SWITCH­ING STEPS

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

Should you have only taken out your mort­gage about a year ago, it is not too early to con­sider switch­ing. You must usu­ally wait un­til you’re at least a year into a mort­gage be­fore a lender will al­low you to switch your mort­gage to it.

“Some lenders will con­sider let­ting you switch your mort­gage if you’re six months into a mort­gage,” said Dowling.

“If you’re switch­ing six or 12 months af­ter tak­ing out a mort­gage, make sure the costs of switch­ing are cov­ered by your new lender as it won’t have been long since you paid for the val­u­a­tion and le­gal fees on the orig­i­nal mort­gage.”

Some lenders of­fer to meet the cost — or pay a con­tri­bu­tion — to­wards your le­gal fees. Some will also cover the cost of the prop­erty val­u­a­tion.

Should you have a fixed mort­gage, your lender could charge a re­demp­tion fee (a fee to cover the cost of you break­ing your fixed rate con­tract) if you switch to an­other lender be­fore your fixed mort­gage term is up. Re­demp­tion fees can run into the thou­sands and so it may be wiser to wait un­til your fixed term ex­pires be­fore switch­ing.

It can be cum­ber­some to switch your mort­gage. “It takes on av­er­age be­tween three and four months to switch so it’s a very slow process,” said Dowling. “When you switch to a bank, your new lender won’t know you so you’ve to go through ex­actly the same process as you did when you ap­plied for your orig­i­nal mort­gage.”

This means you must pro­vide your new bank with all the doc­u­ments it re­quires with a mort­gage ap­pli­ca­tion — in­clud­ing salary certs, your P60, proof of sav­ings, cur­rent ac­count and loan state­ments for the last year, and so on.

Be­fore switch­ing, check the track record of the lender: choose a lender who has been fair to cus­tomers and who passes on in­ter­est rate cuts to ex­ist­ing (as well as new) cus­tomers.

You may not even have to switch to a new lender to get a cheaper mort­gage — par­tic­u­larly if you’re a few years into your mort­gage. The pro­por­tion of the value of your home which you are bor­row­ing could now be much lower than when you first took out your mort­gage — and you may qual­ify for a lower in­ter­est rate as a re­sult.

Your bank may of­fer you a lower rate even if you don’t strictly qual­ify for it.

“If you want to switch, talk to your ex­ist­ing lender first,” said Dowling. “A bank will not want to lose your busi­ness so it may move you to a cheaper rate.”

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