"Why are people paying €9,000 a year in mortgage interest when they could be paying €4,000?"

[Brendan Burgess]

I have an article in today's Irish Examiner

Carrying out a real financial health check in 2022

Why are people paying €9,000 a year in interest, when they could be paying only €4,000?

www.irishexaminer.com

Whoever came up with the advice to “Look after the pennies and let the pounds look after themselves” has a lot to answer for.

People often get worked up about their bank charges. They ask me which bank will give them free banking. I tell them that I don’t know and that I don’t care. I have an active enough current account and it costs me about €100 a year in charges. This gives me access to ATMs around the country 24 hours a day, direct debits, automated credits and an efficient online and mobile payments system. I am quite happy to pay €2 a week for this service.

But people still seem to think I am wasting my money when I could get free banking.

However, when I ask them what interest rate they are paying on their mortgage, they look at me blankly.

Is it any wonder that there are at least 100,000 mortgage holders paying in excess of 4% a year when they could be paying half that?

 

[Brendan Burgess]

I removed the discussion about BoI giving rate cuts to this thread:

BoI will give you a cheaper rate than the quoted rate if you ask

All it takes is a phone call to their bank and they could reduce this rate to 2.9% which would save them €3,200 a year – enough in one year to pay their bank charges for 30 years. In fact it's more like 2.8%! I called Bank of Ireland a few weeks back and they will give a 0.1pp reduction on all...

www.askaboutmoney.com

 

[ryaner]

I wonder if the cashback actually has a place in the market and helps a subsection of people afford to move? There is always a weird psychological aspect where you see the upfront costs more than the savings over X years. More so with the risk around the break fees, or higher SVR during the switching period.

Although part of me thinks this is probably more of an argument for making switching easier and cheaper.

 

[jamestkirk]

Howdy Folks, on a tracker mortgage but have a sub-mortgage on a variable rate 4.30%. I have the option of switching to a 10, 5, 4 or 2 year fixed rate. I was thinking of switching to the 4 year fixed at 2.25%. It will save me 30 euros month. Is it worth doing? Any pitfalls I should be aware of? My wife thinks we shouldn't as its only 30 euros, but Its my 30 euros so want to do it. Any advice would be great. Many thanks.

 

[TheBig40]

Switch and over pay the mortgage by the amount you save every month and pay off the mortgage even faster. From your POV your wife wins because you still don’t have an extra 30€ and you win by give the bank at least €1440 less over 4 years

 

[jamestkirk]

Cheers that’s a good point. But right now I could probably do with that 30 euros! But it’s food for thought…