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Looking to switch mortgage, anyone clued into the general rules?

  • 02-02-2018 3:06pm
    #1
    [Deleted User]
    Posts: 14,344 ✭✭✭✭


    Howdy folks,


    This might seem a bit silly, but I am completely clued-out of the workings of traditional mortgages. All of my loans/savings in my life (incl. mortgage) have been with the Credit Union. I've gotten 2 bank loans in my life, both in the last year, and both paid off fairly swiftly. My credit rating is respectable enough as far as I am aware.


    I am interested in opting to switch my mortgage (which isn't actually a 'mortgage' in name, but is actually a 'home improvement loan', which effectively is a mortgage in everything but name, in that it's secured against the house, and the Credit Union hold a legal charge over the property).


    The interest rate on my loan is 6.08%. In the world of personal loans, this seems on the ball, however, in the secured-loan mortgage world, it's quite high. Bank Of Ireland are about 3-4% depending on your circumstances. A substantial saving to be made.


    Anyway, to get to the reason for the thread:

    With the CU i can overpay when and how I like. There's no penalty, no hassle and no limit on the overpay amount. I can wipe out the loan tomorrow in full and they won't care. I have heard, however, that traditional banks cap the amount you can overpay? Meaning that if your mortgage is over 10 years, for example, you are kinda stuck with that (so if you get a well paying job, or win a few euro on the lotto, etc. you're still stuck with not being able to make substantial over-payments here and there, and the mortgage will still always be about 10 years?).


    My other question is, the house is an ex-council house (we were tenants before buying). The council insist that they be offered the property for sale before anyone else, if i decide to sell it in the next 25 years (they will pay market value, though). However, the CU have the first legal charge on the property (ie; they're higher than the Council in the pecking order). I presume, if the bank were to take a first legal charge, then any other stipulations from the Council wouldn't interest the bank (ie; the bank won't lost interest as soon as they hear mention of the Council?).


    I've made an appointment to call into the bank to chat about it, but doubt i'll hear from them until next week, so just thought id ask on here to get my bearings.

    Current loan to value is about 70%.

    I also want to add a name to the deeds/title of the house. I know I will incur legal costs doing the switch/adding names, but the CU have about 10k of mine in savings that I cant access as i have the loan with them (they block your savings until your loan is less than the savings), so i reckon if i swapped over, the release of the 10k would cover legal costs and i would like to use the rest to pay a lump off the mortgage (which i obviously cant do is the bank limit my overpayments).


    Sorry if the thread is a bit sloppy, but just trying to find my feet here.

    Cheers for anyone with any advice/opinion here. :)


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