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James Horan/Photocall Ireland
Savings
Mortgage holders advised to check contracts for possible savings
Thousands of homeowners in Ireland will see their fixed rate mortgage deals end in the coming months and they may be able to reduce their monthly repayments as a result.
TRACKER MORTGAGES ARE very attractive to homeowners in the current economic climate but obtaining one has been difficult.
According to experts, that could change for thousands of mortgage holders in Ireland who could soon see major reductions in their repayments.
The key is to check the terms and conditions of your mortgage contract, says Frank Conway of MoneyCoach.ie.
“A few years back fixed rate mortgages became popular as inflation was soaring and interest rates were gathering pace,” Conway tells TheJournal.ie.
“Oil prices were going through the roof, as was the cost of food. The European Central Bank was eyeing inflation and increasing interest rates,” he explains.
Irish people generally look for a safe bet so began to lock into their mortgages for about three to five years.”
A lot of those fixed rate mortgage deals are now coming to an end and their holders may be able to revert back to trackers, says Conway.
This could lead to hundreds of euro in savings each month.
For fixed rate mortgage holders who are now due to revert back to tracker deals, the monthly repayments on a €250,000 loan will fall from about €1,266 to approximately €988.
It seems like a sweet deal but it will not happen automatically, warns Conway.
“The deals are fairly nuanced,” he says. “The loan will not automatically revert to a tracker so people should check their terms and conditions. It is important to be thorough and not leave it to the last minute.”
The lender is obliged to send a letter to the mortgage holder at the end of the deal but it may offer other options, including fixing again which could see the borrower save very little – or nothing at all.
It is also important to check if the contract says the mortgage will revert to a standard variable rate deal as this could result in higher monthly repayments.
Mortgage holders can also check with their broker if they went through one before signing their mortgage.
Conway estimates that between 3,000 and 6,000 homeowners could benefit if their mortgages revert to attractive tracker deals due to them. Even more savings could be seen down the line if the ECB cuts the base rate of lending again.
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