The Central Bank of Ireland recently announced that there are over 100,000 households with mortgages, who could get a better deal by simply switching their mortgage. What most banks rely on is that people will not want to have to go through the hassle of switching, but have you really considered enquiring about reducing your monthly mortgage cost?
If we use a mortgage of €240,000 on a house worth €300,000 (80% Loan to Value) and a variable rate of 4.5%, the rough cost of interest payments per year is €10,800. Currently, one Mortgage provider offers 3 year fixed rate of 3.6% for mortgages that would yield an annual saving of €2,160. That’s €180 a month less in interest repayments just by moving mortgage providers!
Is there a lot of work involved?
The first step is to put in an enquiry to see if it’s worth your while. This is not a lot of work and shouldn’t take long. If you decide the savings are worthwhile, you would then have to consider if you wanted to proceed with an application.
In this regard, the real question you should ask is “am I prepared to put in a little work getting documents together to make monthly savings on our mortgage?”. Your mortgage provider is hoping that you are prepared to pay more to avoid the hassle involved in switching to a cheaper provider.
Isn’t there a huge cost involved?
There are costs involved but the main costs are usually the legal ones. Some mortgage providers now cover up to €2,000 of potential legal costs. This would make the process far less costly. But even if you had to cover the entire legal fees, if you were saving over €2,000 a year, it would still be a cost saving exercise.
Can I make any other savings?
There is a good chance that many people took mortgages out directly with the banks and were required to take out Life Assurance (e.g. Mortgage protection). In many cases, this was not the cheapest cover available. By reviewing your mortgage you can also review your Life Cover.
How do I know if it’s worth my while?
If you have a mortgage that is currently 90% below the value of your property (90% LTV), you may be able to make substantial annual savings. The lower the Loan to Value (LTV), the better the rate/savings you will be offered.
I am interested, what do I do?
If you contact me by phone/email, I can begin a pre-enquiry. This shouldn’t take long and all you are doing is seeing if it’s worth your while. You are not obliged to proceed and will not incur any cost at this stage. Asides from a few minutes of your time, what do you have to lose?