Mortgage holders losing out on massive savings
CORK HOMEOWNERS CAN SAVE UP TO €2,228 PER YEAR BY SWITCHING THEIR MORTGAGE
NEW research has found that homeowners across Cork County could be losing out on more than €2,000 each year by not switching to an alternative mortgage lender.
A report compiled by independent switching platform doddl.ie has estimated that the failure of some mortgage holders to ‘shop around’ for deals could be costing them as much as €2,228 per annum.
The free platform offers people the opportunity to review their mortgage rates online and switch provider under the guidance of specialist advisors.
It has found that the spread between the highest and lowest available interest rates available on the open market has now grown to 2.2% or €185 per month in terms of repayments.
The doddl index is based on a new lending 90% mortgage of €158,400 drawn down on the average three-bed semi-detached house value of €176,000 in Co Cork.
It looks at the total number of switcher transactions per quarter as a percentage of all home loan transactions, excluding Buy To Let mortgages, to give an accurate picture of principal private dwelling house credit.
Its latest findings have shown the gap between repayments between the lowest 2.3% rate on offer and the highest at 4.5% is a staggering 27%, meaning that some homeowners are needlessly paying up to twice as much on their interest.
To put this into further context, the highest rate of repayments on the average 25-year mortgage is €880, compared to the lowest monthly rate of €694.
The index showed the rate of mortgage switching has more than trebled in the past four years, with switching transactions last year representing 14% of all home loaning.
Doddl managing director Martina Hennessy said the latest findings show that sticking with a lender who is charging a higher rate that you can achieve on the market “makes no sense, especially at a time when switching has become easier than ever.”
She pointed out that the average Cork saving of €2,228 per year are interest savings, and interest adds no value to a mortgage.
“Mortgage holders need to optimise their rate and terms, especially at the moment, and the impact of lower interest rates is hugely significant,” said Mr Hennessey.
Current bank switching packages have also removed the previous deterrent of cost in switching mortgages and in the majority of cases financial institutions will provide a lump sum amount, once the new mortgage is drawn down, which generally covers any transaction fees involved in switching.
These switcher packages range from €1,650 up to 3% of the mortgage amount outstanding back in cash.
“With so many rate and cashback offers it is important to get impartial advice to help you understand all available options available to you with regard to mortgage switching rather than directly responding to a marketing message from an individual bank,” said