Mortgage switching: how, when, why

What does it mean to switch mortgages? Why would someone want to switch? What can be gained from switching? Finally, if one wants to switch, how should they go about doing it?

The first question is easy to answer, though oftentimes “switching” can get conflated with “remortgaging.” Don’t be fooled; these refer to two different things that, while similar in concept, can have different implications for the borrower.

“Remortgaging” simply refers to getting a new mortgage to replace a previous one; this can be done with one’s existing lender or a new one.

“Switching” is the process of taking one’s existing mortgage and moving it to a new lender.

Now, for the next question: why would a borrower want to switch mortgages? There are a number of reasons for doing so. Firstly, a borrower might be dissatisfied with their current lender for one reason or another, like poor service or lack of responsiveness to inquiries. If borrowers think another lender will provide better service, tat would be a good reason for switching mortgages to said lender.

Another reason for switching …

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Could harsher punishments for mortgages in arrears lead to lower rates?

Mortgages are notoriously expensive in Ireland, with rates twice those of the Eurozone average. How best to address this problem has been a hot-button issue in Ireland for some time. Now, some are putting forward a new solution: harsher punishments for borrowers with mortgages in arrears. One of Irish banks’ stated reasons for rates being so high is that failing to meet mortgage payments doesn’t have high enough consequences for borrowers. For example, home repossessions in Ireland aren’t very common, since the process is so complex and can take several years. As a result, loans are riskier investments for lenders in Ireland relative to other Eurozone countries. If this is indeed the reason for rates being high, it follows that tougher treatment of such borrowers would lead to lower rates for everyone else.

Regarding the number of borrowers this would affect, statistics from the Central Bank of Ireland show that 5.3% of all principle dwelling house (PDH) mortgage accounts were in arrears as of December 2020. This percentage includes a total of 38,785 accounts. However, it’s also worth noting …

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Types of mortgages and lending rules

Irish law has specialized sets of lending rules depending on the type of mortgage application. Types of applications are split into three different categories: first-time buyers, remortgaging or switching, and buy-to-let buyers. Depending on which of these categories an application falls under, different loan-to-value (LTV) and loan-to-income (LTI) limits will be used. The former refers to the minimum deposit a borrower must have on a home before getting a mortgage loan. The latter refers to the maximum amount of money borrowers can receive in relation to their yearly gross income; while this is normally capped at 3.5 times one’s income, lenders can provide additional allowances of varying amount depending on the type of application.

Firstly, there are first-time buyers. These applicants are those buying a house for the first time, so the deposit required by LTV limits is understandably less steep. They will need to have a minimum deposit of 10% of the home’s total value. For example, if the price of a home is listed as €250,000, a 10% deposit would amount to €25,000. Lenders are allowed to have …

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The fastest way to get a mortgage

What is the fastest way to get a mortgage in Ireland today? To those unfamiliar and/or engaging with the process for the first time, it can seem drawn out and overly complicated. However, it doesn’t have to be that way. While different people will likely want to use different approaches, but there are some general rules that everyone can follow to ensure their application goes as smoothly as possible.

The first thing one should do is make sure their financial situation is otherwise well and accounted for. In addition to employment and income, this can include things like home insurance and valuation of the property. One should also consider how long they’ve lived in Ireland; depending on the lender, this may be important in their consideration of an application. Borrowers should furthermore ensure that they have good credit and are not too heavily in debt. Lenders are likely to be more apprehensive regarding borrowers with unstable financial backgrounds, as they seem less likely to be able to ultimately repay their loans.

The next things one should keep in mind are …

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What you need when applying for a mortgage

Before applying for a mortgage, one should be sure they have all the necessary documentation. Typically, if one goes through a broker or chooses to go directly to a lender/bank, guidance will be provided on all the necessary paperwork and how to complete it. However, it can save applicants valuable time to try and get pre-approved by either lenders or brokers. In this case, they would likely need to take some initiative.

Documents required for approval and preapproval can vary depending upon the borrower and lender.

All borrowers will likely need:

Proof of ID Proof of Address Personal Public Service Number Proof of Income Financial Statements

Proof of identity can include things like a valid Irish driver’s license or passport. For proof of address, one might consider a utility bill, a tenancy or lease agreement, or government-issued documents that include said address.

Personal Public Service Numbers (PPSN) are issued by the Department of Social Protection (DSP). Non-residents can obtain a PPSN by applying for one with the DSP. Such an applicant will also need to provide proof of …

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What does “Get Rich Quick” even mean?

It is not uncommon that you probably have stumbled upon these ads where people claiming, “Want to know how I got rich quick? Watch my video for more!”. They show off their riches while standing in front of large mansions and Lamborghinis and if you continue to listen, they most likely tell you an inspirational story about how they came from rags to riches. We know this cannot be real, but we all have a small voice in our head saying, “Is it actually possible?”. Are they actually teaching us useful financial advice that could put us in jeopardy or are they just a regular old conman?

We may typically think of a conman to be the same thing as a thief or a liar but a true conman does not force us to do anything. They do not forcefully steal our possessions away from us, rather they trick us into giving up our own things. They are manipulators and we are obsessed with them. We see them in movies and comics but fail to see them in our day …

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Is your car keeping you poor?

Everyone treats their car like it is their baby. Almost every one of us owns a car or two these days. It is an integrated object in our society. We give it names, notice its funny little quirks and much more to make ours. It conveniently takes us from place to place, but your car may be doing something evil that you are not aware of.

Many of us use our cars as status symbol. Our family, coworkers, or even friends will like us more. Maybe we use to make others envious of us. It creates an illusion our freedom is secure for us to go anywhere. Unfortunately, it does the opposite, it is more likely it will take away our freedom and security. We borrow money so we can purchase the car, the money we borrow has an interest, and we need to pay to maintain the car. Do not forget, once it comes off of the lot the car dramatically depreciates in value. New cars typically depreciate 60% in the first five years. Want to avoid it by …

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Zero cost changes can help your financial journey become better

Living a healthy financial life does not always mean spending as little money that it brings the joy out of life but bringing enjoyment in ways to spend or save money. Of course, investing in good furniture rather than the cheap table that the paint chips is a much better choice. But there are also plenty of other ways to upgrade your life by changing things out for no extra costs.

Using your existing memberships to access free and complementary goods.

Did you look closely at the membership you paid for? Chances you did not. Many of our memberships give us access to free shows or movies like Amazon Prime or free access to airport lounges. There is a lot of value we are paying into our memberships already. Like magazines or books, they can be expensive to subscribe to each month or purchase individually. At the library, they already hold many of these subscriptions and publications which we can check out for no costs. For instance, some libraries provided a handful of museum memberships the public can check out …

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Paying Off Mortgage During the Pandemic

Many people have found themselves struggling financially as the COVID pandemic drags on for longer than expected. In this, having to pay your mortgage may be one of the largest stressors for most. With that, there are some actions you can take to help deal with this.  

Always ensure effective communication with your lender. Speak with them if you are struggling to manage your finances and come up with a plan or budget system to repay your mortgage. If you are unable to repay, do not cancel or stop your direct debit without speaking and communicating with your lender first. On top of that, if you are unable to repay your mortgage in full every period, if you can repay it in a smaller amount than usual, then you should do that.

But even with everyone’s financial struggles during this period, the lender is not exempt from helping their clients. The lender may find that many of their clients are having issues with paying the mortgage in full and should be accommodating. But with that, the lender must also keep …

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KBC move to 90% LTV

This is a very healthy sign for the mortgage market, and in our opinion it could mean that 2010 might mark the low point for credit that we have been watching out for.

In 2009 KBC under-lent, they had €1bn and didn’t lend out anywhere near that, they are also here to stay, and prior to the crisis they had about 1/8th of the market share. The fact that they are rolling out a higher loan to value is a very confident sign that

Banks have a few internal policy tools to control lending 1.    Curtailing the amount of lending – we see that already, mortgage lending is about 85% down from the peak of 40bn p.a. , peak wasn’t exactly a gauge of normal, but half of that would be normal, and even on that basis it’s down 75% – that story still has to play out 2.    Rate increases: this has the same effect as central bank rate increases, it reduces lending and everybody has increased their margins by at least 1% in the last year, you and …

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