How to move your mortgage elsewhere and save yourself thousands

Want to make a hundred grand? No, it’s not a ‘yankee’ accumulator bet on a horse running at Leopardstown. Just switch your mortgage says JOEY SHEAHAN, head of credit at MyMortgages.ie

So people can save up to €100,000 by switching, but most don’t bother. Why is that?

It’s true! While I have definitely seen a greater number of people switch in recent months, it does baffle me that there are still thousands of people out there who have yet to even assess their options. I think people are put off by the misconception that it’s arduous – maybe due to the mortgage application process. But switching is a lot more straightforward, because the borrower has established a good track record where repayments are concerned and has demonstrated affordability, etc.

Who could save €100k?

A mortgage holder with €300,000 outstanding at 4% interest over 35 years can save €100,000 over the term of their mortgage by reducing their interest rate to 2.6%. And this example is pretty typical of mortgage holders in Ireland – sizeable mortgages on high rates.

How do we do this?

To begin, contact your lender and confirm your rate of interest, balance outstanding and term remaining. Also ask if the variable rate you are on is the best available to you and what fixed rate options are there. Then contact a qualified and professional independent mortgage adviser and ask them to compare your mortgage to what is available in the market. The more equity you have in your home, the better the new terms are likely to be available to you, but you can switch even if your loan is worth 90% of your value.

Isn’t this too much hassle?

Absolutely not! This false belief is stopping mortgage holders from taking action and it’s costing them thousands. If someone were to save even €100 monthly, that’s €1,200 annually. Given that a person could have anywhere between 10 and 30 years remaining on their mortgage, then it’s clear that the savings could be huge.

All that paperwork… ugh! How long would it take?

It depends how fast a person is at getting their documents in order. We’ve had people get organised in a matter of days. Once we receive all the paperwork, we submit the application to the bank and following that, we could get approval in one to two weeks. Of course, not every case is the same and sometimes the process could take six weeks. But that still isn’t a very long time when you consider the term of a mortgage.

There are cashback schemes aplenty out there, but are they as good as they seem?

It depends. We look at all our clients on a case-by-case basis, and sometimes these cashback offers can be quite lucrative. But it’s our job to crunch the numbers and not just take these deals at face value. The banks are commercial entities – they are there to make money – so you have to be mindful of that. We recently had a case where the mortgage holders received €6,000 cashback, which they then used for home improvements.

Can you make a profit switching from one lender to another with the cash incentives?

Yes, you can. If your mortgage was €300,000, you would receive €6,000 cashback. The legal costs associated with switching probably wouldn’t exceed €1,500-€2,000 so you could pocket €4,000. But as I mentioned above, these deals should not be your only consideration when make a decision to switch.

Best piece of advice?

To overpay your mortgage if at all possible. If you overpay €100 monthly on a €300,000 mortgage (interest rate of 2.6% over 35 years), you will knock four years and six months off your mortgage and save over €22,000 in interest over the term of your mortgage.

What was your most expensive fun purchase?

A honeymoon in the Maldives with my wife, Amy.

The one little luxury that you’d like to treat yourself to?

A trip to Florida to play Augusta.

Name three things you’d do if you were in Government?

1. Make rent tax-deductible at the nominal rate. 2. Make mortgage interest on primary dwelling homes taxdeductible at the nominal rate. 3. Make childcare tax-deductible.