House prices have never been higher but the combination of falling interest rates and flexible mortgage products means anyone with an existing home loan, or somebody taking out one for the first time, has more opportunities than ever to maximise their repayment and scheduling options. Last week's drop in interest rates offers two prospects: for first-time buyers it means the lowest repayments for a generation and should help to offset higher house prices. A typical £70,000 mortgage may now cost as little as £420£450 per month.

First-time buyers are also being offered first-year discount rates that will reduce those repayments even further. Historically, low life assurance rates mean mortgage-protection premiums will cost as little as £10£12 a month for a couple aged 30 and 28. Building and contents insurance will cost about £3.50 per £1,000 insured, averaging out at about £300 a year. The total monthly outlay for a typical £70,000 mortgage and house worth, say, £100,000 could cost as little as £460 a month.

Competition means special offers are also available, the latest being an option to postpone payments for three months from Bank of Ireland. The Deferred Start Mortgage, as it is called, is available on all the bank's fixed and variable rate mortgages. You can choose to defer the first one, two or three mortgage payments which will then be spread out over the rest of the term of the loan. This should improve cash flow at a time, says the bank, when most buyers are also trying to decorate and furnish their new home.

Other flexible options from Bank of Ireland include a 10-month or 11-month repayment schedule - to allow for extra cashflow during the summer or Christmas holiday period, for example. Bank of Ireland, like First Active, National Irish Bank and others also offers the opportunity to index mortgage payments each year, either in line with cost-of-living increases or with pay increases and allows lump-sum payments. These features all achieve the same purpose: the loan gets paid off sooner and savings on future interest charges are made.

Since most people will be enjoying a substantial fall in monthly mortgage payments, the time is ripe to consider leaving current payments at the level they are and reap the long-term benefits of paying off the loan sooner.

Just make sure your lender applies the extra payment on an ongoing basis, and not just once a year, in order that you get the full benefit of the interest payment acceleration. (In a recent survey, National Irish Bank found 90 per cent of the nearly 600 first-time buyers it questioned had no idea what difference interest being calculated on a daily rather than monthly or annual basis would make to the value of their interest payments.) Accelerating your loan is a guaranteed way to make a 5 per cent, 6 per cent or 7 per cent return (the size of most interest payments now), with absolutely no risk or associated charges. It beats putting the savings into a much lower interest-bearing deposit account.

Use the monthly or annual savings to reduce other more expensive debt such as bank overdrafts and loans and credit card bills which can range from 10 per cent to 24 per cent APR.

Finally, since the reduction in rates is not yet over, new home buyers may want to hold off committing themselves to fixed-rate mortgages that are longer than a one-year term. A two-year, three-year or five-year rate that is fixed at 6.5 per cent APR may seem very low compared to rates in previous years, especially if the repayment works out at just £7 per £1,000 borrowed. However, if the variable rate repayment is just £6 per £1,000 borrowed, the difference could be as much as £70 a month. Over a three-year period you could end up paying another £2,500 for the security of the fixed rate (this assumes the variable does not go up).

NIB's recent survey of first-time buyers has highlighted the level of ignorance about how mortgages actually work. It found that 46 per cent of new buyers believed paying a lump sum would not have any great impact on their loan or that some lenders actually penalised you for paying off your loan sooner with lump sum payments.