Mortgage borrowers will save ‘if they switch’

HOMEOWNERS can save almost a third of the value of their mortgage by simply switching to a cheaper deal.

A bank mortgage price war means anyone on an average variable rate can save hundreds a month even on a relatively small home loan of €150,000.

Joey Sheahan, of MyMortgages.ie, said: ‘Many people assume that once they’ve taken out a mortgage with a lender for 20, 25 or 30 years, then that’s the end of the decision-making process. But mortgages are just like any other financial product – they should be reviewed every three years to ensure you are not paying over the odds.’

Figures show anyone on ‘average’ mortgage rates can save between €40,000 and €100,000 by moving to another lender.

Brokers are expecting a surge in mortgage switching over the next year as banks ramp up their interestrate price-war with more households back in positive equity –which means the house is worth more than the mortgage – because of the surge in property prices.

David Hall, of the Irish Mortgage Holders’ Organisation, said: ‘As consumers we don’t switch, we just have an obsession about not switching. We don’t engage in anything that involves a bit of hard work... It doesn’t make any sense to look at the price of a litre of petrol on garage forecourts and not to be looking at switching your mortgage.

‘You’re also helping to spice up the market and contributing to kicking the market and let the bank know they can ring you back if they want if they have a better deal.’

More than one in five mortgageholders – 21% – could make savings by switching their lender, the Central Bank found recently.

And a Competition and Consumer Protection Commission report on mortgage holding and mortgage switching revealed that while over a fifth of the adult population in Ireland hold a mortgage, limited evidence was found of switching.

Fewer than 25,000 of 740,000 mortgage-holders switched their homeloan – just 3.3% – in Ireland in 2014, a study by the European Commission found. Almost half – 44% – of all mortgage-holders surveyed felt the switching process would be too complex, while 27% of those who switched found no obstacles to the process.

More than a third – 36% – of those surveyed who switched their mortgage reported that they had to chase their lender to be kept informed during the mortgage switching process.

And a quarter said they considered switching but did not because they felt it would take too much time and too much effort.

Mr Sheahan, of MyMortgages.ie, said: ‘We deal with clients on a daily basis who are unaware that switching could even be an option for them – many believe they are simply “locked in” to the contract with their current lender. And of those who have heard of switching, most just think it’s “too much hassle”.

‘People have also voiced concerns over the cost of switching but they don’t realise that most banks will give cashback which will more than cover this from €1,500 up to 2% of the loan amount.’

‘As consumers, we don’t switch’