WHEN you are shopping around for a mortgage, you’ve got to have attitude. The trouble is, most of us appear to have the wrong attitude.

The stress involved in buying a new home means it is often very tempting to take the first offer that comes along. That can be very costly.

According to recent figures from Bank of Ireland, mortgage debt outstanding in Ireland was €62.4 billion at the end of March, up 26.9% year-on-year. New business in the residential lending market amounted to €12.5 billion last year. It’s a lot of money, but borrowers often neglect to shop around.

“People go and ask the bank for a mortgage and say, ‘They were good enough to give me the money’,” says Sarah Wellband, an associate director of multi-agency intermediary REA Mortgage Services. “You wouldn’t go to a car dealer and say, ‘Give me any car. I don’t mind what model or colour it is.’ People should ask the bank what it can offer them.”

There are 13 different providers in the Irish market offering a selection of variable, fixed, tracker, interest-only and other mortgages. How can a homebuyer negotiate the mortgage maze and find the right product?

“The rate is far from everything,” says Shane Connole, of mortgage wholesaler Mortgage Business Solutions. “You need to find a loan that suits you and your needs. Consumers should ensure they are getting the most independent advice available. They should know who they are speaking to and which agencies the broker holds. More than 60% of them hold five agencies or less, which gives a very limited choice.”

Compare mortgage products and providers by looking at the interest rate, the terms and the exact repayments you will have to make now and if rates increase. Find out if you can make lump-sum repayments or take payment holidays before choosing your mortgage.

Behind the times

Buyers who unthinkingly opt for the standard variable rate mortgage offered by their bank may not realise they are purchasing the mortgage equivalent of the puffball skirt.

Wellband says she can’t think of a type of buyer for whom a standard variable rate product is the best option.

Tice O’Sullivan, of multi-agency intermediary PrimaFinance.ie, agrees. “Anyone who knows what they are looking for is not taking the standard variable rate, although banks will still give it if they can get away with it.”

Variable rate mortgages have largely fallen out of favour with new buyers because many suspect banks and building societies of being slow to pass on ECB rate cuts to customers. Both brokers say about 80% of their new mortgage customers are choosing tracker mortgages instead. Connole says that figure is at least 40% and rising in the market as a whole.

At present, the lowest standard variable rate is 3.25% from the EBS, but buyers can do better by opting for a tracker.