First-time buyers often choose a lender according to the size of the loan they will advance rather than the competitiveness of the interest rate, writes Laura Slattery.

But even seemingly small differences in interest rates can make a noticeable difference in repayments, says mortgage broker Mr Liam Ferguson of Ferguson & Associates.

"Take a couple borrowing €250,000 over 30 years to buy a house worth €280,000. The best tracker variable rate available at this time is 3.05 per cent. The worst is 3.49 per cent. Exactly the same loan, just different lenders," Mr Ferguson says. "Yet that difference of just 0.44 per cent achieved by shopping around could save our couple over €60 every month in lower repayments.

"That's around five half-decent bottles of wine to enjoy in the new home!"

Over the lifetime of the loan, borrowers on the 3.49 per cent rate would end up paying almost €22,000 more in interest.

So which lender is offering the best interest rate?

The best standard variable rate at the moment is 3.3 per cent from EBS Building Society. But standard variable rates are no longer the cheapest kind on the mortgage market.

"Tracker" mortgages, where the interest rate is fixed at a certain margin above the European Central Bank (ECB) rate of interest, currently offer the best value.

The best tracker rate available to buyers whose loans exceed 60 per cent of the purchase price is 3.05 per cent at Ulster Bank, but only if you are a customer of its U First current account package, which costs €9 a month. If you do not bank using U First, the rate is 3.15 per cent.

Bank of Ireland and ICS Building Society beat this rate with a tracker at 3.1 per cent, but this is only available to people borrowing €200,000 or more.

AIB, IIB Homeloans and Permanent TSB also offer a tracker rate of 3.1 per cent, but this applies only on loans of €250,000 or more.

These restrictions mean the Ulster Bank tracker rate may still be the most attractive offer for some first-time buyers, namely those buying properties outside of Dublin, even if they don't switch their current account to the bank.

At some lending institutions, you must be a "new" customer to qualify for tracker rates.

If the lender steers you onto a discounted variable rate or the one-year discounted fixed rate instead, it might sound like a great offer, but it could mean that you won't be eligible for the cheapest mortgages around once the discounted period expires after six or 12 months.

For example, if you are offered the discount variable rate of 2.69 per cent at Permanent TSB, after a year it will revert to its standard variable rate of 3.55 per cent, rather than its tracker rate of 3.1 per cent.

Choosing a lender based on attractive-looking short-term discounted variable or short-term fixed rates is one of the basic mistakes first-time buyers make, according to Mr Ferguson.

Nevertheless, with interest rates forecast to rise, some first-time buyers may feel more comfortable fixing their repayments for the first year.

The cheapest one-year fixed rate for new customers is 2.69 per cent, available at IIB Homeloans.

Lenders may be prepared to advance more money to borrowers when using the lower discount rates as the basis for their calculations. But there is no harm in asking how much can be borrowed under the lenders' tracker rate. In the long term, it will save first-time buyers thousands of euro in interest payments.

Other types of mortgages on offer include interest-only mortgages. These are primarily aimed at investors but are becoming increasingly popular with first-time buyers because the initial repayments are low.

With an interest-only mortgage, repayments consist entirely of the interest due with no dent being made in the capital balance until the end of the loan, or until the end of the maximum period for which the lender will allow only the interest to be repaid.

At some point, however, the capital must be repaid, so it is not usually a good idea to stay on interest-only for too long.

Another niche option is First Active's current account mortgage, which has an interest rate of 3.29 per cent.

More than 3,000 people now use this product and just over a quarter of them are in the first-time buyer category.

Under this type of mortgage, the balance on the current account is deducted from the mortgage debt, cutting the interest payable. The interest owed is calculated on a daily basis, so customers benefit immediately by crediting money such as a salary to the account.

Any money left in the account at the end of the month after day-to-day expenditure and the normal monthly mortgage repayment is classed as an overpayment and reduces the balance of the mortgage automatically.

These overpayments remain available to customers at any time or can be used to shorten the term of the mortgage.