Posted on 16/06/2021
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 Wexford, offers some helpful advice for anyone thinking of making the change.
Shopping around is the key to getting the best deal but there can still be a reluctance to do so when it comes to your major financial commitments. “People tend to shop around for car insurance each year, because they’re used to it and they might only save themselves €50,” says Maurice. “But switching your mortgage is one task that could make a massive difference to your pocket every month. It’s your biggest financial commitment.”
So who is the most likely to benefit from switching?
“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.
The biggest potential savers are mortgage holders on standard variable rates with an average term of 10 years or more remaining on their mortgage. These borrowers can save a lot in interest payments by moving to a lower rate.
EBS offers a number of interest rate options starting with a low 2.75% Fixed rate for the first 1-5 years. See the full range of interest rate options here. When you combine this with the up to 3% back in cash offer from EBS, this can really make compelling reason to switch.
Switching is unlikely to benefit anyone on a tracker mortgage as switching will result in customers losing their tracker rate. People on an existing fixed rate mortgage should check first if they may be subject to a fixed rate breakage penalty if they move.
You can get approval in principle at no cost but there will be some legal and 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 up to 3% Back in Cash deal could potentially help you cover those costs. So if you switch your €200,000 mortgage to EBS, we will pay you €6,000 back in cash, €4,000 just after you switch and the remaining €2,000 in year 5 (subject to conditions of your mortgage).
Maurice points out that this would go a long way to covering the costs of switching and will most likely leave you with some cash left over for yourself. In addition, at a lower rate, you’ll be making long term savings on your mortgage repayments every month as well. What’s not to like?
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.
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 applicants arranging their 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.”
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 up to 3% 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.
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