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Is switching mortgage really worth it to save money?

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Comments

  • #32
    silver2020
    Registered Users Posts: 2,045 ✭✭✭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)


  • #33
    Brego888
    Registered Users Posts: 1,314 ✭✭✭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.


  • #34
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭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


  • #35
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭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?


  • #36
    jayjay2010
    Registered Users Posts: 505 ✭✭✭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


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  • #37
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭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/


  • #38
    lawred2
    Registered Users Posts: 24,257 ✭✭✭✭lawred2


    Geuze wrote: »
    See here:

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

    Beating the market by .2%

    Meh


  • #39
    jayjay2010
    Registered Users Posts: 505 ✭✭✭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 :-(


  • #40
    Smee_Again
    Registered Users Posts: 1,984 ✭✭✭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?


  • #41
    jayjay2010
    Registered Users Posts: 505 ✭✭✭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?


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  • #42
    kippy
    Registered Users Posts: 18,381 ✭✭✭✭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....


  • #43
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭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?


  • #44
    silver2020
    Registered Users Posts: 2,045 ✭✭✭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.


  • #45
    ILikeBoats
    Registered Users Posts: 2,423 ✭✭✭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


  • #46
    silver2020
    Registered Users Posts: 2,045 ✭✭✭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


  • #47
    GeorgeOrwell
    Registered Users Posts: 124 ✭✭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.


  • #48
    jayjay2010
    Registered Users Posts: 505 ✭✭✭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!


  • #49
    GeorgeOrwell
    Registered Users Posts: 124 ✭✭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.


  • #50
    ams
    Registered Users Posts: 1,443 ✭✭✭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!


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