Can i switch my mortgage, if I don't have an actual mortgage?

Howdy folks,

I have a loan from the local Credit Union. It's a mortgage in everything but name (they have a legal charge on the house, etc).

It is branded as a home improvement loan. In spite of it operating under a different name, can you still take into consideration swapping it as a mortgage to an alternative provider?

My Credit Union have always been good to me, so I don't begrudge them making a few Euro off me in interest, but their loan has an interest rate of 5.9%, whereas most banks offering a 'normal' mortgage are in the 2-3% range.. a big difference in what I'll pay in interest over the remaining life of the mortgage/loan.


Anyone been in this situation before? I presume that the Banks don't care what the loan is called or branded as, so long as they can secure their money against your house, then they are happy to consider it a mortgage?


I'm with Bank Of Ireland so planning to give them a shout tomorrow but just thought I'd ask here so I'm not ringing them completely blind and getting laughed off the phone. :pac:


Cheers

Henry Ford III

New lender would need a first charge on the property so you'd have to borrow the total from them and pay off the old C.U. loan.

I would assume that that's the case regardless, when you're switching mortgage? (that one lender buys the loan out in full from the previous lender, and then takes their legal charge)?

Lockedout2

You go to the new lender and take out a new mortgage they pay the money to your solicitor and the solicitor pays off the old loan. They don't buy the old loan from the Credit Union.

Why did you end up getting a "mortgage" from the Credit Union?

Lockedout2

Lockedout2 wrote: »

You go to the new lender and take out a new mortgage they pay the money to your solicitor and the solicitor pays off the old loan. They don't buy the old loan from the Credit Union.

Why did you end up getting a "mortgage" from the Credit Union?

Yeah that makes sense alright. So you're effectively applying for a mortgage again? But for a house you already own/have equity in?


I bought an ex-council house. Never considered a bank loan at all, as I had been lead to believe that banks simply have no interest (the council add a fair few T&C's to the sale). But the CU are generally more flexible. I wanted the sale done ASAP so I didnt bother shopping around.


As I say, I've no issue with the CU getting profit off the loan, that's fair game, they gave me the money in the first place. But if i went to the Bank next year with a substantial head-start on my mortgage, then I think they'd be more likely to loan to me (is my thinking anyway) and hopefully at a lower interest rate.

Trish56

You will need to take into consideration that you will have legal and valuation fees when taking out a mortgage with a new lender. There is cash incentives to switch but not too sure if you would qualify.