A mortgage expert has shared a clever way you could save up almost €5,000 on your mortgage.
Martina Hennessy, Managing Director of mortgage switching platform doddl.ie, explained that anyone with a variable mortgage should act now to get themselves the best rate possible.
"Interest rates are super low at the moment. In Ireland, rates are as low as they’ve been for 14 years," she told RSVP Live.
"But it’s expected that rates will start to increase. If you lock in a good rate now, you’re safeguarding against increases in the future."
She said many people think switching mortgages is really complicated, or have an emotional block around thinking about their mortgage.
"When you’re looking to buy a house, you’re trying to get the mortgage, you’re bidding on a house, you might lose out on that house, you bid again…It's a very emotional time and people associate mortgages with being really difficult.
"People say 'I'm never doing that again!'
"The important thing to realise is that when you're switching mortgages, you still own your property, you're in control. All you're doing is moving your mortgage from one lender to another to save on interest."
Martina explained that the first thing you should do is call your bank and check what your interest rate is, and then go to a broker or a platform like Doddl.ie to see what better options are out there.
Homeowners are paying an average €4,595 in extra mortgage repayments per year by not switching lenders, and this increases to €4,678 if your home has a building energy rating of B3+ and you are eligible for a Green rate.
"The lowest rates on the market are only available to brokers via channels like Finance Ireland, Avant Money and ICS Mortgages," she said.
"When you're looking at rates, you can absolutely go to Bank of Ireland, AIB yourself, but you can't access Avant Money yourself, you have to go through a broker.
"Even if your circumstances have changed and you can’t switch, you should look at your rate and see, does your existing lender have anything that’s better?
"There are over 20,000 households in Ireland that are on standard variable rates. You might have a fixed mortgage for three years and then after three years you roll on to standard variable rates.
"These are up to 4.5%, they are huge rates. You might tell yourself you’ll look at it eventually but you get busy and you don’t. The lowest rate in the market is 1.95, and if you’re paying the higher rate, it’s just unnecessary and out of your own pocket.
"People are spending so much money on interest that could be much better spent in other areas."
She explained that often mortgage holders think they can't switch providers because they availed of a cashback offer, which isn't the case.
"It’s really popular for first-time buyers to get a 2% cashback offer, so they might think they can’t switch because of that. But there’s no clawback on cashback. If you’re variable, there’s no clause, no penalties, nothing.
"Your bank can’t penalise you for moving to another lender, except if you’re in the middle of a fixed rate. If you’re in the middle of a fixed rate, you need to check if you have a break penalty."
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