A mortgage is one of the biggest financial undertakings you are likely to take in your lifetime so it is important to ensure you have the best deal available and a loan repayment option that is manageable. If you are struggling with mortgage repayments, want to save money, borrow more money, renovate your home or are searching for a better rate, one option available to you is switching your mortgage.
According to the Central Bank of Ireland, 1 in 5 people could save by switching their mortgage.
The Central Bank of Ireland have also introduced new measures to make switching your mortgage easier. Changes to the 2012 Consumer Protection Code have been made to help consumers make more savings on their mortgage repayments, provide additional protections to those eligible to switch and facilitate mortgage switching through enhancing the transparency of the mortgage framework. These changes came into effect on the 1st January 2019.
If you are eligible to switch your mortgage, here are some points to consider:
- Outstanding balance – if you have a small outstanding balance on your mortgage you may find it difficult to switch as lenders may have a minimum amount they are willing to lend.
- Negative equity – lenders may not be willing to take you on as a mortgage customer if you are in negative equity
- Mortgage term – minimum or maximum loan terms may apply when you are switching. For example, some lenders may not accept an application for a mortgage over 30 years or less than five years.
- Repayment history – whether you have been meeting your mortgage repayments over the previous 12 months and any other financial obligations will be considered as part of your new application.
- Loan-to-value (LTV) ratio - Over the lifetime of your mortgage, your LTV ratio will change as your mortgage decreases and the value of the property changes.
If you decide to switch mortgage providers, you must employ a solicitor to take care of the processing, paperwork and liaising.
By using a conveyancing solicitor for this process, you will have peace of mind knowing that all details have been accounted for while ensuring that your switch goes ahead smoothly and efficiently.
Here is a summary of what a solicitor does during the process:
1. Request the Title Deeds for your property from your old bank and act as the point of contact with your new bank for the switching process. Your solicitor will also investigate the Title to ensure everything is order for your new mortgage provider.
2. Request up to date redemption figures (outstanding balance on your old mortgage) from your old bank.
3. Have a consultation with you to go through the loan offer from your new bank and to answer any questions or concerns you might have.
4. If you’re happy to proceed with the switch, you will sign the new loan agreement which your solicitor will send to your new bank.
5. Once all documentation has been signed and returned to your new bank, your solicitor will continue to deal correspond with the bank until your loan cheque is issued.
6. Once your loan cheque has issued, your solicitor will redeem on your old mortgage and return the balance (if any) to you.
7. The new mortgage will be registered by your solicitor with the Property Registration Authority and Title Deeds will be returned to your new bank.
New Bank Set to Enter Irish Mortgage Market
Avantcard, who currently specialises in credit cards and personal loans, is planning to enter to Irish mortgage market this autumn. Owned by Spanish banking group, Bankinter, Avantcard’s mortgage products will be offered under a new trading name; Avant Money.
Switchers, movers and first-time buyers will be able to avail of the new products through a number of mortgage brokers.
The average rate on a new mortgage in Ireland is 2.87%. It is expected that Avant Money will aim to offer rates as low as under 2%. Since Avantcard’s announcement to enter the Irish mortgage market, Permanent TSB has announced cuts to all mortgage rates to both new and existing customers. Ulster Bank is also offering an additional €500.00 cash on top of the existing €1,500.00 it already offers to mortgage switchers.
Irish customers are likely to benefit by the new entry which is set to create “mortgage war”.
If you are thinking about switching your mortgage or have already made a decision to re-mortgage your property, contact Gerard Cochrane & Co. Solicitors today for a quotation. We endeavour to make the switch as uncomplicated as possible with completion within weeks.