Is €1,500 for switching excessive?

[gnf_ireland]

Agree that this is very disappointing. It is effectively putting the onus on the customer to switch mortgages in order to get a reasonable deal. I think unless customers actually start to move in real numbers, this practice will not change unless the banks are forced to legally.

However, I do feel there is a major barrier to entry here in the legal costs associated with switching a mortgage, which you do not have in the cases of utilities for example. This is undoubtedly going to stop a large number of people from moving, even if they have the right LTV and income ratios.

I have been quoted ~1500 euro for legal fees to switch a mortgage. The breakdown was 900 + VAT for professional services and 400 euro roughly in outlays. Is this reasonable or is it excessive? My view is it is excessive, and feel it may be driven by KBC's decision to offer 1000 towards legal fees in the past. I believe this has now been removed, but am meeting KBC tomorrow to discuss the switching in any event.

Can anyone advise
(a) whether a 1500 quote is excessive or not and
(b) what a reasonable quote should be for this work

So you should simply move to KBC or AIB.

Brendan - do you feel it would be possible for you to do a deal with a solicitor's practice to support this at a reduced fee based on volume that would assist customers with the move process? It would need to be organised as part of a campaign to force the banks to change their practices, but if it could be done it may be a game changer? Any thoughts here? I am suggesting it as I know you have the contacts and network to support such an initiative where others like myself do not ...

 

[Brendan Burgess]

€900 + VAT is a reasonable fee. I know some good solicitors whose minimum fee is €1,000. There is a fair amount of work involved.

Here are the rough costs

How much does it cost to switch?
This is a fair guide:

Land registry: €175
Searches: €150
Commissioners' Fees: €40
Valuation: €127
Solicitor's fee: €1,000
Vat on solicitor's fee: €210
Total: €1,700

The good news is that KBC has extended the €1,000 deal for another year.

Brendan - do you feel it would be possible for you to do a deal with a solicitor's practice to support this at a reduced fee based on volume that would assist customers with the move process?

An interesting idea. The problem is that every case has to be handled individually, so there isn't that much advantage to a solicitor to have 500 of such cases. It can't be automated.

However, it may be possible to cut the cost by:

1) Asking the solicitor who acted for you in the purchase originally. They should have certified the title already and so it will be easier to do it a second time.
2) If you are in an estate or apartment block, you might be able to get a group rate.

I wouldn't organise anything myself on this. People are often unhappy with solicitors and if I or askaboutmoney recommended a particular firm and the solicitor turned out to be unsatisfactory, I would just get more abuse.

Brendan

 

[Monbretia]

Anyone remember the Title Insurance that was used to do cheap switches, think the company was First American. They indemnified the bank against problems with the title, I used them myself a switch at one stage through one of the main banks, think the fee was only 150 or so.

Did that system fall out of favour?

 

[shweeney]

Such a high level of fees is a serious barrier to competition in the mortgage market. Surely when a house is initially purchased, the solicitor could put together a pack containing the necessary documents to facilitate future mortgage transfers etc. Obviously this is not in the business interests of the conveyancing industry, but it could be mandated in law maybe?

 

[gnf_ireland]

Anyone remember the Title Insurance that was used to do cheap switches, think the company was First American. They indemnified the bank against problems with the title, I used them myself a switch at one stage through one of the main banks, think the fee was only 150 or so.

Did that system fall out of favour?

I was just looking at the EBS switching information and they appear to use American First as an option and state:
If you decide to move your mortgage to another institution before the end of a five year period, you will be required to pay EBS €777 to cover the initial legal fees for switching.

File containing this detail uploaded

 

[Brendan Burgess]

If you decide to move your mortgage to another institution before the end of a five year period, you will be required to pay EBS €777 to cover the initial legal fees for switching.

I don't think that this is legal unless it relates to a fixed rate mortgage. Under the Consumer Credit Act, there can be no charge for redeeming a variable rate mortgage early.

Brendan

 

[Monbretia]

Banks usually have a clawback of the legal costs paid (if they pay them) if you move from them again before a set period, that has been common for a while so I wonder is it outside the CC Act and not considered a charge as such?

 

[mf1]

Such a high level of fees is a serious barrier to competition in the mortgage market. Surely when a house is initially purchased, the solicitor could put together a pack containing the necessary documents to facilitate future mortgage transfers etc. Obviously this is not in the business interests of the conveyancing industry, but it could be mandated in law maybe?

A solicitor's certificate of title with a proper schedule of Title Deeds was always part of what was returned to the lender. The following are some of the difficulties that can arise that are outside that schedule:

Marital issues - e.g. no formal separation and one party will not engage.
Boundary disputes that have arisen subsequently.
Issues that arose post purchase in (what were then) new estates: non transfer of common areas, liquidation of original developer, NAMA-ed developments
Structural defects
Planning issues- standard ones would be attic conversions and non exempt extensions with no Architect's Opinions
If the property was originally an unregistered title and is now in the Property Registration Authority for compulsory registration, it is unlikely that any other solicitor ( other than the original solicitor) would be willing to certify the title now.

To put it bluntly, a property title ( in the broadest sense and including tax, planning, marital issues) seldom remains static and must be properly investigated by the solicitor.

And I don't think EBS are still doing the Quickswitch - that seems to date back to c.2007? I don't think the Title Insurance for residential properties is currently in use( I am open to correction on that) and my view would be that that is because it was ultimately not cost effective.

mf

 

[gnf_ireland]

And I don't think EBS are still doing the Quickswitch - that seems to date back to c.2007? I don't think the Title Insurance for residential properties is currently in use( I am open to correction on that) and my view would be that that is because it was ultimately not cost effective.

Apologies - I may have been guilty of the dangers of google ! I could not find a date on the document so assumed it was valid.

 

[gnf_ireland]

To put it bluntly, a property title ( in the broadest sense and including tax, planning, marital issues) seldom remains static and must be properly investigated by the solicitor.

I am not sure I would concur with the statement SELDOM. I am happy to agree that they are prone to change, but I would imagine in 75%* of switcher mortgages taken out in the last 5 years, the property title (in the broadest sense) has not changed at all.

* note, this is just a random guess at the figure and not backed up by any scientific data