Mortgage switch advice

Donnie

Registered User
Messages
57
Hi all,

We are almost 5 years into a 35 year mortgage and are with KBC. We were on a 3 year fixed but are now automatically onto their standard variable rate and currently our rate is 4.05%. It decreased from 4.5% only a few months ago as all of our other bank accounts are with KBC etc. The remaining amount on the mortgage is approx. €354,000 and monthly repayments on the 4.05% rate is €1,690 per month which does not include any of the TRS mortgage interest relief. We bought the house 5 years ago for €425,000 and it is currently valued at approx €660,000.

Can anyone please lend advise if it is worthwhile pursuing a cheaper mortgage rate with another provider and if it would be worthwhile when you take into account switching fees, legal fees etc.

Any advice would be welcome as we are not experts at all in this area.

Thank you,
D
 
Absolutely worth it.

From reports in today's paper it looks as if there will be a new provider shortly offering rates below 3%. So you would save 1% a year on €354k or €3,500 a year. The most it should cost you to switch is €1,500 so, you will have recovered the costs in less than 6 months.

Not sure about TRS but I assume that the TRS continues to the new lender.

Brendan
 
Hi all,

We are almost 5 years into a 35 year mortgage and are with KBC. We were on a 3 year fixed but are now automatically onto their standard variable rate and currently our rate is 4.05%. It decreased from 4.5% only a few months ago as all of our other bank accounts are with KBC etc. The remaining amount on the mortgage is approx. €354,000 and monthly repayments on the 4.05% rate is €1,690 per month which does not include any of the TRS mortgage interest relief. We bought the house 5 years ago for €425,000 and it is currently valued at approx €660,000.

Can anyone please lend advise if it is worthwhile pursuing a cheaper mortgage rate with another provider and if it would be worthwhile when you take into account switching fees, legal fees etc.

Any advice would be welcome as we are not experts at all in this area.

Thank you,
D
Hi

I myself recently moved to ulster bank and they will pay 1500 towards legal fees and they also offer a very good rate if you are borrowing over 250k which you would be and have a good LTV which you also have. If you check their website you can input the figures and you will see what your monthly repayments will be. I inputted your numbers over 30 year term and the results are between 1500 and 1580 a month depending on which rate you pick so it would seem it is well worth your while moving and ulster bank also treat their existing customers much better than KBC. I am not sure about the TRS which you may loose but I believe it due to end at the end of this year anyway.

Aidan
 
Revenue does not consider switching lender to be a "new" loan for the purposes of this relief.

If you took out your (original) home loan between 2004 and 2008, you will remain eligible for relief until 31 December 2017 and switching does not impact your eligibility.

Interestingly, the latest IBF figures show that the number of switches increased by over 200% on a YoY basis in 2015 (albeit from a low base).

It is definitely worth switching - you could reduce your interest rate by as much as 25% and save yourself thousands of Euro.
 
From reports in today's paper it looks as if there will be a new provider shortly offering rates below 3%. So you would save 1% a year on €354k or €3,500 a year. The most it should cost you to switch is €1,500 so, you will have recovered the costs in less than 6 months.

In view of the above it might be best for those people who have a good mortgage paying capacity/a good payment record and a good LTV to hold off and see what the new entrant/s have to offer later in the year. It may cost a bit in the meantime but all the existing mortgage providers will have to reappraise their own position vis a vis the new entrant/s. I would think that to hold off changing might be worth doing rather than regretting it for the following 5 years depending on what type of deal that you might be tempted to enter in to now.
 
I am not sure about the TRS which you may loose but I believe it due to end at the end of this year anyway.

Aidan

I saw this bit. I'm about 50% along in my switching process so I thought I'd better check.

I rang the number on this page
http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html#section2

The lady was very helpful.

If you switch your mortgage to a new bank then your old bank will notify Revenue and your TRS will cease. Once your first repayment has gone from your new bank apply to Revenue as a switcher and they will enable it for the new bank. This process can take 2 or 3 months. During this time you will not get TRS, however you won't lose it. It'll be back paid. She said it was important to wait until the first payment had gone from the new bank.

If you borrow more from the new bank (e.g. your morgtage with KBC is €300K and you borrow €400K from the new bank) you only get the TRS on the original amount. Sounds fair enough to me.

From this page, TRS continues until the end of next year
http://www.revenue.ie/en/tax/it/reliefs/tax-relief-source-mortgage-rates.html


Donnie, yes it's in your interest to price around. Ring the mortgage advisors in different banks and they'll take your details and tell you how much you would be paying with their products.

For me I'm currently leaning towards Bank Of Ireland.
With KBC for the next 5 years I'll be paying €48,234.30 at current rates.
With BOI for the next 5 years I'll be paying €45,374.25 at current rates. Thats assuming fixing now for 3 years and then going variable for 2. It might save more to fix again for another 2. I won't know realistically though until 2019 :)
By switching to BOI they'll give me €5000.
My fees for switching are looking like they'll be €1000

So by switching, over 5 years I'll save €6860. This is an approximate number. In reality the 2% cashback BOI give me will go off the mortgage and we plan on putting the same amount (at least) onto the mortgage as our current KBC monthly payments so we'll reduce the capital more.
It's not going to make us rich but I prefer the money in our pocket rather than KBCs.

My plan is to dust off the spreadsheets again after 5 years and see if BOI are still the best option for us then.
 
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In view of the above it might be best for those people who have a good mortgage paying capacity/a good payment record and a good LTV to hold off and see what the new entrant/s have to offer later in the year.

Hi Dermot

There is a bit of a problem with this. If everyone does this and waits to see what will happen, then nothing will happen.

If everyone who can switch, actually switches,the banks will respond.

For Donnie, the original poster, the gap is so big that he should switch as soon as possible.

In any event, it takes around 3 months to get the paperwork and legal stuff together. Everyone should start now. Let's say that Donnie decides to switch to AIB. If the new lender, Frank, as reported in today's paper, gets off the ground with a <3% mortgage rate before AIB signs the paperwork, then he can switch to Frank instead.

Brendan
 
Hi all,

We are almost 5 years into a 35 year mortgage and are with KBC. We were on a 3 year fixed but are now automatically onto their standard variable rate and currently our rate is 4.05%. It decreased from 4.5% only a few months ago as all of our other bank accounts are with KBC etc. The remaining amount on the mortgage is approx. €354,000 and monthly repayments on the 4.05% rate is €1,690 per month which does not include any of the TRS mortgage interest relief. We bought the house 5 years ago for €425,000 and it is currently valued at approx €660,000.

Can anyone please lend advise if it is worthwhile pursuing a cheaper mortgage rate with another provider and if it would be worthwhile when you take into account switching fees, legal fees etc.

Any advice would be welcome as we are not experts at all in this area.

Thank you,
D
This is a model for a switcher. Switching costs are around €1,000, but many banks will cover more than that amount with cash incentives. Much more importantly, you could get a much lower interest rate, and save a fortune over the long-term. For example, you could get a rate of 3.35%, which would cost you around €1,561 per month over 30 years. That's €1,548 per year in savings (net of income tax, don't forget), or €46,440 over the remaining term. Better still, you could reduce the term and your monthly repayments. You could take 3 years off your mortgage and still only be paying around €1,662 per month. Doing that would save you an additional €23,282 in interest payments.

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl
 
There is a bit of a problem with this. If everyone does this and waits to see what will happen, then nothing will happen.

If everyone who can switch, actually switches,the banks will respond.

I would agree but that will not happen (absolute inertia). Some time ago you put a lot of work into promoting a meeting about mortgage rates etc and it was very poorly attended. (Not your fault). I cannot understand why mortgage holders will not take matters into their own hands.

For Donnie, the original poster, the gap is so big that he should switch as soon as possible.

I understand but I just would not like to see Donnie being locked into something for say 5 years at say 3.35% only in 6 months time to see that he might get a rate of 2.9%. A bit of dammed if you do and dammed if you don't.

In any event, it takes around 3 months to get the paperwork and legal stuff together. Everyone should start now. Let's say that Donnie decides to switch to AIB. If the new lender, Frank, as reported in today's paper, gets off the ground with a <3% mortgage rate before AIB signs the paperwork, then he can switch to Frank instead.

I totally agree that people should start getting their paperwork in order and start shopping around when they have that completed or near completed.

What concerns me is that so many people are almost expecting Mr Bank to call to them (at a convenient time for them) and give them their mortgage at 1% lower than they are currently paying if the mortgage holder would please sign their name at the bottom of the offer and let Mr Bank sort out the switching for them. That is not going to happen.
 
Thank you all. Lots of advice and it seems like switching is definitely worth it. I am stull unsure whether to switch ASAP or as another poster said wait until Investec and Pepper Home loans. If I switch now and then 6/9 months latr to one of these new providers to Ireland, I will have to pay two sets of switching costs and legal fees. However I know in the long run this may be immaterial.

Any further advice will still be very welcome.
 
I have some more advice. Surprisingly, a lot of people can't switch, even when they want to. Reason why include:

  • Growing family - higher minimum disposable income requirements, child care costs.
  • Changes in employment and income, e.g. reduced hours, change of jobs, probation, contract employment, lower bonuses, moving to self-employment, etc.
  • Increased financial commitments, e.g. car loan, pension contributions.
  • Adverse credit history in the period since taking out the mortgage.
  • Poor account operations in the few months before applying, e.g. missed payments, frequent use of overdraft, etc.
My advice would be to get some advice to establish whether you can simply switch if you decide to. Once you have established this, you could plan when would be the best time to make the switch. For example, if some sort of life event may be on the horizon in the next couple of years, then you could make an informed decision as to whether it would be best to switch before this life event happens.
 
Thanks for the help all. I have since been in contact also with a mortgage broker and given our details they think we will certainly be in line for a switch to a lower fixed or standard variable rate with another provider and we will save between €100 - €170 per month depending on choice of provider. At the moment Ulster bank's 3.2% fixed or 3.35% standard variable rate seem like the best on offer.
 
I'm in process of switching. The process is simple and I reckon I will do it in 2 months . Thats 2 months mortage payments only. This has been achieved by putting my solicitor and new bank under pressure . Don't sit back and let them control it get involved in the process and ring them regularly to make sure all on track. If a solicitor does an effective and efficient job let him know you will recommend him Start organising the paperwork and keep doing so for example keeping all bank statements going forward in one folder. Originals are most important.
 
I recently switched from Boi 4.35% svr to Ulster bank discounted svr of 3.5% (.8% less of their svr for life time of mortgage). I've a ltv of just under 60%. By switching I've taken five years off mortgage keeping payments around the same. I met bank manager first week of October 2015. Had all statements and payslips with me. She took copies of all that day and filled in the forms. Got approved two weeks later I believe. I could have drawn down November/December but the bank manager asked me nicely would I wait till January to draw down cause it would help with her 'numbers'. I agreed. Solicitor fee €500 + vat and other costs worked out to be over €900 all in. Ulster bank will be giving me €1500 for switching. I know kbc offer good rates but the way they treat their existing customers is one of the reason I went with Ulster Bank. Also moved current account that day too. Boi crazy fees on that too.
 
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