Welcome to the Financial Column in association with Money Plus, Bridge Street, Boyle
Q. I am planning to purchase a house in the near future. I am looking at rates & offers from the various Banks. I have read many articles recently and they all warn against the Cash Back Offers.
What do you advise?
A. A house is probably the biggest purchase most people make in their lifetime. For this reason it is something that you should consider carefully. Equally, your mortgage is probably the biggest loan that you will ever need, and you will be repaying it for most of your working life. It is worthwhile taking the time to check out all your options.
The rates on offer vary considerably, depending on whether your preference is for a fixed or a variable rate, and on the loan to value. Most mortgage lenders are currently offering relatively attractive and competitive rates for fixed periods of 3 & 5 years. The advantage of a fixed rate is that you know that your repayment will remain the same for the fixed period and you can plan accordingly. The rate currently on offer reflect the fact that we are in an unprecedented period of low interest rates at present. We do not expect this to change in the short term.
The cash back offers which are available from some providers appear very attractive, particularly when most buyers need all their available cash when buying a house. However, as you rightly pointed out, all independent commentators are warning that this will be more than clawed back over the lifetime of your mortgage and I concur with this sentiment. You will notice that the providers who are participating in offers such as these have the highest variable rate in the market. I believe this is not coincidental. Fixed rates provide more certainty and clarity and at present are very competitive. While none of us have a crystal ball you need to think about what might be on offer when the fixed period expires.
I would strongly recommend that you consult with an independent broker who will consider your own particular circumstances and carry out a fair analysis of the marketplace. They will make a recommendation based on your personal situation. You will then be able to make an informed decision and proceed in the knowledge that you have considered all options.
There are important steps to take when considering a mortgage which will ensure that you have the best chance of a positive outcome. The earlier you look into these the better. I have outlined them in earlier editions, and space does not allow their inclusion in this article. My contact number is listed below and I would be happy to assist you with this and/or provide you with a full analysis if you feel it would be of benefit.
For all financial advise you should consult a local independent financial broker or adviser such as Money Plus. In this regard Belinda McCauley and her colleagues at Money Plus, Bridge St, Boyle would be delighted to assist you. Belinda can be contacted at 071-9194000/ 086-7847827 or by email: [email protected]