By switching your mortgage, you can save a lot of money. Mortgage is most likely to be the biggest household expense for many years, so this bill is one that most people do not want to overpay on. Therefore, just like any other bill, you should always opt to switch your mortgage every few years so that you can be sure that you are not overpaying.
Without a doubt, you could save a lot by switching mortgages. If you have a mortgage with a balance of €250,000 and are currently paying 4.5 percent standard variable rate, and have a minimum of 20 percent equity in your home, you could save approximately €300 each month by switching to the most affordable on the market. This translates to a lot of savings. Despite the fact that there are certain upfront costs linked to switching providers, banks can offer cashback to the individuals who switch.
Every financial institution has its unique set of criteria for allowing its customers to switch their mortgage. In the event that your financial situation has changed negatively since you qualified for the first mortgage, then you will face problems when switching. Before you switch, there are some factors to consider.
The first thing is the remaining balance in the initial mortgage since the least amount that lenders in Ireland accept for one to switch is approximately €30,000. The second is whether you have a fixed-rate mortgage because there is a possibility that you may be charged a penalty fee for switching a fixed-rate mortgage early. The third thing is your credit rating since it has to be flawless because previous defaults on loans can cause problems during switching. The fourth and last thing is the amount of time remaining on your mortgage since you cannot be able to switch if only a few years remain in the mortgage since the financial institution can feel that it will not be worth the time. There are various steps involved in switching a mortgage and these include knowing your present situation, comparing mortgage rates, starting the switch, and getting documents. These documents include proof of identity, proof of address, proof of income, evidence of savings, and employment status. Under the new requirements by the Central Bank of Ireland, the bank that you are switching to has to give you information needed for the switch and also give a decision before 10 business days after receiving the mortgage application forms. Other steps include house valuation, getting legal documents, getting mortgage protection, and filling a new direct debit form. After that, you are done and ready to enjoy the cheaper mortgage.