gnf_ireland
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Like Carmel, Brendan has asked me to write up a summary blog of my switching experience. I had planned to do this in any event, but realised the draft was more of a rant so summarising it now as best I can. I am happy to answer any questions people have on this, either on the post or via PM.
My personal circumstances are very different from Carmel’s, given employment status.
Background
Me: IT consultant for last 14 years - deemed a company director for mortgage assessment purposes. No other property.
Wife: Works in permanent position in good industry sector. House outside Dublin, currently in negative equity but on low tracker mortgage and is rented out
Bought current house in March 2011 in South County Dublin with original LTV of 67%. 2 year fixed rate of 3.4% over 25 years. High levels of uncertainty regarding interest rates at the time. 5 year fixed was 4.7%. Both fixed and variable rates rose immediately after I drew down in April 2011.
March 2013 rolled onto SVR with BOI @ 4.35%. 3 year fixing at the time was 4.89% and 5 year fixing was 5.29%. Believed a level of downward pressure on SVR rates at the time, due to economic situation in Europe and globally.
Q2 2014 - As part of a personal financial review, I decide to stop paying into regular savings accounts and overpay the mortgage by the same amount instead. I also decide to pay ~14% off the mortgage in a lump sum from existing savings. Monitoring the mortgage interest rates closely at this stage
5th January 2015: BOI make their move on interest rates on 5th January and new LTV <60% at 3.9% -for new customers only. Rang both the mortgage centre and Premier Banking to see if they could put me onto the new rate, but the best they could offer was to fix for a period and then move to 4.2% rate. As of 1st January, LTV was below 47%.
Next day I visited one of the KBC hubs. I had contacted them before Christmas in preparation of a potential switch and had gathered all the documentation over the Christmas period. As I am self-employed, this tends to be a large amount of documentation.
Current application details (personally)
· LTV = 47%
· LTI rate = 2.2 times
· Decent level of savings
An issue arose with the application immediately. I was now a married person, so according to the staff in KBC I could only apply for a mortgage on a family home as a joint couple if I am married. I also had 2 children between March 2011 and July 2014, which of course alters the mortgage appraisal process. Both of these children are in childcare costing ~ 2k a month. Furthermore my wife has a house in negative equity of about 60k, although is on a low ECB tracker.
Redo the application and get wife's financial details sorted. Revised details (joint application) and submit application on 9th January
· LTV = 47%
· LTI rate (both houses) = 2.6 times
· Decent level of savings
14th January 2015: KBC query 6 transactions over 1,000 euro and ask for explanation on them. Answers sent through that evening via email later that evening.
26th January 2015: KBC confirms application has been successful and letter is being posted listing further details to be provided. These included originals of certain financial statements, as well as letters from company accountants of current and previous companies I was a director of stating no financial liabilities or personal guarantees provided. This letter of "Approval in Principle" expires in July 2015 - valid for 6 months. All documentation supplied 4 days later.
February 2015
Slow month for the switching process. All documentation submitted but hold-ups on the KBC side, which the contact at the hub is unable to explain. Assume that it was either a high volume of applications or the person assigned the assessment went on holidays. Nothing happens for a month
Letter of offer issued 28th February and must accept within 2 months, expiring 28th April, and draw down in 4 months. Partial reason for hold-up was issue determining who my actual employer is to prove place of employment as 3 parties involved (end client, recruitment company and management company)
Title Deeds requested from BOI, but not provided on first attempt. This has to be re-requested and delays process by 10 days.
Solicitor review of the documentation identifies a clause whereby they have to ensure title deeds are in joint names before the draw down. Title deeds currently in my name only and changing as part of the re-mortgage. However this will be done AFTER the draw down not before it. Request KBC to clarify position, which they do by email. However takes another 4 weeks for them to issue this clarification in writing to the solicitor- despite a number of requests.
Once clarified, the process is very quick and draw down scheduled for 1st May. Issue with SEPA holiday so ends up being pushed out to 5th May. The cutover was straight forward enough. BOI closed mortgage account and did not attempt any further payments. KBC did pay the original requested amount (balance on January 1st rather than May 1st), but solicitor rebated this to them immediately so a non-issue.
First repayment was 1,000 euro lower than remaining repayments, which is now the 1,000 switcher initiative was paid. This ensured no issue with cash flow.
Cost of mortgage switching was ~1600. Valuation was 127 and Solicitor was 1470, including outlays. KBC paid 1k of this, and saved 250 on house insurance so cost 350 euro overall. Have this saved already in repayments.
Observations
1. Despite the fact I am self-employed the process was straight forward enough. A few small hiccups on the way, but nothing major.
2. KBC provided me with half price house insurance on 1st April, although I had not signed the letter of offer yet. This was in acknowledgement of the delays in the process on their side
3. BOI did eventually offer me the 3.9% rate (without need for valuation) in mid-April.
4. Due to BOI's behaviour, I also closed by credit card with them during this time. This is now with KBC also *see note below
Why KBC:
Reason is straight forward. They have the lowest variable rate on offer at the time, and as I am aggressively overpaying the mortgage I did not want to consider fixing it. This is still my current position on fixing, despite the ongoing high SVR rates
What would I do differently second time around:
1. I would apply to all banks at the start, since it is effectively the same paperwork you need to arrange for each of them. Submit to all of them and assess which provide the best options
2. Definitely visit the banks in person and have a contact person identified. I done this with the KBC hub and was invaluable at times
3. Once you have decided you are switching, apply for the title deeds to avoid any unnecessary delays
Finally, since moving KBC have reduced their rates by 0.05% and not offered it to existing customers. I did contact the mortgage department about this to express my dissatisfaction at the practice. I informed them that this was the primary reason I switched from BOI, and reminded them that those who have switched recently are the ones who have decent LTV/LTI ratios and do not suffer from inertia. These may not be the customer base that they want to annoy easily. I also advised them that I will be closing all deposit accounts with them as they mature as a result of not passing on this cut, and if a second cut was not passed on all non-mortgage banking would be closed (credit card and would not consider them for house insurance renewal). I know it makes little difference but don’t see the point in rewarding this behaviour.
At the moment, at 3.55% variable I cannot get a better variable rate. I am not interested in fixing due to my aggressive overpayment strategy, and have decided to liquidate some equity investments and use to pay off a further lump sum against the mortgage. This is taking a little longer than expected due to influence Greece has on the stock market recently.
I would be prepared to switch again, should more favourable rates exist. However, I think I would need to be payback on the move within 4 months, including any incentives to switch that were being offered. The new P-TSB discount offer for 12 months is worth considering, but I do think others will follow this model shortly rather than cutting SVR's.
Note: I have to state that at this stage I would be very reluctant to switch to either KBC or BOI based on their treatment of existing customers. I believe the practice is unforgivable, and undermines the concept that variable rates should move downwards as well as upwards. It is the equivalent of upward only rent reviews in my opinion. I have contacted my local government TD's asking them to pressure the banks to ban the practice, but yet to hear any response from them on it. I will add that they responded to earlier communication on this topic very quickly.
My personal circumstances are very different from Carmel’s, given employment status.
Background
Me: IT consultant for last 14 years - deemed a company director for mortgage assessment purposes. No other property.
Wife: Works in permanent position in good industry sector. House outside Dublin, currently in negative equity but on low tracker mortgage and is rented out
Bought current house in March 2011 in South County Dublin with original LTV of 67%. 2 year fixed rate of 3.4% over 25 years. High levels of uncertainty regarding interest rates at the time. 5 year fixed was 4.7%. Both fixed and variable rates rose immediately after I drew down in April 2011.
March 2013 rolled onto SVR with BOI @ 4.35%. 3 year fixing at the time was 4.89% and 5 year fixing was 5.29%. Believed a level of downward pressure on SVR rates at the time, due to economic situation in Europe and globally.
Q2 2014 - As part of a personal financial review, I decide to stop paying into regular savings accounts and overpay the mortgage by the same amount instead. I also decide to pay ~14% off the mortgage in a lump sum from existing savings. Monitoring the mortgage interest rates closely at this stage
5th January 2015: BOI make their move on interest rates on 5th January and new LTV <60% at 3.9% -for new customers only. Rang both the mortgage centre and Premier Banking to see if they could put me onto the new rate, but the best they could offer was to fix for a period and then move to 4.2% rate. As of 1st January, LTV was below 47%.
Next day I visited one of the KBC hubs. I had contacted them before Christmas in preparation of a potential switch and had gathered all the documentation over the Christmas period. As I am self-employed, this tends to be a large amount of documentation.
Current application details (personally)
· LTV = 47%
· LTI rate = 2.2 times
· Decent level of savings
An issue arose with the application immediately. I was now a married person, so according to the staff in KBC I could only apply for a mortgage on a family home as a joint couple if I am married. I also had 2 children between March 2011 and July 2014, which of course alters the mortgage appraisal process. Both of these children are in childcare costing ~ 2k a month. Furthermore my wife has a house in negative equity of about 60k, although is on a low ECB tracker.
Redo the application and get wife's financial details sorted. Revised details (joint application) and submit application on 9th January
· LTV = 47%
· LTI rate (both houses) = 2.6 times
· Decent level of savings
14th January 2015: KBC query 6 transactions over 1,000 euro and ask for explanation on them. Answers sent through that evening via email later that evening.
26th January 2015: KBC confirms application has been successful and letter is being posted listing further details to be provided. These included originals of certain financial statements, as well as letters from company accountants of current and previous companies I was a director of stating no financial liabilities or personal guarantees provided. This letter of "Approval in Principle" expires in July 2015 - valid for 6 months. All documentation supplied 4 days later.
February 2015
Slow month for the switching process. All documentation submitted but hold-ups on the KBC side, which the contact at the hub is unable to explain. Assume that it was either a high volume of applications or the person assigned the assessment went on holidays. Nothing happens for a month
Letter of offer issued 28th February and must accept within 2 months, expiring 28th April, and draw down in 4 months. Partial reason for hold-up was issue determining who my actual employer is to prove place of employment as 3 parties involved (end client, recruitment company and management company)
Title Deeds requested from BOI, but not provided on first attempt. This has to be re-requested and delays process by 10 days.
Solicitor review of the documentation identifies a clause whereby they have to ensure title deeds are in joint names before the draw down. Title deeds currently in my name only and changing as part of the re-mortgage. However this will be done AFTER the draw down not before it. Request KBC to clarify position, which they do by email. However takes another 4 weeks for them to issue this clarification in writing to the solicitor- despite a number of requests.
Once clarified, the process is very quick and draw down scheduled for 1st May. Issue with SEPA holiday so ends up being pushed out to 5th May. The cutover was straight forward enough. BOI closed mortgage account and did not attempt any further payments. KBC did pay the original requested amount (balance on January 1st rather than May 1st), but solicitor rebated this to them immediately so a non-issue.
First repayment was 1,000 euro lower than remaining repayments, which is now the 1,000 switcher initiative was paid. This ensured no issue with cash flow.
Cost of mortgage switching was ~1600. Valuation was 127 and Solicitor was 1470, including outlays. KBC paid 1k of this, and saved 250 on house insurance so cost 350 euro overall. Have this saved already in repayments.
Observations
1. Despite the fact I am self-employed the process was straight forward enough. A few small hiccups on the way, but nothing major.
2. KBC provided me with half price house insurance on 1st April, although I had not signed the letter of offer yet. This was in acknowledgement of the delays in the process on their side
3. BOI did eventually offer me the 3.9% rate (without need for valuation) in mid-April.
4. Due to BOI's behaviour, I also closed by credit card with them during this time. This is now with KBC also *see note below
Why KBC:
Reason is straight forward. They have the lowest variable rate on offer at the time, and as I am aggressively overpaying the mortgage I did not want to consider fixing it. This is still my current position on fixing, despite the ongoing high SVR rates
What would I do differently second time around:
1. I would apply to all banks at the start, since it is effectively the same paperwork you need to arrange for each of them. Submit to all of them and assess which provide the best options
2. Definitely visit the banks in person and have a contact person identified. I done this with the KBC hub and was invaluable at times
3. Once you have decided you are switching, apply for the title deeds to avoid any unnecessary delays
Finally, since moving KBC have reduced their rates by 0.05% and not offered it to existing customers. I did contact the mortgage department about this to express my dissatisfaction at the practice. I informed them that this was the primary reason I switched from BOI, and reminded them that those who have switched recently are the ones who have decent LTV/LTI ratios and do not suffer from inertia. These may not be the customer base that they want to annoy easily. I also advised them that I will be closing all deposit accounts with them as they mature as a result of not passing on this cut, and if a second cut was not passed on all non-mortgage banking would be closed (credit card and would not consider them for house insurance renewal). I know it makes little difference but don’t see the point in rewarding this behaviour.
At the moment, at 3.55% variable I cannot get a better variable rate. I am not interested in fixing due to my aggressive overpayment strategy, and have decided to liquidate some equity investments and use to pay off a further lump sum against the mortgage. This is taking a little longer than expected due to influence Greece has on the stock market recently.
I would be prepared to switch again, should more favourable rates exist. However, I think I would need to be payback on the move within 4 months, including any incentives to switch that were being offered. The new P-TSB discount offer for 12 months is worth considering, but I do think others will follow this model shortly rather than cutting SVR's.
Note: I have to state that at this stage I would be very reluctant to switch to either KBC or BOI based on their treatment of existing customers. I believe the practice is unforgivable, and undermines the concept that variable rates should move downwards as well as upwards. It is the equivalent of upward only rent reviews in my opinion. I have contacted my local government TD's asking them to pressure the banks to ban the practice, but yet to hear any response from them on it. I will add that they responded to earlier communication on this topic very quickly.
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