Switching could save €50k on a €300k mortgage – or help you retire YEARS earlier

Everyone is rightly complaining about soaring prices. But we could make all the pain go away and then save ourselves lots more with one simple move – switching our mortgages. Yet many people just don’t bother saving themselves tens of thousands (see Consumer Eye below). Here ALISON FEARON of Switcheroo.ie tells us not to fear our finances and just do it! She also shows how easy it is to switch; the value of using a broker – and why you should change your car insurance every year.

Mortgage statements are coming through our letterboxes at the moment. A good time to switch?

Your statement is an opportunity to see the balance that’s still outstanding. With this information now is the perfect time to shop around with interest rates at an alltime low and great fixed rates to lock in savings. The best way to reduce that balance is to move to a cheaper mortgage rate and ideally take a year or two off the term while maintaining your current payments.

How much could we save?

There is no bigger savings opportunity. [Savings] vary by mortgage but to give you an example of a €300k mortgage at a rate of 2.9% for 30 years. If you can get that rate down to 2%, that’s a saving of €50k. Post-tax. Cash. Another way to think about it is how many years can I take off my mortgage so I can retire early. Using the above example by switching to a lower rate but maintaining your original payment you would take three years and four months off your mortgage term.

How do we do it?

The easiest route to switch is to use a mortgage intermediary who can access the full range of mortgage provider groups in Ireland, like Switcheroo.ie. This means you also access the non-bank lenders who only work with designated partners. It effectively doubles [your] options.

How long does it take?

We think of it as a weekend of work spread over a couple of months. We have calculators and mortgage-rate comparison tools on our site that will quickly show you what your options are and what you can save. You can then speak with an adviser. The boring bit is gathering your financial statements and payslips, but most documents are online, so it is getting easier and faster. Once you have all the documents the whole process to drawdown should take eight weeks.

Why would I get a better deal?

1) Central Bank Interest rates are zero, so mortgage rates are low too, 2) Competition has increased with new entrants forcing banks to reduce their rates, 3) There are a new range of products – long-term fixed rates, green mortgages and cashback offers, 4) Your property has increased in value… so you have more equity and so banks will offer you a better rate.

Why should we go to brokers?

We recently analysed the market across over 65 product categories of term and loan-to-value, and our best rates were typically 20% lower than the average rate available to high street customers. Some lenders allow more bonuses or commissions when calculating income than others. Some allow more income for public sector employees. A mortgage intermediary finds the best mortgage for you and will manage the process for you. We are regulated by the Central Bank of Ireland so are required to give you the best advice.

How much does it cost? How is it paid for?

Switcheroo.ie is free. There are legal (€1,500) and valuation costs (€165) but a number of the banks have switcher offers that will cover these costs for you via cashback.

So why don’t people switch when the savings are so huge?

People have a fear of their finances. They don’t open their bank statements or, God forbid, a letter from the Revenue. Banks understand this and many structure products that benefit from this customer inertia.

Best and worst investments?

Best investment, husband; worst investment, kids! Kidding! My husband was my worst investment! Crypto? The future of money or biggest bubble ever?

Biggest bubble ever.

Ever been treated badly as a consumer?

When in London, I bought a secondhand car for around £12k and had it insured for the same, for an annual premium of around £800. Two years later it was stolen and when I made my claim, I received a check for £4k. When I complained they simply told me that’s all the car was worth even though the insured amount was £12k. Note to self – change your car insurance every year!