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5 tips from a mortgage advisor about switching mortgages

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22 May 2017

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Imagine walking past a €100 note and refusing to pick it up because it seems like too much effort.

That might sound ridiculous but that’s effectively what many mortgage holders in Ireland are doing every month.

Switching mortgages is not for everyone and circumstances will obviously vary but Central Bank of Ireland research estimates that 21% of borrowers could save money by switching their mortgage. It could be a great option for you. Maurice McGee, Manager of EBS Waterford, offers some helpful advice for anyone thinking of making the change.

You could be making serious savings

Shopping around is the key to getting the best deal but there can still be a reluctance to so so when it comes to your major financial commitments. “People tend to shop around for car insurance because they’re used to it and they might save themselves €50,” says Maurice. “This is one that can make a massive difference. It’s your biggest financial commitment.”

“I think people haven’t had a lot of financial security for the last few years,” adds Maurice. “They didn’t want to rock the boat. They’re now starting to settle down and look into it. A lot of it is the same as insurance. It’s about customer apathy. People think they should do something about it but they just don’t.

Who should think about switching?

So who is the most likely to benefit from switching? EBS offers standard variable interest rates of 3.5% (where the loan to value rate is between 50% and 80%) and 3.7% (where the loan to value rate is greater than 80%). These rates are comparatively lower than a number of other lenders so there are savings to be made.

The biggest potential savers are mortgage holders with long term mortgages on standard variable rates, who can save a lot in interest payments by moving to a lower rate. Switching is unlikely to benefit anyone on a tracker mortgage while people on fixed rate mortgages can be subject to a penalty if they move.

“When you work out the mechanics of interest and capital repayments, the mortgages that benefit most from a switch are mortgages with a long term still outstanding,” says Maurice. “So this will suit younger borrowers with higher mortgages. These will tend to be couples in their 30s or early 40s with young families.”

Now is a great time to change

You can get approval in principle at no cost but there will be some administrative fees if you decide to go ahead and switch. This includes a valuation on your house and solicitor fees to complete the transaction. An EBS valuation will cost you €150 and solicitor fees can vary, depending on the solicitor.

However, EBS’s 2% Back in Cash deal could potentially help you cover those costs. So if you take out a new mortgage for €200,000, EBS will pay you €4,000.

Maurice points out that this would go a long way to covering the costs of switching and you may even have some change left over for yourself. In addition, you’ll be making long term savings on your mortgage repayments as well. What’s not to like?

Talk is cheap

Talk may be cheap but, in this case, it’s actually free. You can call into your local EBS office to chat about switching your mortgage and get an approval in principle without spending a cent.

Maurice says that a mortgage advisor can walk you through the process and advise you if a switch would be financially beneficial. More importantly, they can also say if your mortgage circumstances mean that it doesn’t make sense to switch.

Switching is a lot faster than getting a new mortgage

Some people might be put off by the thought of renegotiating another mortgage but switching your mortgage can be a relatively quick process. Because you’re not moving properties, the biggest delay is arranging the paperwork.

“We have turned these around in 30 to 40 days,” explains Maurice. “That’s the real advantage.

We’re not on the property chain, where you’re waiting for people to buy before they move out. It can be as quick as the customer wants it to happen. The timing is largely in the hands of the new borrower and their solicitor retrieving their deeds from the old lender etc.”

Thinking of switching your mortgage?

If you’re doing the maths and realise that you’ve been ignoring €100 notes for far too long, it’s easy to rectify your mortgage situation. You can find out more about our 2% back in cash offer here.

It’s also easy to book a mortgage meeting to suit you to see whether you could tap into savings on your mortgage.

EBS d.a.c. is regulated by the Central Bank of Ireland. EBS d.a.c. neither accepts nor assumes any responsibility in relation to the contents of this blog and excludes all warranties, undertakings and representations (either express or implied) to the fullest extent permitted under applicable law.

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