WITH RISING COSTS, everyone is talking about switching to save money — electricity providers, gas companies, grocery stores, you name it. But many people are unaware that you can actually switch mortgage companies to save money as well. Moreover, people who are on a fixed mortgage, think that that means that switching is a blocker – it isn’t.
It’s not common knowledge that switching mortgages is possible or affordable, especially because mortgage managers usually stress a high mortgage rate break fee when you initially sign on the dotted line. But that’s a myth that’s worth dispelling: at the moment, most customers breaking their fixed rate mortgage are not being charged a break fee.
We sat down with Paul Monahan, General Manager of Daft Mortgages, to discuss the benefits and process of switching mortgages. You’ll want to act quickly, though, as interest rates are set to go up again in the coming months and you will have missed the boat if you do not switch now.
Paul explains, “Take a fairly typical example of one of our customers. They fixed at 3.0% a few years ago and have a monthly repayment of €1,330 on their €247,000 mortgage. 3.0% was a competitive fixed rate at the time and they have 2 years left on it. They can break their current fixed rate mortgage with no break fee now and switch to a 2.05% 4 year fixed rate, reducing their monthly repayment to by €167 to €1,163 per month straight away. Not just that, but if interest rates rise as expected, and they waited 2 years until their current fixed rate to refix, they could find themselves getting a 4% interest rate and facing paying €1,408 per month, €78 more than they are paying now. So, over the next 4 years, they stand to save €9,888 by fixing now.”
Monahan continues, “Switching mortgage providers is one of the most effective things that people can do to reduce their outgoings. People who are on a fixed mortgage, think that that means that switching is a blocker – it isn’t. The real blocker is people don’t know how to switch. That’s where Daft Mortgages come in. Daft Mortgages is on the side of the consumer, and we’ll tell you how to switch and how to get the best mortgage for you. The whole point of switching is to save as much as possible, that’s why Daftmortgages.ie gives customers access to seven lenders, including lenders that are the best value but customers can’t go to directly.”
Daftmortages.ie found that 83% of mortgage switchers will start to save from their very first repayment. Given that interest rates are rising though, almost every fixed or variable rate mortgage holder will benefit from taking a new fixed rate now and locking in today’s mortgage rates that start at around 2%.
Monahan pointed out that this is the perfect time to consider switching your mortgage rate. “Mortgage interest rates have been falling for 10 years or so, but we’re at the bottom now,” he explained, “Some lenders rates have started to go up but many haven’t yet.” Anyone who currently has a mortgage can change their mortgage to a different provider to avail of a better rate.
Customers on a fixed rate mortgage often don’t realize that they, too, can switch to another mortgage lender and lock in a lower rate. Monahan recommended, “I’d advise any customer on a fixed rate mortgage to call their lender and ask how much it would cost them to break — it’s definitely free just to find out!”
You can begin the process of applying to switch mortgages with a mortgage broker like Daftmortgages.ie to get an understanding of the various rates available from multiple lenders. While the process might take a bit of time and resources, Monahan spoke from experience when he explained that switching mortgage providers is worth the effort, “I’ll be totally up front, it will be going on for a couple of months,” he said, “But I’ve switched my mortgage and the way I think about it is that per hour of work I’ll never earn that much!”
Interested in finding out more about switching your mortgage? You can avail of a free personal savings report from Daftmortgages.ie. Learn just how much you could save by switching your mortgage, simply by filling out this form.
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