stay the same for a set term, because they’re ‘fixed’. A fixed rate option can make it easier to plan ahead, which is helpful if you’re on a strict budget. Ciara gives the example of a mortgage with a three-year fixed rate:
This allows you stability for the first three years – knowing that your repayments will not change for that time can give you extra peace of mind when looking ahead to the future.
It’s worth noting that while your repayments will not rise during the fixed rate period, they will not fall either, meaning you could miss out on lower interest rates and lower repayments, and your mortgage could end up costing more in the long run. It’s also good to keep in mind that if you did want to pay off a fixed rate loan early, charges may apply.
Variable rate: With a variable rate mortgage, the interest rate can rise or fall. Variable rate mortgages typically offer more flexible payment options. You can choose to increase your repayments at a given time, or use a lump sum to pay off all or part of your mortgage. While this flexibility can be appealing for some, remember that your mortgage repayments can both increase and decrease during the term of your loan – something to keep in mind if you’re just starting on your mortgage journey.
Both rates have different benefits, and you can get closer to finding your perfect match using permanent tsb’s Mortgage Rate Selector tool. Now, let’s drill a little deeper into your mortgage wants and needs…
2. What are your must-haves?
Along with the mortgage rates, there are other things to consider, such as the amount of cashback you can receive at drawdown from your mortgage provider. You may want some extra cash to help start you off in your new place – this could form part of your décor budget, be used to make a ‘dream’ purchase (hello, super-comfy bed) or just be added to the rainy day pot.
For example, permanent tsb offers 2% cashback at drawdown to help you turn your house into a home. To bring this to life, on a €300,000 mortgage, that would mean €6,000 in your pocket after drawdown.
So you’re a little closer to figuring out your must-haves and dealbreakers, but there may still be other areas that you’re finding confusing.
Sometimes, the mortgage journey can feel more like a maths exam, with percentages and abbreviations coming at you from all sides. Let’s see where you stand…
Master of jargon? Well done. If you’re still feeling puzzled, you’ll find plenty of explanations for common terms on permanent tsb’s Mortgage Jargon Buster. (And by the way, LTV stands for loan-to-value, the price comparison between the value of your home and the value of your loan.)
When it comes to mortgages, everyone has a well-meaning opinion to share: your friends, your parents, that lady at the hairdresser’s.
Figuring out fact from fiction is tricky – which is where a good Mortgage Consultant can come in handy. Read on for three key mortgage myths, busted by Ciara…
Myth #1: I’m paying high rent, so I’ll never get mortgage approval
Once you have that deposit saved, paying rent can actually work in your favour. “By showing you can pay your rent every month, you’ll demonstrate your ‘repayment ability’ to the bank, showing that you can meet your monthly repayment commitments.”
Myth #2: I should just aim to save the minimum required deposit
While there’s nothing wrong with just saving the minimum amount, if you can afford to put more aside, it could save you more money in the long run. “The mortgage rate can be different depending on your loan-to-value ratio. So if you are able to save more than required towards your deposit, you may qualify for a better mortgage rate.”
Myth #3: I need to have my deposit saved before talking to my bank
“It’s never too early to make an appointment. Mortgage Consultants like myself are here to help you through your home journey, every step of the way – from savings right through to drawdown.”
Offer available to new applicants who receive full letter of approval within the qualifying period. 2% cashback at drawdown is paid into the customer’s mortgage paying account within 40 working days of mortgage drawdown and excludes tracker, buy-to-let, negative equity and applicants refinancing an existing permanent tsb mortgage. The qualifying period (11 January 2016 until 31 December 2020) may be extended as permanent tsb decides. Rates available to new and existing home mortgage customers only. Product eligibility criteria applies. Lending criteria, terms and conditions apply. Security and Insurance required. permanent tsb p.l.c is regulated by the Central Bank of Ireland.
Start your journey home with permanent tsb. We know that buying your first place is a big decision, and we’re here to support you every step of the way, from our lowest rates to our mortgage cashback offer. Find out more over on our website here, or book an appointment to start your journey home today.
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