If you got out a mortgage some time ago, it may be likely that you can switch to a much better rate without incurring any switcher costs.
There are 300,000 mortgage customers on high standard variable rates. These customers can potentially save thousands of euro over the remaining term of their mortgage by switching mortgage provider. Switching is relatively easy and in some cases, free. Many lenders are willing to contribute up to €2000 toward the cost of switching.
Many people with existing mortgages are paying high interest on their repayments. What many do not realise is that they are not obliged to stay with the same lender for the remainder of their mortgage term. Indeed, they can re-negotiate the mortgage conditions and term by switching to another lender. People switch providers regularly when it comes to their internet, phone, electricity and grocery shopping, but they do not look at mortgages in the same way. This may cost mortgage borrowers a lot extra in repayments. So, what can you do to save money?
There are certain conditions which put you in a good position when applying for a mortgage switcher. The new lending institution will want to ensure that you have been able to meet your mortgage repayments and that your property is not in negative equity. Hence, switching will not be an option for borrowers in arrears, or for properties with current market value lower than the outstanding mortgage loan on them.
A drop of only a fraction of percent can bring significant savings over the term of a mortgage and maybe a decrease in the term at the same time. All of this without any cost to borrowers in doing so!
The great news is that some banks are now covering the costs associated with switching, meaning no cost to the borrower. Rates available from 2.9%.
Saving them €41,040 over term of the mortgage.
John and Ciara, aged 35 and 34 were 5 years into their mortgage of €220,000
|Old Bank||New Bank|
|4.5% p.a. interest||3.0% p.a. interest|
|Repayments €1,041 per month||Repayments €927 per month|
|Saving €114 per month|
|Saving €1,368 per year|
Pat and Edel, aged 54 and 49, had 16 years left on their mortgage with an outstanding balance of €240,000
|Old Bank||New Bank|
|4.39% p.a. interest||2.95% p.a. interest|
|16 years||14 years|
|Repayments €1,737||Repayments €1,745|
|Saving 2 years of the mortgage|