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‘I saved thousands in a few years’: One homeowner on why they switched mortgage - plus how you can too

For Tommy Hanratty, the process was ‘very, very simple’.

Image: Shutterstock/LStockStudio

FINDING THE RIGHT mortgage that will still suit your situation over three decades later is not an easy feat. But, it’s really important to know that just because it was the mortgage you went for at the time, you can still save by switching now.

Tommy Hanratty is a reader of TheJournal.ie who saved thousands by switching mortgage a few years ago. We asked Áine Carroll, the Director of Communications and Policy at the Competition and Consumer Protection Commission (CCPC), to offer some advice for those who also hope to switch.

First up: Here’s what Tommy had to say.

So, what was your situation?

I had a mortgage that was on a fixed rate for the first three years. By this stage, I was about five years into it. I was paying a really high interest rate at the time which is mad. I went to them and said that I wanted to do a top-up which was for €20,000 and they told me they could give me a really good rate on that.

But when I asked could I get that rate on the whole mortgage, they said the rate they were offering was only for new customers – meaning that anyone walking in off the street could get a much better rate. I said ‘I could get that rate down the road’, and they told me I’d have to get a solicitor, which was a very small cost compared to what I saved.

I was very annoyed about it at the time. I didn’t know how they could give a much better rate to someone who they didn’t know from Adam when I had paid my mortgage every month without fail. It was crazy. They were going to keep that rate all the time when they were handing out better rates for new customers. So I changed my mortgage and got a much better rate elsewhere.

And what was the switching process like?

Nothing really put me off the process, I had to pay a little bit to a solicitor but it wasn’t much. I saved a fortune by changing – my monthly payments went down considerably. It was a great advantage for me to change and shop around. I just went into a few of the different banks and found out what rate they’d give me.

The bank I went with said if you switch, we’ll give you this rate on the whole lot (my mortgage and the top-up). A friend of mine is a solicitor so they just had to draw up a new contract, and I had to bring proof to the bank that I had been paying my mortgage. It was much easier than the first time around getting the mortgage. The process was very, very simple. It wasn’t a big thing at all.

What difference did the switch make?

In a few years, it was thousands I saved. It was a 2% difference in the rate which is huge in the long run. It’s definitely worth looking into, especially if you’re a few years into a long-term mortgage. You can switch and save by shopping around and probably getting rates that your own bank won’t do you for you. I saved a fortune.

My advice for others would be if you feel your mortgage is too high, shop around. I was paying an awful lot of money years ago – such a high percentage on a fixed rate which I thought was ridiculous. Often they’ll only offer their low rates for new business – like my top-up. It was definitely worth my while shopping around.

So, what advice does expert Áine Carroll of CCPC have to offer those looking to switch?

Here she tells us everything we need to know…

What do I need to know before I switch?

The best time to do it: If you’re coming to the end of a fixed rate or you are currently on a variable-rate mortgage.

How to compare mortgage rates: Research your options using the CCPC mortgages money tool. Just enter the market value of your house, your outstanding mortgage amount and your current monthly repayments.

The tool will show you the savings you could make on your monthly repayment and over the lifetime of your mortgage. If you do find a better rate with a new provider, let your current provider know as they may agree to offer you the same deal.

And how do I actually do it?

If you’re switching to a new rate with your existing lender: they will issue you a letter confirming the change to your contract terms.

If you’re switching to a new lender: the switching process is the same as applying for a new mortgage. When you are applying to switch you’ll need to know your mortgage redemption figure (how much you currently owe) which you can get from your current mortgage lender. You should tell your mortgage protection insurance company as they will have to note the new lender on your policy.

How much could I save?

The savings from switching your mortgage can be significant and and can be worked out using the CCPC mortgages money tool. Take this example:

Let’s say that you owe €250,000 on your mortgage, have 25 years left and market value of your house is €350,000. Your current monthly repayment is €1,350 on a variable interest rate. You could potentially save €171 per month and approximately €51,291 over the lifetime of the mortgage if you switched to a lower rate.

Remember this does not include any additional costs (such as legal fees etc).

Think you might benefit from a mortgage switch? You can get unbiased advice with the Competition and Consumer Protection Commission (CCPC) by checking out their mortgage switching guide. Make sure you’re fully up to speed on your options by visiting their mortgage comparison tool.

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