In Ireland today, there are 10 mortgage lenders: Allied Irish Banks (AIB), Avant Money, Bank of Ireland (BOI), EBS, Finance Ireland, Haven, ICS Mortgages, KBC Bank Ireland, PermanentTSB, and Ulster Bank. Each one of these lenders is a financial institution that offers home loans to aspiring home buyers.
When choosing the institution that fits your needs the best, one of the big factors to consider is how much you are looking to borrow. Each lender will assess your credit score, debt, and other assets all differently. One of the most important pieces of information that they will look at is the loan to value ratio (LTV). This is calculated by dividing the amount you are borrowing by the estimated value of the property you want to purchase.
The reason that the LTV is so important is that it shows the lender how much risk they are at. Ideally, a loan will have an LTV of 80% or less. The higher the LTV, the higher risk the loan is. For example, if a lender gives you a €155,000 loan to purchase a house that costs €170,000, the LTV ratio would be €155,000/€170,000, or 91%. Since the LTV is well above 80%, this mortgage application will appear to be very risky to lenders.
Another huge factor for you to consider when choosing a lender is the interest rate each one offers. Each lender has different interest rates for each level of LTV, meaning that one lender may give you an interest rate of 3% with your LTV, while another may give you an interest rate of 4% for the same LTV. It may not seem like a huge difference now, but it is very beneficial to find the lender that offers you the lowest interest rate, allowing you to save your money on your monthly mortgage payment, as well as reduce the amount you have to pay on your loan over time.
The process of choosing a mortgage lender can be confusing, especially for first-time buyers. Taking time to find the lender that suits your needs is the best way to ensure that you make the most of your money. Using a mortgage broker to help you find the best lender for you may be the best route to take. Mortgage brokers work as an intermediary between you, the aspiring home buyer, and the lender, to get the best deal for you.
We recommend you use an online mortgage platform, such as onlineapplication.io, to help you get the best deal on your mortgage. We take pride in making mortgages and insurance easier, faster, and better for everyone. Check out our home page for some more in-depth information on how we can help you!