Mortgage for Entrepreneurs Series: Switch to Mortgage Savings
How and why switching mortgage provider can make sense
The European Central Bank cut interest rates consistently last year, meaning savings for tracker mortgage holders. However, many mortgage holders prefer the security of a fixed or variable rate, to budget monthly outgoings. And, while most lenders have reduced pricing, people now coming off fixed rate mortgages, agreed five years ago, are in a truly different mortgage market.
Lenders compete for customers, especially new market operators. Homeowners are always wise to review their mortgage terms, talk to a broker, shop around for competitive rates, and weigh-up the benefits against the costs of switching.
Why switch?
A lower interest rate or more favourable terms can significantly reduce repayments, saving big money over the life of a mortgage. There’s also features like flexible repayment options, cashback incentives or overpayment facilities.
Some lenders have overpayment options, on a fixed interest rate, so you can use a windfall to lower the term repayment amount, without penalty. Green mortgages have lower rates for a better BER energy rating, so if you have upgraded yours, it’s worth switching for!
Interest rates fluctuate; you must shop around if you’re coming off a lower fixed-term, that your lender is now increasing.
Remember, lenders look at your ‘loan-to-value ratio’ when deciding on a mortgage deal. They compare the mortgage amount to the property value, and this ratio mostly lowers, over time, meaning better interest rates and terms.
How to switch?
First check your current mortgage terms, interest rate, and outstanding balance, to see if a lower interest rate or better terms or features are available. A broker will know and help!
Speak to your lender about penalties or fees, if breaking your current fixed mortgage contract. Check what rates they currently offer if you were to fix for a longer term.
Switching can mean legal fees up to €2,000 and valuation fees of maybe €300, so gauge savings.
A new lender will need an affordability assessment, so have all your paperwork, like proof of income, bank statements, credit report and identification documents, ready.
You need to get the Title Deeds from your current lender, but, once you’re offered a new mortgage, the transfer is pretty seamless, with just your mortgage protection insurance to transfer, and the monthly savings to enjoy!
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This article's author, Margaret Barrett is Managing Director at Mortgage Navigators, a brokerage specialising in lending for professionals, self-employed contractors and business owners. A Qualified Financial Advisor (QFA), Barrett previously worked with Bank of Ireland.
