How we bagged €38k by making the switch

Switching mortgages helped one Meath-based couple more than compensate for shocking gas and fuel price hikes we’ve seen lately.

In fact, the money Noel and Naeiri Gavin saved – €38,000 – could pay for all the extra energy price hikes even if they lasted for more than a decade.

Noel works in engineering and Naeiri is a stay-at-home mum.

One reason they were able to get a good deal on a new loan was because rising property prices has given them a better loan-tovalue ratio for their house – the key metric used for deciding what interest rate you pay.

As homes rise in value and your home loan falls, you should pay less for your mortgage. But you may have to take steps to ensure you get credit for this phenomenon.

The strong local property market in Navan and a number of home improvements saw the value of their home increase to more than €500,000.

This reduced their loan-to-value rate to less than 60 – and qualified them for a better mortgage rates.

Another reason they did relatively well was because they originally took out their mortgage with Permanent TSB which has one of the highest standard variable rates in the market.

This is the trade off for a ‘cashback’ offer that comes with the loan and is handy for paying off the early bills.

But, as Noel and Naeiri discovered, you don’t have to stick with the high rate – you can always ‘take the money and run’ by switching later.

The fixed rate they had agreed was expiring so they contacted Moneysherpa for guidance on their next step. If they hadn’t taken action the mortgage would revert to the general variable rate from PTSB.

Their broker advised them that they could save even more by switching provider to ICS mortgages, whose packages recognise and reward the reduced risk from a low LTV ratio.

As an added bonus, Noel and Naeiri not only saved €38,000 – they were able to take four years off their mortgage too and can look forward to a mortgage-free future a lot earlier than they previously thought possible.

‘If you are with one of the traditional bank lenders and not on a tracker, you will probably save over €20,000 by switching to either Avant Money, Finance Ireland or ICS,’ said Mark Coan founder of moneysherpa.ie the Irish money guide.

The traditional banks carry a lot more costs than these new lenders that’s why the average non-tracker rate with a traditional bank is 3.8% while new lenders can charge less than 2%.’