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Dublin: 13 °C Sunday 16 June, 2019

Could you be saving money on your mortgage?

It’s more likely than you think – here’s how.

THINK FIRST TIME buyers get the best deal on mortgage rates? Think again.

It used to be that first time buyers had access to the lowest mortgage rates, as banks tried to entice them to take out a mortgage with them, but the times they are a-changing.

Following pressure from the government on financial institutions and the upturn in the economy, banks are now offering better rates to those looking to switch their mortgages.

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Statistics from the Central Bank show that one in five mortgage holders could benefit from switching their mortgage.

And the good news is – it’s much easier than you think.

Why switch?

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The main reason, of course, is to save money. You could stand to make substantial savings over the course of your mortgage, depending on what rate you’re paying.

Here are some calculations from the Competition and Consumer Protection Commission that show your potential savings – bearing in mind, this does not factor in additional costs such as penalties for breaking with your current provider:

You have a remaining balance on your mortgage of €250,000
Your house has a market value of €350,000.
Your mortgage term is 25 years.
Your current monthly repayments are €1,400 on a variable interest rate. Using the mortgage comparison tool, you could potentially save €73 a month or €22,000 over the lifetime of your mortgage if you switched to a lower interest rate.*

*Remember this does not factor in any additional costs. This example is for illustrative purposes only.

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Can everyone do it?

Unfortunately if your payments are in arrears or your property is in negative equity, you won’t be eligible to switch mortgage. If you’re on a fixed rate mortgage, you will have to pay a penalty if you want to switch.

If you’re on a tracker mortgage, you probably won’t find a cheaper rate mortgage to switch to.

However, if you’re on a variable rate or coming to the end of a fixed rate mortgage – you should have a look at the mortgage comparison tool and see if it’s worth switching.

How easy is it?

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First things first- have a look at the mortgage comparison tool from the Competition and Consumer Protection Commission. This contains all the switching rates from financial providers in one place so comparison is a doddle.

Next, you should contact your existing mortgage provider and see if they can offer you a better deal than what you’re currently on. If they will – you won’t need to switch. If they won’t, it’s time to start looking for a new provider.

What are the benefits?

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All dem dolla dolla bills, yo.

Sure, what else do you need?

Anything to remember?

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Check out if there are any fees or penalties associated with breaking your current contract and whether overall it’s worth it for the savings in the long term.

Banks aren’t exactly transparent about how much/whether it will cost you to switch your mortgage away from them, so get in touch with your individual provider to see if they will charge you.

Don’t be distracted by offers of free legal expenses or discounted insurance – look at the mortgage package as a whole and make sure the savings outweigh the costs of switching.

It’s worth bearing in mind that you can’t predict what the new lender will do – so interest rates could go up in the future.

Thinking of switching your mortgage? The Competition and Consumer Protection Commission’s consumer website, Consumerhelp.ie, provides information on consumer rights and personal finance to make an informed choice on important decisions. They even have a handy mortgage tool so you can figure out how much you could be saving by switching. Head over to Consumerhelp.ie to see how you could benefit from switching your mortgage. 

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