Is switching mortgage really worth it to save money?

jayjay2010

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

What Username Guidelines

jayjay2010 wrote: »

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

I did it about two years ago. Went from PTSB 4.1% variable to AIB 2.95% variable. It was absolutely worth it, saving almost €250 a month, just 2 years into a 35 year mortgage. And it’s not a huge mortgage by any means, it went from €1,360 to €1,110.

They had €2k cash back at the time. Solicitors fees were €700 so we ended up +€1,300 and +€250 per month. Insane. Even if solicitor fees cancelled out the cash back, or there was no cash back offer, it would still be absolutely worth it.

It’s basically like buying the house from yourself, so it’s like the first time you got the mortgage but no other party involved to delay it. You’re getting a new mortgage to pay off your old one. You apply to the newer bank and provide the usual statements, insurance, etc. AIB were pretty good in taking emailed PDFs and it helped I worked a few doors away from the bank if they needed me in person, which wasn’t too frequent. The life assurance was via Irish life so they needed a call to change it from ptsb to AIB, but it sounds like it’s something they do daily.

Couple of other things,I preferred AIBs online services and they have no current account fees while you have a mortgage, so I moved the mortgage, savings, current account and credit card to them. Even with that extra, it wasn’t lots of work.

kippy

jayjay2010 wrote: »

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

Download an App called Simple Mortgage Calculator. Plug in the figures.
It's almost always worth it if the rate is better and there are plenty incentives now.
The life insurance can be a problem depending on your age/health situation and setup of original life insurance but that would depend on each case.

Vikings

jayjay2010 wrote: »

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

You can get 2.2% rates or 2.3% rates fixed on as little as 2 years as of right now. Without doing any major maths, there is savings to be had.

For example take a 2.3% fixed rate for 2 years with a cash back offer, use the cash back to pay solicitors fee for switching and then use the money saved to overpay the mortgage, reducing the term for the same amount paid now.

Brego888

jayjay2010 wrote: »

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

Potentially massive savings to be made over the term of a mortgage depending on your circumstances and rates. 10's of thousands to be saved.
Level of work is similar but not quite as much as your original mortgage application.

Dont be at yourself

We switched ours after 3 or 4 years — a combination of lower interest rates and lower loan-to-value ratio (due to rising house prices) meant we reduced our monthly payment by almost 20%.

The paperwork is an absolute faff but worth it in the end.

bdmc5

Absolutely worth it. We took out a mortgage 2 years ago with BOI for their 2 percent cashback offer at 3 percent FIXED. That was worth 8k almost at the time in cashback so really helped with the initial expenses of a new build.

Fast forward 2 years to this year we just finished switching to PTSB again for 2 percent cashback and a lower 2.9 fixed rate and 2 percent back on every mortgage payment. Even after small breakage cost of fixed rate with BOI and solicitor fees we still were up 6k cash for moving.

In afew years when out of fixed rate will definitely look to move again if possible but probably more focus on moving to best rate we can get as opposed to cashback or other incentives.

niallers1

Of course it's worth it but just go in with the expectation that the process can take a few months. You should start applying now.

lawred2

Already switched twice to reduce term and repayments since first taking out the mortgage 6 years ago.

And two generous cash back offers as well while we were at it.

The savings are definitely significant

KilOit

Saving €94 a month after switch with fix 5 years at 2.2, that's with 1 year less on term also. After the 5 years there will be more money off the principal than if I stayed at 2.95% so double win.

People go to all the effort switching car insurance etc for the price of a few coffees when switching mortgage could afford you a holiday! The effort is absolutely worth it

brisan

One thing I would do if possible.
If you save 200 euro a month by switching then try and get a mortgage that lets you overpay by at least that amount every month .
If they do not allow you to overpay that amount squirrel any excess away and pay it off as a lump at the end of the fixed term (if you go for fixed )
You would be surprised at how many months can be knocked off your mortgage by doing this
The caveat being that you can comfortably afford your current mortgage

lawred2

brisan wrote: »

One thing I would do if possible.
If you save 200 euro a month by switching then try and get a mortgage that lets you overpay by at least that amount every month .
If they do not allow you to overpay that amount squirrel any excess away and pay it off as a lump at the end of the fixed term (if you go for fixed )
You would be surprised at how many months can be knocked off your mortgage by doing this
The caveat being that you can comfortably afford your current mortgage

just reduce the term when you're remortgaging

Deub

lawred2 wrote: »

just reduce the term when you're remortgaging

But then you don’t have the cushion if, for some reason, you need extra cash For a couple of month.

What Username Guidelines

brisan wrote: »

One thing I would do if possible.
If you save 200 euro a month by switching then try and get a mortgage that lets you overpay by at least that amount every month .
If they do not allow you to overpay that amount squirrel any excess away and pay it off as a lump at the end of the fixed term (if you go for fixed )
You would be surprised at how many months can be knocked off your mortgage by doing this
The caveat being that you can comfortably afford your current mortgage

This is great advice I forgot to put into my earlier post.

As I switched to a variable rate, overpaying is as simple as a transfer online from one account to the mortgage account. Most months I'll fire in the €250 saving as we had gotten used to it. Some 'tighter' months, I don't. Each time I do this, the monthly payment gets a little bit smaller with term remaining the same. You can opt to have the payment amount remain and the term reduce, but I'd prefer to have that cushion there, as Deub mentioned.

lawred2

Deub wrote: »

But then you don’t have the cushion if, for some reason, you need extra cash For a couple of month.

well that's true but for me I find "extra cushions" just turns into money spent no matter what my intentions were for the first month or two

since taking out the mortgage six years ago - we've reduced the repayment by 100 a month but the term by 8 years... Plan is to shave another few years off it so we'll be done mid fifties

kippy

lawred2 wrote: »

well that's true but for me I find "extra cushions" just turns into money spent no matter what my intentions were for the first month or two

since taking out the mortgage six years ago - we've reduced the repayment by 100 a month but the term by 8 years... Plan is to shave another few years off it so we'll be done mid fifties

Yeah,
It's easy said to overpay but a more difficult thing to put into action! Fair play to you!

Noddy33

Some real good advice been passed on this thread. I am coming near to the end of a 4 year fixed term with my mortgage provider where currently paying 3.3%.

Was going to seek the advice of a financial services/mortgage broker with regards best options for switching. Would I be correct in saying that the process seems to take approximately 3-5 months by time solicitors new contracts and new bank paper work is sorted?

Also what are people advice with regards making a large pay off on outstanding mortgage. Have a quite significant amount of savings that I would like to use to make as a payment on reducing mortgage balance. Is this an efficient use of the savings if I can make lump sum payment and reduce the loan term of my mortgage? Also is there any regulations to stop me doing this and is there there a maximum amount of times you can make a large payment on your mortgage?

Smee_Again

Noddy33 wrote: »

Some real good advice been passed on this thread. I am coming near to the end of a 4 year fixed term with my mortgage provider where currently paying 3.3%.

Was going to seek the advice of a financial services/mortgage broker with regards best options for switching. Would I be correct in saying that the process seems to take approximately 3-5 months by time solicitors new contracts and new bank paper work is sorted?

Also what are people advice with regards making a large pay off on outstanding mortgage. Have a quite significant amount of savings that I would like to use to make as a payment on reducing mortgage balance. Is this an efficient use of the savings if I can make lump sum payment and reduce the loan term of my mortgage? Also is there any regulations to stop me doing this and is there there a maximum amount of times you can make a large payment on your mortgage?

How’s your pension looking?

brisan

Smee_Again wrote: »

How’s your pension looking?

Thats something you could say to a lot of Irish people and they would shake their head.

Its never too early to start a pension
Unless you are going to have 35 years plus in a DB pension (even then AVCs are a great option ) you would be surprised how many people will have a poor pension

Smee_Again

brisan wrote: »

Thats something you could say to a lot of Irish people and they would shake their head.

Its never too early to start a pension
Unless you are going to have 35 years plus in a DB pension (even then AVCs are a great option ) you would be surprised how many people will have a poor pension

I only have to look in the mirror to know that

Noddy33

Smee_Again wrote: »

How’s your pension looking?

Just approaching mid 30's and have pension the last four years........work put 10% of salary and I give in 5% of salary. I am conscious of this and is something I would like to explore further and look to increase personal contribution. Long term goal really is have mortgage paid off by 55 and be able to retire by early 60's.........but obviously alot can happen between now and those 30 years!!!

Irish_peppa

Curious when you told your current mortgage provider that you were leaving or in the market to leave them didnt they chase you with offers or try match the competitors offer?
When you try leave sky they keep you on the phone offering you deals to stay. I recently left a message with insurance brokers secretary I was leaving and getting insurance elsewhere. He rang me numerous times to see if he could twist my arm to stay. (was sick of him calling annoying me about it)
A lost mortgage customer is BIG money over the term.

theteal

Do Irish banks generally charge a product fee for these mortgage offers?

Over here (UK) it is very common that people chop and change as soon as heir fixed term is up - vairable rate is about 4+% iirc whereas as 2yr fixed is generally about 1.3% at the moment. The "issue" is that these products can cost the guts of a grand (which they add to the mortgage) so has a negating factor on the headline rate. There are free alternatives with less attractive rate so there is some maths to be done. There are no solicitors/valuation fees mind - our valuation was what I told them it was, needless to say it increased

Geuze

theteal wrote: »

Do Irish banks generally charge a product fee for these mortgage offers?

Irish market is different.

No upfront fees payable to lender.

The opposite is the case - some lenders give cashback.

Example: 2% back after 6 months, another 1% back after 5 years.


There are sol/legal fees if changing lender, maybe 800-1200.

Smee_Again

Noddy33 wrote: »

Just approaching mid 30's and have pension the last four years........work put 10% of salary and I give in 5% of salary. I am conscious of this and is something I would like to explore further and look to increase personal contribution. Long term goal really is have mortgage paid off by 55 and be able to retire by early 60's.........but obviously alot can happen between now and those 30 years!!!

Well if you pay some off your mortgage you’ll know how much it saves you.

Or you could pay more into a pension and hope that the pension fund outperforms your mortgage interest rate. You’ll get get tax relief on any contributions you make up to 20% of your annual salary.

Or some combination of both.

Brego888

Noddy33 wrote: »

Also what are people advice with regards making a large pay off on outstanding mortgage. Have a quite significant amount of savings that I would like to use to make as a payment on reducing mortgage balance. Is this an efficient use of the savings if I can make lump sum payment and reduce the loan term of my mortgage? Also is there any regulations to stop me doing this and is there there a maximum amount of times you can make a large payment on your mortgage?

In a similar position. Fixed term ends next month. When it defaults to variable we are planning to pay off a large sum directly off the principle of the mortgage. Then move mortgage and fix again.

Noddy33

Brego888 wrote: »

In a similar position. Fixed term ends next month. When it defaults to variable we are planning to pay off a large sum directly off the principle of the mortgage. Then move mortgage and fix again.

Out of curiosity is there any restrictions with regards when and how often I can make a lump sum payment of the outstanding principle mortgage debt?

Geuze

Noddy33 wrote: »

Out of curiosity is there any restrictions with regards when and how often I can make a lump sum payment of the outstanding principle mortgage debt?

Variable rate mortgage = no.

Smee_Again

Noddy33 wrote: »

Out of curiosity is there any restrictions with regards when and how often I can make a lump sum payment of the outstanding principle mortgage debt?

Depends on the mortgage contract, my fixed term with BOI allows a 10% over payment each month with no penalty. I think UB allow significantly more, but its up to each bank to set their own rules.

Usually no limits on a variable mortgage.

Brego888

Noddy33 wrote: »

Out of curiosity is there any restrictions with regards when and how often I can make a lump sum payment of the outstanding principle mortgage debt?

Yeah as above posters said, variable rate you can pay off what you want. Fixed rate the process defers per bank.
The optimum time to do it is when on a variable rate.

Sarn

Brego888 wrote: »

In a similar position. Fixed term ends next month. When it defaults to variable we are planning to pay off a large sum directly off the principle of the mortgage. Then move mortgage and fix again.

If I were you I’d get the ball rolling on the switching. Our experience is that it can take several months to switch. We started the switch before our fixed rate ended and a few months later are still waiting on the letter of offer from KBC. We also paid a lump sum off the principle when we went back on to variable.

silver2020

jayjay2010 wrote: »

My mortgage renewal is in October, I'm on 3.3% interest rate but I can get less with competitors. Some are offering a better interest rate plus cash back. However, is the move really worth it, after the solicitor fees etc?

Also, there are talks of Advant Card Money coming out with circa 2% mortgage rates. Now that sounds like it would be worth the switch.

Has anybody done this recently and what is the level of work involved?

Avant Money (now owned by Bankinter of Spain) is unlikely to come in at 2% as the cost of repossession of non payers has to be taken into account here. In Europe, if you stop paying and don't come to agreement, you're out within 90 days and house is sold with new owners within 6 months.

Here you can stop paying and wait years before an eventual repossession which will cost up to €100k in legal fees. That adds about 0.3% to everyone's mortgage (remember that the next time some group is asking for repossessions to be stopped)

Some are saying that they will introduce long term fixed rates - up to 20 years as that's their selling point in Spain.

a 20 year rate at 3% would be phenomenal. That would mean €1686/month for a €400,000 mortgage and you know that no matter what happens, it will alway be that amount for 20 years.

Last time there were 20 year fixes was late 60's with a civil service rate. (My dad had one @ 6% for life)

Brego888

Sarn wrote: »

If I were you I’d get the ball rolling on the switching. Our experience is that it can take several months to switch. We started the switch before our fixed rate ended and a few months later are still waiting on the letter of offer from KBC. We also paid a lump sum off the principle when we went back on to variable.

Yeah we've already done the same. Met KBC a month ago, had valuation done last week and just waiting on loan offer now. Hopefully only be paying the variable rate a month or two.

Geuze

silver2020 wrote: »

Avant Money (now owned by Bankinter of Spain) is unlikely to come in at 2% as the cost of repossession of non payers has to be taken into account here. In Europe, if you stop paying and don't come to agreement, you're out within 90 days and house is sold with new owners within 6 months.

Here you can stop paying and wait years before an eventual repossession which will cost up to €100k in legal fees. That adds about 0.3% to everyone's mortgage (remember that the next time some group is asking for repossessions to be stopped)

Yes, our rates will always be higher, as long as this repossession regime exists.

Our banks must hold more capital against mortgages compared to foreign banks.

https://assets.gov.ie/6836/664f5174ebd34f7e938aea654bed6757.pdf

Geuze

silver2020 wrote: »

Avant Money (now owned by Bankinter of Spain) is unlikely to come in at 2% as the cost of repossession of non payers has to be taken into account here. In Europe, if you stop paying and don't come to agreement, you're out within 90 days and house is sold with new owners within 6 months.

a 20 year rate at 3% would be phenomenal. That would mean €1686/month for a €400,000 mortgage and you know that no matter what happens, it will alway be that amount for 20 years.

Last time there were 20 year fixes was late 60's with a civil service rate. (My dad had one @ 6% for life)

https://www.bankinter.com/banca/en/mortgages-loans/mortgages/fixed-rate-mortgage


Here are their fixed rates in Spain, before discounts, and after all discounts:

Up to 10 yrs = 2.80%

---

1.50%

Up to 15 yrs = 2.90%

---

1.60%

Up to 20 yrs = 2.99%

---

1.69%

These are not APRs.

Taking their 10 yr rate, 2.8% is good, but won't shake up the market that much, as 2.2%-2.6% fixed is available here for shorter terms.

Now, if they offer discounts here for bundling other products, and go as low as 1.5%, well that would be a massive change.


However, surely rates must be higher here than Spain, as banks must hold more capital against RWA here?

jayjay2010

Thanks for all the replies guys. Not sure what to do. My renewal isn't until October so I think I will wait a couple of more weeks, hopefully Advant release their pricing soon so that I can make a decision

Geuze

jayjay2010 wrote: »

T My renewal isn't until October so I think I will wait a couple of more weeks, hopefully Advant release their pricing soon so that I can make a decision

See here:

https://www.askaboutmoney.com/threads/avantcard-to-target-high-earners-only.219519/

lawred2

Geuze wrote: »

See here:

https://www.askaboutmoney.com/threads/avantcard-to-target-high-earners-only.219519/

Beating the market by .2%

Meh

jayjay2010

Right guys so here's my dilemma:

Option 1.

Stay with PTSB, new rate 2.95% 3 year fixed. Make monthly over-payments of approx €200 per month (what I'm currently doing).

Option 2.

Move to Advant, new rate 1.95% 3 year fixed. No over-payments allowed during fixed term. Cost of changing bank approx €1700, no cashback.

I understand that Advant have a much better rate, but they do not allow over-payment. No cashback offers so I will be down money initially. No guarantees of same excellent rate in 3 years time.

What to do :-(

Smee_Again

jayjay2010 wrote: »

Right guys so here's my dilemma:

Option 1.

Stay with PTSB, new rate 2.95% 3 year fixed. Make monthly over-payments of approx €200 per month (what I'm currently doing).

Option 2.

Move to Advant, new rate 1.95% 3 year fixed. No over-payments allowed during fixed term. Cost of changing bank approx €1700, no cashback.

I understand that Advant have a much better rate, but they do not allow over-payment. No cashback offers so I will be down money initially. No guarantees of same excellent rate in 3 years time.

What to do :-(

Which option pays off the most capital over the 3 years?

jayjay2010

Smee_Again wrote: »

Which option pays off the most capital over the 3 years?

Silly question but what would be the best way to calculate this?

kippy

jayjay2010 wrote: »

Silly question but what would be the best way to calculate this?

Down load an app called Simple Mortgage calculator. Plug in your figures....

Geuze

jayjay2010 wrote: »

Option 2.

Move to Advant, new rate 1.95% 3 year fixed. No over-payments allowed during fixed term. Cost of changing bank approx €1700, no cashback.

I understand that Advant have a much better rate, but they do not allow over-payment. No cashback offers so I will be down money initially. No guarantees of same excellent rate in 3 years time.

What to do :-(

I read on AAM that Avant allow 1% overpayments per year.

1,700 to change mortgage seems a lot?

I expected more like 1,200?

silver2020

jayjay2010 wrote: »

Right guys so here's my dilemma:

Option 1.

Stay with PTSB, new rate 2.95% 3 year fixed. Make monthly over-payments of approx €200 per month (what I'm currently doing).

Option 2.

Move to Advant, new rate 1.95% 3 year fixed. No over-payments allowed during fixed term. Cost of changing bank approx €1700, no cashback.
(

why not go with 7 year fixed with avant? - I'm guessing you are 60% ltv. This is a superb rate and even if there's a price war, the difference will be negligible on that rate.

And instead of overpaying, look at paying extra into a pension - maybe set up a small second pension if you have a employment based one already. It's a no brainer as you'll save 40% tax v 1.95% interest saving.

Or put it this way - if you overpaid your mortgage by €200 / month, that is just over €2420 in a year off the mortgage (inc interest rate saving), but would be worth €4,000 in your pension.

ILikeBoats

Absolutely worth it OP.

We switched 3 years in. We could have saved a lot of money on the monthly payment but instead reduced the term of the mortgage. We knocked 8 years off the mortgage while still making savings.

It's hard to work out over the lifetime as many changes will still occur but I estimated around 70k in savings.

The paperwork is a pain but worth it

silver2020

ILikeBoats wrote: »

Absolutely worth it OP.

We switched 3 years in. We could have saved a lot of money on the monthly payment but instead reduced the term of the mortgage. We knocked 8 years off the mortgage while still making savings.

It's hard to work out over the lifetime as many changes will still occur but I estimated around 70k in savings.

The paperwork is a pain but worth it

It's best just to work out the savings for the specific period of fix rather than the remaining term of the mortgage as rates can be different when the fixed rate period is up.

And even then, you have to work out the savings on the best option from your current bank to the new bank.

So if you are on say 3.15% variable and current bank offers a 2.5% 5 year fixed and new bank offers 2.2% 5 year fixed, the savings is this 0.3% for 5 years less any costs. - for a €300,000 mortgage with 20 years remaining, that 0.3% is €3,000.

If a 0.3% difference stayed for the following 15 years, (unlikely as banks keep changing) the saving would be €10,700 for the 20 years

GeorgeOrwell

Apologies in advance if I missed an answer to this elsewhere in the thread:

Does Avant allow overpayment during its fixed rate?

I reckon I could save €200 per month by moving from my Haven variable mortgage, and it makes sense to keep overpaying by that amount each month (otherwise I'll just spend it!).

Each month, it'd be an overpayment of around 25%.

Annually, that'd be an overpayment of about 1.6% of the total outstanding mortgage.

jayjay2010

GeorgeOrwell wrote: »

Apologies in advance if I missed an answer to this elsewhere in the thread:

Does Avant allow overpayment during its fixed rate?

I reckon I could save €200 per month by moving from my Haven variable mortgage, and it makes sense to keep overpaying by that amount each month (otherwise I'll just spend it!).

Each month, it'd be an overpayment of around 25%.

Annually, that'd be an overpayment of about 1.6% of the total outstanding mortgage.

I was told by one broker that Avant allow 1% overpayment per year of your remaining mortgage balance.
I was told by another broker that they do not allow overpayment, so be careful.

I'm leaning towards KBC 3 year fixed @ 2.45% with 3k cashback as opposed to Avant 3 year fixed @ 1.95% as there is no cashback, in those 3 years I believe that KBC will actually work out the better option.

I like to overpay every month with the option of stopping at any time.

I currently have 32 years left but I will be bringing my term down to 25 years - with the new rates offered, my mortgage repayments won't go up substantially but I'll have trimmed 7 years off my mortgage!

GeorgeOrwell

jayjay2010 wrote: »

I was told by one broker that Avant allow 1% overpayment per year of your remaining mortgage balance.
I was told by another broker that they do not allow overpayment, so be careful.

I'm leaning towards KBC 3 year fixed @ 2.45% with 3k cashback as opposed to Avant 3 year fixed @ 1.95% as there is no cashback, in those 3 years I believe that KBC will actually work out the better option.

I like to overpay every month with the option of stopping at any time.

I currently have 32 years left but I will be bringing my term down to 25 years - with the new rates offered, my mortgage repayments won't go up substantially but I'll have trimmed 7 years off my mortgage!

Yeah, it's quite difficult to work out the overall cost/benefit of switching when you take into account all the costs and potential benefits.

As my mortgage - and therefore potential savings - are fairly small, are the legal costs, valuation costs, costs of gathering all the paperwork - really worth it? Especially if Advant don't actually permit overpayment and so the whole real benefit isn't there?

In your position - with a longer mortgage - there are more obvious benefits to switching.

ams

https://www.eventbrite.ie/e/switch-it-up-live-with-the-irish-times-and-ulster-bank-tickets-119264207455

Might be of interest to some here. I'm a little bit nervous re the recent news re Ulster Bank though!