€500,000 SWITCH

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

Dowling Fi­nan­cial ex­am­ined how much could be saved by a home­owner who took out a 30-year vari­able mort­gage last year and who now has €500,000 left to re­pay over the next 29 years.

Bank of Ire­land is the most ex­pen­sive lender for a home­owner get­ting a vari­able mort­gage to bor­row more than 80pc of the value of their home. Bank of Ire­land charges 4.5pc in­ter­est on such a loan.

Had you taken out a 30-year mort­gage with Bank of Ire­land last year and still have €500,000 left to re­pay on that loan over the next 29 years, the in­ter­est over the next 29 years will add up to €396,090 — as­sum­ing you’re bor­row­ing more than 80pc of the value of your home, ac­cord­ing to Dowling Fi­nan­cial. This is al­most €133,000 more in­ter­est than you would pay if you switched your re­main­ing 29-year mort­gage of €500,000 to AIB on Novem­ber 1 — the date that AIB will cut the in­ter­est rates on its vari­able mort­gages.

From Novem­ber 1, AIB will charge 3.15pc in­ter­est on a vari­able mort­gage where more than 80pc of the value of the home is be­ing bor­rowed. Un­der that rate, the in­ter­est on a €500,000 vari­able mort­gage over the next 29 years would add up to €263,282. That’s much lower than the in­ter­est you would pay with Bank of Ire­land — or with Per­ma­nent TSB, which charges 4.2pc in­ter­est on such a loan, mak­ing it the sec­ond most ex­pen­sive lender in this case.

The in­ter­est on a €500,000 vari­able mort­gage (where more than 80pc of the value of the home is bor­rowed) would add up to €365,611 with Per­ma­nent TSB over the next 29 years — so in this case, a home­owner would save €102,329 by switch­ing from Per­ma­nent TSB to AIB.

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