You may still be traumatised about how hard it was to get your mortgage over the line in the first place that the idea of switching fills you with dread. However, it can be done and switching will not be as difficult as getting your first mortgage. Get into your mind that switching mortgage provider could save you thousands of euro and go for it. Generally it will take around eight weeks to complete a switch so try not to get frustrated and abandon the process if you feel it is taking too long. Joey Sheahan of MyMortgages.ie said every mortgage holder should reassess their situation every three years regardless of what rate they are on.
There will be some costs involved in switching mortgage provider, mainly the cost of a solicitor. However the bill should not be as big as it was when you were first getting a mortgage. This can deter many people from switching but your mortgage is a marathon rather than a sprint and short-term pain can lead to long-term gain. Your solicitor too will do a lot of the background work on this. According to Bonkers.ie legal fees for switching can be up to €1,500 plus VAT.
Increased competition in the market means that switching is now easier and more cost-effective than ever.
Keep an eye out for deals. Banks make a lot of money from mortgages and they will want you to switch to them. Often banks will offer switchers lump sum payments, which is often around €2,000 or even cover the cost of your solicitor’s fees. According to Trevor Grant of Irish Mortgage Advisors increased competition in the market means that switching is now easier and more cost-effective than ever.
Although a deal is great make sure you focus on the rate. You could be paying this mortgage for another 20 years and while a lump sum would be nice, the lower the interest rate is the less you will pay over time. Mr Sheehan points out that a borrower could save €70,000 in interest over the life of their mortgage by reducing their rate from 3.2% to 1.95%. There’s a lot of talk in the market too that interest rates could rise which would mean higher mortgage repayments. Mr Grant said that mortgage holders should be asking themselves how they might deal with any such future increases and now is a good time to switch if you can.
There are very strict criteria to be met when getting a mortgage and it is the same when it comes to switching. If your financial circumstances have changed since you first got your mortgage it may not be as plain sailing as you think. A mortgage switching application will take into account your current financial circumstances. So, if for example you reduced your hours at work to three days instead of five days and have two additional children since you first took out your mortgage then the playing field will be different. That is not to say it wouldn’t be possible but it is something to bear in mind. Generally too you will not be able to switch if you are in negative equity on your mortgage. If you are on a fixed rate too you may need to wait until the term of that deal is finished.
Source: https://www.irishexaminer.com/lifestyle/people/arid-40839290.html
