22 May 2017
There’s always something satisfying about finding money down the back of the couch but imagine you were sitting on thousands of euros and simply didn’t realise it. Sounds crazy, right? Well, many Irish homeowners could be doing just that by refusing to shop around for cheaper mortgage rates.
Why should you switch your mortgage?
One in five Irish adults hold a mortgage but just 2% of mortgage holders have actually switched their mortgage in the past five years. The Central Bank of Ireland examined 522,407 mortgages and found that a whopping 109,705 mortgage holders could save money by switching. It could be you!
The main reasons for not comparing or switching mortgages are that people don’t think it’s worthwhile, never considered switching as an option, or they’re tied into a tracker or a fixed rate mortgage.
Yet you could be saving “€92 a month, or €26,673 in total, assuming rates stayed the same over the life of the loan,” according to Fiona Reddan in the Irish Times. This example is based on someone with €250,000 left on a mortgage over 24 years at a standard variable rate of 4.5% who switches to a standard variable rate of 3.8%.
EBS offers a standard variable rate of 3.7% for comparative home loans with a Loan to Value (LTV) rate of 80% or higher. “Generally speaking, the higher the mortgage, and the longer the term to maturity, the greater the potential savings,” the article adds.
Take a second to let those figures sink in. Savings of €92 a month could go a long way towards a holiday, your kids’ college fund or your car insurance. Most people are happy to shop around for car insurance to save €50 per year but shopping around for mortgages could make this look like small change.
Switching your mortgage can also be a relatively quick process as you’re not looking for a house, dealing with bids or waiting for a seller to buy a house. You could easily switch your mortgage within 40 days if there are no major issues or delays.
Who should make the switch?
The people who’ll benefit most from switching mortgages are those with a long term mortgages and a large outstanding balance. Typically, younger borrowers with higher mortgages can make the biggest savings.
There can be limited benefits to switching for people on tracker mortgages, fixed rate mortgages or borrowers with a small amount left on their mortgage but your local EBS Mortgage Adviser can help you find out if switching doesn’t make financial sense. The option of switching isn’t available to people who are in arrears or negative equity.
How do I switch my mortgage to EBS?
As with any mortgage, you’ll need to complete a mortgage application form and provide documentation like a valid ID, a P60, payslips and bank statements for the last six months. You can then get approval in principle and choose to switch if the savings make it worth your while.
If you do decide to switch, there are some formalities to get out of the way. EBS requires a valuation of your house from an approved valuer so you’ll need to pay a €150 fee towards this service. This is valid only for two months and you’ll be charged €65 for any subsequent valuations.
You’ll also need to pay a solicitor to get your deeds from your old lender and to oversee the new mortgage. This can cost between €1,000 and €2,500, depending on the solicitor.
However, these costs could be partially covered by EBS’s 2% Back in Cash offer, which pays you 2% of your new mortgage back when you switch to EBS. That’s €5,000 when you switch a €250,000 mortgage. Not bad at all.
Thinking of switching your mortgage?
If you’re sick of using your couch as a saving system, it could be time to shop around and see if you could be saving serious money by switching your mortgage. Call into your local EBS office for a chat with one of our friendly mortgage advisors and see whether you could tap into big savings on your mortgage.
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