What Matters When Comparing Mortgage Rates?

We are looking for a 5 year fixed rate mortgage for a self-build with a term of 20 years. We have a loan to value of less than 50% so we're in a good enough position. We're considering the following at the moment:

BOI Gross Rate 4.64%, APR 4%
PTSB Gross Rate 3.7%, APR 4.3%

We were originally looking at the lowest gross interest rate, but we're wondering now if the APR is more important? I know it indicates the cost of the loan over the whole term of the mortgage, but we're wondering if that matters? That is, considering we could hopefully switch to another provider if the follow-on rate was uncompetitive at the end of the 5 year fixed term and considering that the APR is based the existing follow-on variable rates, which will surely change.

I've heard that it's the cost per thousand that really matters, but is it the cost per thousand over the whole term, or over just the 5 years that we should worry about? PTSB cost per thousand is 5.9%, not sure about BOI.

We'd be grateful for any advice as we're a bit green about all this.

From what I can figure out the APR is averaged over 20 years, 15 years of which will be based on the variable rate after the first 5 years. In this way the APR is hugely misleading, which is a shame.

It looks to me that the BOI APR looks better only because they assume you will move to a relatively good variable rate (compared to PTSB) after the 5 year fix.

If I was you I'd simply focus on the repayments in the first 5 years, with PTSB significantly better.

No one knows what rate you'll be on after that i.e. no one can guarantee BOI's standard variable will be better in five years time, and even if it was you might be able to switch at that point.

When comparing fixed rates, use the nominal rates (4.64% v 3.7%).
APR is misleading - it presumes the variable rate will remain constant from the start to the end of the fixed rate.
PTSB is the clear winner here if you are just comparing rates.

There are other advantages that are not so clear though.

e.g

One benefit of going with BOI is that they will allow you to overpay each month by a €65 without penalty.

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