Today there were announcements from AIB and KBC that they would cut mortgage rates on several of their mortgage products . AIB announced that it would lower its variable rate by 0.25% at the beginning of Q3 and KBC also announced several cuts to its products – see the attached picture for a summary of the cuts.
Having recently gone through the process of finding the best business loan on the Irish market I understand there is a lot of information out there – which makes it very hard to know which bank to approach.
In Ireland there is definitely a feeling that you are lucky if your business gets approved for a loan and that you should take whatever terms the bank offer – but why should you pay more than you have to?
Below is a comparison of the business loans available to SME’s in Ireland.
|Provider||Product Name||Information||Interest Rate|
|Bank of Ireland||Secured Small Business Loan||Up to €300,000, available to new and existing customers||5.74%|
|Bank of Ireland||Unsecured Small Business Loan||Up to €300,000, available to new and existing customers||6.74%|
|AIB||Standard Business Loan||6.50%|
|Ulster Bank||Secured Small Business Loan||All Loans are subject to a 1% arrangement Fee of the Loan Limit payable when loan is drawn down||5.76%|
|Ulster Bank||Unsecured Small Business Loan||All Loans are subject to a 1% arrangement Fee of the Loan Limit payable when loan is drawn down||8.76%|
|MicroFinance Ireland Directly||Unsecured Micro Enterprise Loan||Business must employ less than 10 staff & have Turnover of less than €2m||8.80%|
|MicroFinance Ireland through local enterprise office||Unsecured Micro Enterprise Loan||Business must employ less than 10 staff & have Turnover of less than €2m||7.80%|
|Permanent TSB||Term Loan||Up to €250,000, available to new and existing customers||6.50%|
|SBCI||SBCI Loan||SBCI Loans are offered through on lending partners AIB,BOI & Ulster Bank at a discounted rate to the Banks standard rates if you meet certain qualifying criteria.||4.50%|
Buying a first property is the biggest financial decision that a lot of people make and can have a huge impact on your financial well being both now and for many years into the future.
Putting in some spadework now will save you a lot of hassle in the future.
- Do your research
Find out as much as possible about the areas you are looking at. Use online resources such as daft.ie and google maps to do some preliminary research. Also google the area to see if there are any future developments planned in the area that you should know about.
One useful website is propertypriceregister.ie that contains details of all properties sold since 2010 – if you know how to use excel you can even download a spreadsheet to do some useful pivot tables to chart the movement of house prices since 2010 in the areas your researching.
- Consider the downside
Anything can happen in life so it is important to consider the worst case scenario when buying a property. Compare your monthly mortgage repayments to the current monthly rents that similar properties in the area are commanding – is there any margin of safety? If rents were to fall and interest rates rise would there still be a margin of safety?
This is important to consider as you may need to move in the future but the value of the property may have fallen. By having a margin of safety between the possible rent and the mortgage repayments it will allow you to avoid selling when the property market has crashed. Also it will allow you to cover any extra costs such as tax and repairs that come with becoming a landlord.
- Consider the future
Is there room to expand the property in the future? This is an important consideration if you are planning on having a family in the future.
What is the BER rating? If it is low make sure you build the costs of upgrading the BER into your costs.
The good news for first time buyers is that several providers have dropped their fixed rate mortgages for first time buyers with the market leading rate being offered by Permanent TSB at 3.29%.
However several of the lenders are now only offering the lower rates if first time buyers are able to come up with a bigger deposit.
The market leading rate is only being offered to first time buyers who can come up with a deposit of at least 20% of the house value. While the next best rate being offered is by KBC at 3.3% with first time buyers only required to come up with a deposit of 10%.
Compare mortgage rates on the Irish market at www.moneybags.ie/mortgages/
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