Is it stupid to NOT switch mortgages..can't decide what to do?

Fauve

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Hi
Please bear with me, I need help from those in the know.
Our situation is this;
Fixed rate (PTSB) ended in Dec, and now at 4.8%.
We would qualify for the NIB loan to value mtg, at a rate of 4.5%.
Doing the sums and talking to NIB rep, we would make a saving of something like €16 per month on repayments. (factoring in TRS)
To switch it would cost us approx solr fees and valuation fee total; 930 minus refund from NIB 600 = 330.
We could use NIB legal team but in not so many words were discouraged from doing so as they are very very slow, by NIB rep.
I would prefer to use my own solr anyway, long time contact/friend etc.
When we met with NIB rep, I was never less sold a financial product in my life. It was almost as if she was discouraging us from going ahead.
Very confusing and not at all expected.
We would also have to open an account with NIB, arrange for the salary to go into it. It is not compulsory but rep told us that as the whole switching thing had kind of backfired on NIB as in they had loads of mortgage switchers but no account take up, they now would look most favourably and move quickly on new account holders as well.
So why are we so slow to change?

Are we stupid to not switch now while the offer still stands.
Other little things....
EddieHobbs referenced the NIB ltv mortgage about four times in Jan mag, this got me thinking.
The NIB branch that would be our local one was as quiet as could be when we visited, we thought it was closed or had skeleton lunchtime staff, however lunchtime came and went and there wasn't a rush of anyone anywhere. Never been in a bank so quiet.
If they did relocate from nearby town, would we be in a quandry down the line if no real life branch?
Finally, NIB rep said we would be tied in for lifetime of the mortgage if we do switch, (17yrs), and in the future if they hike up the interest we would be unable to get out of it.
Another point to note is that we would have to take up a new Life policy on the mortgage, as the one we have is with Irish Life, at what everyone tells me is a good premium. Even the NIB rep was surprised at what we were paying each month. We would have to get a new policy if we switched companies, and I am guessing that it would cost more than what we are paying now.
To switch or not to switch ..that is the question????
Thanks for reading.
 

ClubMan

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To switch or not to switch ..that is the question????
If the potential savings achievable by switching to a cheaper lender outweigh the possible switching costs (which some lenders will subsidise or subsume) then it makes sense to do so in my opinion. Is NIB the cheapest lender for your circumstances (e.g. LTV and mortgage amount)?
 

Fauve

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82
Hi Clubman
Thanks again for your advice, we need to go through this ourselves again with a fine tooth comb to be honest as I don't know if much has changed since before Christmas, re better offers etc.
We were looking more at the short term re payback. The cost of switching would'nt even payback in the first year. I know mortgages are to be considered in the longer term but when funds are tight even the odd hundred euros here and there makes a big difference.
The tax back cheque would enable us to now do the switch without too much impact, and wondering if we should now jump ship..
Just the prospect of mtg rising above the 4.8% fills me with some fear and I am wondering if we are foolish now to not avail of the 4.5% while it is there.
Having said that I think the Life policy premium would make up for any saving.
Might get a quote for that from NIB.
Sorry have to go, kid calling.
F
 

ClubMan

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Just the prospect of mtg rising above the 4.8% fills me with some fear and I am wondering if we are foolish now to not avail of the 4.5% while it is there.
From this and your other thread I take it that you're on a tight budget. If you know for sure that heading towards 5% would start putting you under financial pressure then it may well make sense to opt for the best fixed rate available for your circumstances for whatever period of time you think it will take to improve your financial/cashflow situation - also assuming that you won't need to move in that time since the fixed rate early breakage penalties may be significant.
Having said that I think the Life policy premium would make up for any saving.
Might get a quote for that from NIB.
If you mean mortgage protection life assurance then don't confine yourself to banks for this. In fact you are probably more likely to get a better deal elsewhere (e.g. a discount online broker such as www.123.ie or www.labrokers.ie etc. - there are more so please check them all out!) and you can switch any time. Do a search for previous threads on this issue too.
 
Z

z109

Guest
Another point to note is that we would have to take up a new Life policy on the mortgage, as the one we have is with Irish Life, at what everyone tells me is a good premium. Even the NIB rep was surprised at what we were paying each month. We would have to get a new policy if we switched companies, and I am guessing that it would cost more than what we are paying now.
I am not sure if this is the case or rep speak - that you have to get a new policy. If you are increasing the amount you are borrowing then you need to have life insurance to cover the extra, but you should probably only get a top-up policy if your existing cover is at a good rate.
 

ClubMan

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I also don't believe that you would necessarily have to get a new mortgage protection life assurance policy and if the NIB rep was saying this then I would be wary of them engaging in some sort of hard (mis?) selling? In any case even if you did need to take out additional or new cover then you are certainly not confined to the lender for that and you can freely shop around for it if you choose. Even if you stay with your existing lender you can do this.
 

Butter

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I switched to NIB two years ago to avail of a better offer for our mortgage - we fixed at 3.29% for two years. Unfortunately that is coming to an end next month. I am glad we moved for several reasons. We definitely did well financially out of it as the rate was so good. Our branch is also very quiet and it doesn't wreck my head to go in (unlike the Ulster Bank nearby where I have my current account and it is incredibly busy all the time). We opened a freebank account with NIB and we were never told that we would have to pay in our salaries. I don't think that they can put that in as a condition of granting a mortgage. We just transfer mortgage payments from the Ulster Bank to the NIB a/c every month by standing order. Also if you are not increasing the amount you are borrowing you probably won't have to change your life assurance provider. Ring them and ask if it is possible to just reassign the lender noted on the current policy. This would be much less hassle and shouldn't end up with you having to take out a new policy.
So in my experience it was worth moving, even with the (relatively) small hassles involved. Admittedly I have moved mortgages three times in eight years to avail of better offers and it's always been worthwhile.
 

ClubMan

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dmittedly I have moved mortgages three times in eight years to avail of better offers and it's always been worthwhile.
Fair play to you. A lesson to all those people who are too indolent to bother. Have you ever estimated the savings made by switching?
 

Butter

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This is not exact but I did a rough calcuation and I reckon it is in the region of €8000 in total. That's infinitely better in my pocket than in the profitability statement of a bank. The cost of legal fees has been fairly low as one switch was to Ulster Bank which didn't involve a solicitor and another switch was to NIB who gave me a €1000 cashback for legal fees. I would imagine I am the kind of customer though that banks hate. I think in the U.K the term used is a rate tart!
 

Fauve

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82
Hi all
Thanks so much for all thoughts on this.
I am very caught for time now, so this is a quick reply.
We are going to go through all this again and make final decision.
We are on a tight budget alright, in the sense that, living on one wage (by choice)we are just getting into a position to be able to save more than we are and if we can save a few Euros by doing this then maybe it is worth it.
Also if PTSB hike the rate in the year ahead, in view of the fact that there will not be an increase in salary incoming this year (despite everything else rising!) it means we could be ending the year tighter than we started it.
This I want to avoid.
Marg thanks so much for that feedback on NIB, I admire your tartiness (smiley :)).
I might borrow some for myself.
Can I just ask re NIB, do they take tax relief at source on the monthly payment or how is it done with them. (With our ptsb mtg they take it from the montly payment before direct debit. Again this makes the amount easier on the eye and monthly pocket).
Re salary, the rep didn't say we had to have it going into the nib ac but this was suggested strongly, "we would like to see the salary going in..." etc.
€1000 cashback sounds lovely, I think they must have changed that since? She told us it would be roughly €600 refund on solr fees.
Also, are you tied in for the duration of the mortgage? No more switching allowed for you or did I misunderstand that part (can't rem if I read it or she said it)?
We will not be moving house, and we are not looking for a top up.
If anything we would look to reduce the term but that would really stretch us so unless Lotto smiles on us this weekend, that won't be happening either.

Finally, I will get onto Irish Life re mortgage protection life assurance, I asked about this previously but will be more clear this time, just to be sure.
And can shop around also.

Thanks again for all replies and thoughts on this.
I shall feedback in due course the outcome of deliberations.
Fauve
 

ClubMan

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Can I just ask re NIB, do they take tax relief at source on the monthly payment or how is it done with them. (With our ptsb mtg they take it from the montly payment before direct debit. Again this makes the amount easier on the eye and monthly pocket).
All lenders grant owner occupier mortgage interest tax relief at source once you have claimed it from Revenue.
Re salary, the rep didn't say we had to have it going into the nib ac but this was suggested strongly, "we would like to see the salary going in..." etc.
I didn't think that they could insist (e.g. financial product bundling is supposed to be illegal isn't it?)? But then again there are other examples of having to have an account with an institution in order to avail of some other product...
€1000 cashback sounds lovely, I think they must have changed that since? She told us it would be roughly €600 refund on solr fees.
Haggle!!
Also, are you tied in for the duration of the mortgage? No more switching allowed for you or did I misunderstand that part (can't rem if I read it or she said it)?
Where lenders give cash back or subsidise/subsume remortgaging legal costs they may have a clause in the loan agreement requiring you to pay some or all of it back if you move from them within some period of time (e.g. 5 years).
Finally, I will get onto Irish Life re mortgage protection life assurance, I asked about this previously but will be more clear this time, just to be sure.
And can shop around also.
Definitely shop around for yourself or via a broker rather than expecting the lender to get you a good deal.

Good luck.
 
N

notsosmart

Guest
On a somewhat similar note - I'm on the AIB Tracker rate mortgage ( don't know rate right now ) but am thinking it's probably worth my while shopping around for a Switch about not.

Mortage has 22 years left. Took a 25 year mortgage at 230k but don't know exactly how much is left. Property is probably valued at 300k right now. Any advice on who might provide me with the best savings? My repayments are about €1390 per month at present.

Apologies if this kind of question has been posed already.

Cheers lads.
 

ClubMan

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What rate are you on? Check the rates table in the Thursday's Irish Times property section etc. to see what's on offer. Check the Financial Best Buys forum but I'm not sure if the mortgage rates listed there are up to date?
 

Fauve

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Hi Clubman, thanks for those nuggets of wisdom.
I shall try haggling if we proceed, though it was never my forte and the hub is worse!
Anyway, re trs and please forgive me, this may be my stupidest moment yet on Askaboumoney...but I thought I read in a thread here a while ago that some trs is not taken before the mortgage repayment is debited from personal account.
I know all lenders grant it once it is claimed (we spent the first three yrs of this mortgage not claiming it!:eek:). I thought I read somewhere here that some financial institutions don't take it but put it into your ac at yr end or month end or some such thing?
Tax relief at source means tax relief is taken at source (ie financial institution?). Is this correct?

Ok, I have to sleep and dream about mortgages now.
Thanks again all.
 

ClubMan

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Anyway, re trs and please forgive me, this may be my stupidest moment yet on Askaboumoney...but I thought I read in a thread here a while ago that some trs is not taken before the mortgage repayment is debited from personal account.
I know all lenders grant it once it is claimed (we spent the first three yrs of this mortgage not claiming it!:eek:). I thought I read somewhere here that some financial institutions don't take it but put it into your ac at yr end or month end or some such thing?
OK - I get you now (and you're not being stupid - maybe I am). I'm not sure if different lenders do it differently. I assumed that all did it monthly and just collected a direct debit net of the relief. But probably best to check with any specific lender - e.g. check the terms & conditions of the loan agreement or ask them.
Tax relief at source means tax relief is taken at source (ie financial institution?). Is this correct?
Yes - except that the relief is given at source.
 

60watt

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Hi Fauve,
I switched to NIB tracker at 4.5% last year and I am making a savings of approx €28 per month.
I cant advise you what to do but here is my experience of NIB LTV tracker

1. You dont need to have your salary paid into the NIB Easy current account.
At the moment I transfer money to this account online every month from my PTSB current account (just enough to cover the mortgage).
Also there are no charges on the NIB Easy current account

2. NIB credit the TRS to my Easy current account on the same day as the mortgage is debited from my Easy current account.

3. I really like the NIB online banking. You can see what date your next payment is due, you see a full statement of all your payments and interest.

4. I strongly disagree with you statement that the NIB legal team are very very slow. I used them and they were very very efficent. Well worth not having to pay my own solicitor. And if you chose to use your own solicitor NIB will contribute €600

5. I remember asking my NIB rep at least twice if I was tied in for any period and he said no . I must double check what it says in the contract.

6. You don't have to change life assurance policy, if you are happy with your existing policy you just have to call your policy provider and ask them to note the interest of NIB on your policy. Having said that I did change my life assurance policy simply because I could get a better deal by shopping around.
 

ClubMan

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2. NIB credit the TRS to my Easy current account on the same day as the mortgage is debited from my Easy current account.
Do they charge your mortgage repayment by DD gross and then refund the tax relief or just charge the repayment net of relief? What do other lenders do does anybody know? My most recent mortgage repayment predated tax relief at source!
4. I strongly disagree with you statement that the NIB legal team are very very slow.
I thought that it was the NIB sales person who said this!?
5. I remember asking my NIB rep at least twice if I was tied in for any period and he said no . I must double check what it says in the contract.
Get answers to questions like this in writing and also check the terms & conditions of any agreement before signing it!
 

60watt

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NIB charge the mortgage repayment by DD gross and then refund the tax relief. My previous lender BOI did it the exact same way.

Sorry yes it was the NIB sales person that said this, but like I said they were very very efficient for me.
 
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