Charlie Weston ‘Why switching provider is easier than you might think’

brm  -  Sep 20, 2019  -  No Comments

It is time the myths around mortgage-switching were dispelled. Too many people think they are unable to switch – a situation which is leaving them paying thousands of euro too much to their banks.

Switching is simply the process of changing mortgage provider, usually done to get a lower interest rate and to save money.

It is wise to have a regular check done on your mortgage to ensure you are getting the best value possible.

This is especially the case if you have been on the same rate for three years or more, or are coming to the end of a fixed rate.

Of course, this does not apply to those with trackers. As a tracker is the best value mortgage in the market, bar none, people who have a tracker should not consider switching unless they are moving house.

For others, there are huge savings to be made by opting to switch.

A family on a legacy variable rate could easily save €1,000 a year by moving to a more competitive lender.

The gap between the highest and lowest rates in the market mean that savings of €3,400 a year are possible, according to mortgage switching platform Doddl.ie.

That would go a long way to make up for what is expected to be a damp squib Budget, in terms of tax cuts, and would offset some of the expected costs from a messy Brexit.

Mortgage rates in this country may be twice the average charged across the eurozone, but banks here have been cutting what they charge mortgage holders for a while now.

And a new player has entered the Irish owner-occupied mortgage market. ICS has some of the lowest rates in this market.

Many people consider switching to be a long and cumbersome process.

But the reality is that it is now a relatively straightforward process.

A good broker will take you through the process, while banks are eager to make it as smooth as possible.

The Central Bank switching code mandates that certain timelines and targets are met by your existing lender and new one when switching.

There is form-filling, of course, and you will need a solicitor. You will also need to meet income criteria and have sufficient equity built up in your home to satisfy Central Bank lending limits.

This entails movers having built up sufficient equity so that the property is worth at least 20pc more than the outstanding loan on it. This is known as the loan-to-value limit. Your credit rating will also need to be good.

Contact a good broker to ensure you qualify for switching. If you do, the broker will hold your hand through the process and ensure you get a good deal.

Just asking about your options will cost you nothing.

And if you fit the bill for a switch, the savings could be huge. But sometimes you do not even need to move lenders to get a better deal.

Bank of Ireland, AIB, Permanent TSB and Ulster Bank have around 100,000 customers between them who could get better rates by just applying for one, or submitting a home valuation.

These banks have written to their customers a number of times to tell them they could cut their monthly costs by opting for a cheaper rate offered by their own bank.

Customers not signing up for the lower rates are missing out on savings in the thousands of euro. For a family with a larger mortgage of €300,000, annual savings of €4,200 can be made.

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