Switching Mortgage - Risk?

abnormalnorman

Hi,

Im thinking about switching mortgage - currently offered 2.9% from BOI (about 7 years into a 35yr mortgage with them), but looking at mortgage switching calculators and im seeing comparison rates the likes of 1.95% from both Avant Money & ICS Mortgages, 2% from Haven Mortgages, and 2.1% from AIB.

Just wondering is there a catch? Iv never heard of Avant Money, or ICS, or Haven Mortgages? is there a risk with these which the likes of well known BOI and AIB would not have?

Also, should I go to a mortgage advisor, or just go with the online calculators, and contact the likes of Avant Money & ICS Mortgages directly?

thanks in advance.

You can't contact Avant directly, you have to use a broker. Haven is just AIB by another name.

Avant I believe is owned by Bankinter who are a Spanish bank (open to correction). I don't believe there is any additional risk compared to BOI/AIB/whoever.

Brego888

You should definitely explore switching more. Especially given you are likely to save a full percent on your current rate.

I've switched 3 times in past 5 years and made great savings.

Just bear in mind you need to pay legal fees (pay for a solicitor) for each switch. Which could be around 2 grand. So factor that into what savings you will make.

You've been through the mortgage procedure already so I don't see the need to pay for a broker on top of it. It's a pain to gather up all the documents each time but worth it.

Emma2019

Avant are Spanish and specialise in low risk mortgages which is why they can offer lower rates.

fungie

https://www.boards.ie/discussion/comment/118648937#Comment_118648937

2000 for a switch is crazy money. I was quoted several times for under 1500.

fungie

naughtysmurf

ICS are a subsidiary of BOI, have had two mortgages with them in the past so are legit, if that’s a concern

Q&A

ICS were a BOI subsidiary. They were sold to dilosk. This is probably one of the reasons their rates undercut BOI's

For all the lenders you mention are legitimate lenders and are covered by the central banks consumer code. Whatever happens to your lender if your loan is sold it will have to follow those guidelines. After that I'm not sure what's to worry about. If they failed in the morning you would still owe the money and whoever bought your loan would have to honour the rates.

tobottherobot

Currently in the middle of doing this myself. I've engaged a broker and will be dropping from 3% down to 2.05 next week when I hopepully get my offer from Avant. As indicated above, I used a broker (Nova Mortgages) who have made it all quite easy to be fair. I'm not sure how long you've fixed for but you'll need to ring your current provide and as for a break fee... mine was €1800 + need to pay another €1500 for a solicitor

Knocks about 6 years off my 32 year mortgage for the same monthly payment. Nuts...

https://www.boards.ie/discussion/comment/118654386#Comment_118654386

Similar story, was on 3.2% with BOI initially, down to 2.5% now with PTSB, and am just about to duck under the 70% LTV threshold so will be switching to 2.05% with Avant soon.

The savings really are beyond belief, by the time I switch to Avant I'll be paying about 400euro less interest per month than if I'd just stayed on the 3.2% rate. Also got cashback from BOI and PTSB.

splashthecash

https://www.boards.ie/discussion/comment/118654386#Comment_118654386

Can I ask what a "break fee" is? Is it a fee I have to pay to leave my current mortgage provider? Do all providers have these or only some?

Avant Money seem like a good option to investigate - sounds like I then need a broker and solicitor

Q&A

https://www.boards.ie/discussion/comment/118655010#Comment_118655010

If you have a fixed-rate mortgage and you want to break out of that fixed rate you may have to pay a break fee.

The fee is a function of market rates on the day you fixed and the day you break.

It can be a large number it can also be zero all depends on market rates. Unless you're following financial markets the only way to know is to contact your bank.

No such break fee applies to a variable rate mortgage.

L1011

Avant are a huge credit card provider, bought MBNA ops.

Haven are AIB

ICS are Dilosk, a specialist lender.

All are absolutely safe to go with.

Regardless, if anyone gives you a mortgage they are likely financially sound - at least to the point that their failure would be dealt with properly. Its not going to become payable on demand immediately

silver2020

https://www.boards.ie/discussion/comment/118648952#Comment_118648952

Nope.

They don't have legacy costs and a branch network. They also don't have to have as much back up capital as Irish banks.

Therefore their cost of funds is lower and combined with lower operating costs they can offer lower rates.

They no longer cherry pick property and are open to people with homes in most areas.

sunshinew

Sorry - jumping in on this as I've been looking to switch too! It's mainly the hassle stopping me.

My solicitor when I bought my apt was useless so can I get all the documents I need through my current mortgage provider and hire a new solicitor? What documents are they?

Also I have 116k left to pay. Was thinking about paying 20k off it in a lump sum before switching but think I read if I go below 100k new banks won't bother taking on my mortgage? I'm being ripped off on a 3.3% variable with ESB...😬

silver2020

https://www.boards.ie/discussion/comment/118656702#Comment_118656702

If you pay 20k off and have a balance of 96k, the savings for switching may not be there and it's better to look at a fixed rate with ebs.

5 year fixed at 2.75%, whilst high, if you have 10years left on the mortgage it's about €220 a year extra compared to 2.25%

If switching costs are €1500-€1800, then the net savings would not come until year 8 and even then the total savings over 10 years would be under €500

So in your case with probably less than 10 years and under €100k balance, it may not worth the hassle if you can get a 2.75% rate.

If you got a 1.95% rate the net savings would come in mid year 4.

sunshinew

Thanks so much for such useful advice and taking the time to reply. Great news really as I've been so lazy on the hassle of organising it.

https://www.boards.ie/discussion/comment/118655010#Comment_118655010

The other poster (Q&A) answered your question but just note the fee is completely formulaic, it's not some arbitrary fee the bank sets, it is regulated.

Manion

The catch, if you can consider it a catch, is often in the terms of conditions. For instance some of the mentioned lenders do not support ever over paying your mortgage, you're committing to 30 years or whatever at the outset. Family members are buying there first home with https://www.financeireland.ie/products/residential-mortgages/mortgage-rates/ and the terms and conditions seem great compared to what was on offer a few years ago. The ability to overpay by 10% of the mortgage in any given year, the ability to bring your mortgage with you if you buy a new home etc also they are experienced with public/civil service pay scales so calculate the lending threshold more favorably. Note I'm not a broker, I've never done business with this crowd, details are all on the site and I'm sure are subject to change, not financial advice. It's just an example where there seems to be a lot you can get if you shop around these days. The departure of Ulster bank and KBC from the Irish market isn't good, but it seems to have opened the door for new entrants or existing lenders to expand into the Mortgage business.

fungie

Lenders can't prevent you from overpaying. This is for any amount.

Manion

https://www.boards.ie/discussion/comment/118658354#Comment_118658354

Not sure where to start on this, but you're wrong. It's typical for fixed rate mortgages to limit overpayment in Ireland. Where do you think the concept of a breakage fee comes from?

fungie

https://www.boards.ie/discussion/comment/118658398#Comment_118658398

The breakage fee doesn't prohibit you from overpaying in anyway. Often the breakage fee is far far less than interest you would of paid on the amount and depending on timing, can be zero.

I overpay my BOI fixed mortgage by well over 10% every month.

Manion

https://www.boards.ie/discussion/comment/118658458#Comment_118658458

States here the maximum you can overpay in any given month is 10% with bank of Ireland. Overpayment is something at the agreement of the lender. KBC for instance applies max 10% of capital overpayment limit at the start of the fixed payment period. As you can see BOI policy is more onerous than that.

https://personalbanking.bankofireland.com/borrow/mortgages/calculators/overpayments-calculator/

Look I'm not going to get into this, your assertion they cannot prevent you overpaying is wrong. Every lender has an overpayment policy. This is why you don't take financial advice from people on the internet.

fungie

https://www.boards.ie/discussion/comment/118658517#Comment_118658517

You are factually incorrect I'm afraid.

There is nothing stopping anybody overpaying by any amount. I over pay every month and also knock lump sums off it too in an adhoc way. I made one of those adhoc overpayments of 10k last week, no fee. There can be a fee depending on interbank rates but as I mentioned, there aren't many times where making an overpayment doesn't save you money.

silver2020

https://www.boards.ie/discussion/comment/118658354#Comment_118658354

True. You can overpay as much as you like whenever you like.

But.....

There will be penalties in many cases if you overpay more than that stated in your mortgage fixed rate contract.

There can be different rules in different fixed rates on different styles of mortgages within the same bank, so to blatantly say you can over pay just because YOU can overpay a certain amount is giving misleading information to people.

If you are on variable rate you can overpay whenever and as much as you like with no penalties.

But it is so so so important to read and understand the terms and conditions of your mortgage.

It might be boring, but an hour of your time may save you a lot of money.

So read the terms and conditions of your rate rather than believe a random person online as their t&C's are probably different to yours.

Manion

Sigh, it's right there on the BOI site what the terms are. Of course you can overpay anything you like if you're willing to pay a penalty fee. But you see how that's worse than a Lender that allows you to overpay 10% in a given year with no penalty, right? You can overpay the entire outstanding balance of the mortgage if you like, for a fee. When we talk about overpayment it typically means without a fee, for which BOI have limits, like all other lenders. If you claim you're over paying by any arbitrary amount with BOI over 10% monthly on a fixed rate mortgage with no penalty, then the BOI website says you're telling porkies.

fungie

https://www.boards.ie/discussion/comment/118658591#Comment_118658591

What type of mortgage actually prohibits you though? You can overpay what you want on fixed, variables and trackers, this must be 99% of the mortgage types in Ireland.

My point is, the banks try scare people away saying, in BOI's instance, you can only overpay 10% per month but this is total crap. For many people, who fixed over the last couple years, break fees are currently nothing (due to interbank rates increasing relative to a few years ago), meaning you can overpay any figure with zero fees.

I'll run through an example: Last year, I paid a substantial lump sum off a fixed rate mortgage (1 year into a 5 year fixed) of 50k. The break fee I was quoted was 0.8% of that figure, so 400 euro. However, by making the payment, I was saving 5,800 euro in interest payments over the remaining fixed rate period, not to mention the rest of the lifetime of the mortgage. This made the net savings of 5,400 euro over 4 years.

My point is, if you have spare money and you want to overpay your mortgage, even if you're on a fixed rate, probably 9 times out of 10 you're making substancial savings. Don't let the banks deter you.

fungie

https://www.boards.ie/discussion/comment/118658626#Comment_118658626

They aren't telling porkies, you just don't understand the overpayment fee formula.

silver2020

0.8%

That's very high.

Imagine someone with 350k and wants to break fixed rate to switch banks.

0.8% is €2800, add legal fees and you are at €4,500.

If you have spare cash I'd be looking at bumping up pension payments than paying off a low rate loan.

Manion

https://www.boards.ie/discussion/comment/118658694#Comment_118658694

That really wasn't your point, and in the context of the thread is pretty irrelevant. The thread isn't about whether or not its financial viable to pay a breakage fee and wether you save money in the long run. The point related to how different lenders can compete on terms and conditions.

https://www.boards.ie/discussion/comment/118658711#Comment_118658711

Glad we all agree you cannot overpay by whatever you like without paying penalties. What an utterly pointless segway.

fungie

If you break and fix at lower rate it can be worth it.

silver2020

https://www.boards.ie/discussion/comment/118658894#Comment_118658894

Yes and people should check if a better rate is available.

Fixed rates are starting to increase slightly and ECB will most likely increase rates this year, so now is the time to check

Q&A

https://www.boards.ie/discussion/comment/118659750#Comment_118659750

Can I who has increased fixed rates recently?

Manion

https://www.boards.ie/discussion/comment/118659833#Comment_118659833

Cannot find references, but you'll notice it around the 5-7 year Fixed rate offering. Used to be you would consistently get a lower rate the longer you fixed, not you start seeing the rate go up for a few lenders beyond the 3 year mark.

Q&A

https://www.boards.ie/discussion/comment/118660067#Comment_118660067

From my experience the shorter terms have always been priced more competitively where as longer (over 5 years) have been less so.

If anything the recent trend has been for shorter fixed rates have declined further

ted1

https://www.boards.ie/discussion/comment/118654606#Comment_118654606

Must be a significant sized mortgage..,

PhilippInecioni51

Derby, if you need it).

paulieeye

https://www.boards.ie/discussion/comment/118659833#Comment_118659833

Avant, ICS and Finance Ireland..

https://www.independent.ie/business/personal-finance/property-mortgages/finance-ireland-the-third-lender-to-increase-mortgage-rates-41751006.html#:~:text=NON%2Dbank%20lender%20Finance%20Ireland,fixed%20rates%20by%200.5pc.

Swampy

If you come out of a 4 year fixed into the higher % interest variable rate, can you just negotiate rates with the bank or do you have to do a full new mortgage application to go back into a fixed?

Q&A

https://www.boards.ie/discussion/comment/119364044#Comment_119364044

You're 6 months late on this one. I think you'll find none of these lenders had increased rates in February nor does the link state that either.

Q&A

https://www.boards.ie/discussion/comment/119364814#Comment_119364814

If you're sticking with your same provider there's no need for a new application. Just pick from the fixed rates they have on offer. You might have a form to sign but it should be as simple as tick the box, sign and return.

paulieeye

https://www.boards.ie/discussion/comment/119365714#Comment_119365714

oh ya, didnt even look at the date of your post! Think Avant was the first to increase in May

cubatahavana

I am switching to AVANT. I'm fixing my mortgage for 24 years at 2.65%. My reasoning is that rates won't go as low as this for a long time. I am going to pay 100 euro more than what I pay now, but I will have the peace of mind that I can afford this payment for the whole life of the mortgage.

fungie

https://www.boards.ie/discussion/comment/119368953#Comment_119368953

That's a very definitive statement to make. Nobody knows where interest rates will go, especially over a timescale that long.

Luxembourgo

With the announcement today, is it too late to switch?

Have the form here with one year left in a fixed term. Had planned to go to a 5 year fixed but if that's going to have 0.5 percent on it might not bother

Manion

This is the first of what is likely to be many rate increases over the next while.

tom1ie

I’m into the first year off a 7 year fixed with Avant at 1.95%.

I can overpay by 10% of mortgage value every year for the 7 years.

I throw the 10% (if I have it!) off the principle which recalculates and lowers the monthly repayment going forward.

The length of the mortgage never reduces only the outstanding principle amount, which is what you want.

Eventually I’ll end up with €1000 to repay and 5 years to do it 😂

tom1ie

https://www.boards.ie/discussion/comment/119369207#Comment_119369207

You can bet your bollix interest rates will rise to combat inflation.

centeral banks have lent trillions to in the past few years. Their viewing it as time to collect.

Sheep Shagger

Best rate i can see on Advents website is 2.4% and it says rates are valid as of 22 May so doesn't look like they have hiked them after the ECB news today.

How are people getting lower than that (i'm under 60% LTV too).

stargazer 68

Folks not quite au fait with this kind of stuff! Our interest rate is 3.7% and the estimated ltv is 36% according to online calculators. 11 years left on the mortgage

Looked at switching a couple of months ago but I'm now the sole earner so I don't know if any other lenders will even consider it. Any suggestions?

Sheep Shagger

https://www.boards.ie/discussion/comment/119370168#Comment_119370168

I'd go to a broker. They check all the options. Also gives you access to Advent who specialise in under 60% LTV customers.