Switching Mortgage providers could save you €1000’s
On Saturday May 2nd, Irish Independent, Charlie Weston sent a clear message to us all regarding the current state of mortgage interest rates. “Forget the Government doing anything about variable rates.
Forget the Central Bank acting on the issue. Forget the Competition and Consumer Protection Commission, and forget the continued expressions of outrage over the situation issued by all and sundry.
None of it will work.
What will be effective in forcing our obstinate banks to act is if thousands of people get annoyed enough about being fleeced to do something. That something is to move your mortgage.
Around half of the 300,000 homeowners overpaying for their mortgages on variables are in positive equity. This means they owe less than their home is worth. As long as they are not, and have not been, in arrears and have a good credit rating they can switch to get better value.
It is no good giving out about your bank, you have to act. And, boy, do the banks here punish variable –rate customers.
Goodbody Stockbrokers analyst Eamonn Hughes estimated that standard variable rates were on average 3pc above the average cost of funds for banks.
If a couple of thousand people were to start moving to a bank offering a lower rate, lenders would soon act.
Another factor that is likely to put downward pressure on rates is if the Court of Appeal agrees with the High Court that Danske Bank’s variable rate should reflect market rates, and as such is too high.
This case could have huge implications for most variable-rate mortgage holders.
But the judgement has been reserved, and we don’t know when it will be delivered.
Irrespective of the outcome, people who are in positive equity have it in their own hands to force a reduction in mortgage rates”.
Switching a mortgage is more complicated than moving other products and services, but the savings are bigger.
Switching from a rate of 4.5pc on €250,000 mortgage to a rate of 3.9pc would save around €100 a month. This is €30,000 over a 25 year term.
Some banks are more aggressive than others at attracting business and offer special deals.
Here’s what to do:
- Get your house valued by an estate agent and calculate your loan-to-value (LTV) ratio. If your house is valued at €250,000, and there’s €205,000 left to pay on the mortgage then your LTV is 82pc. Anything below 90pc allows you to switch.
- Contact Declan Maher Financial Services Ltd on 087 1444977 or at firstname.lastname@example.org and they will guide you through the rest of the process.
Remember it is in your hands, get active and get a better deal!