Once upon a time, Ireland’s entire housing market descended into a massive ball of fire.
I’m sure you’re familiar with it.
It’s what sparked the recession a little over 10 years ago.
The arse fell out of the market and the country went into a tailspin that only really started to properly recover in the last few years.
You could easily blame the bankers and the government who’d seen foreign borrowings grow from €15 billion to €110 billion in 2004-2008 in rollover schemes to fund building projects that wouldn’t be sold for several years (or sell at all, as the case may be).
The worldwide market took a crash and the Celtic Tiger let loose one last roar, keeled over and died.
It was grim for a good few years. One of the things that fell away, alongside property prices, was the habit of switching mortgages.
But switchers are back and the banks are throwing money at you for your mortgage.
Money, money, money.
Or: switch and save.
Many mortgages are taken on a variable rate – which changes. The idea of switching is that you move your mortgage to the lender with the best variable rate, saving you a packet. Lots of the lenders will also throw in incentives to get you to sign up with them.
It’s a straightforward idea in theory: move your mortgage money to the lender with the best rate and save on that rate.
It’s a doddle!
You can indeed if you meet key criteria:
The terms aren’t wildly different to how you signed up in the first place. If you said ‘yes’ to all the above, you should be able to switch your mortgage.
Of course, there are certain warnings you should heed as well – you know the ones most people ignore but that would scare the bejaysis out of you: you’ll lose your home if you don’t keep up your repayments; that the payment rates may be adjusted by the lender from time to time; and to always check the rates that will apply after a fixed rate period expires.
Know what you’re getting yourself into, essentially, because we all know what happened the last time we kept our blinkers on.
The truth is that there *is* money to be made in switching – but just be smart about it.
H/t to them for bringing competition to the market which will spur the other lender to drive down their rates which are currently the highest in Europe.
To save you the hassle, I’ve taken a look at the offers that are currently available. Some of them may well wet your whistle and get you to move. Obviously, terms and conditions apply, so have a read of all the documents before you take the plunge.
(To be fair, given how much ‘cashback’ appears on the list, is there any surprise there are stipulations to the banks giving away free money? One of which, by the way, generally is that you might have to have a recent mortgage to benefit from some of the switch incentives.)
The first thing to do is to figure out your Loan to Value (LTV) ratio. In simple terms, this is the amount outstanding on your mortgage as a percentage of the current value of your house. If your mortgage balance is €200,000 and your house is worth €400,000 then you loan to value is 50%.
To get the current value of your house, you will need to get it valued which will cost you €130/€150. You can get the current balance on your mortgage from the bank.
Once you have the LTV, you can shop around and check out if there are better rates on offer than you currently pay. Remember to check with your current bank too as they may match a rate on offer elsewhere. This is especially true if your LTV is low as they want to keep theses mortgages on their books.
Switching to a new rate with your current bank is quicker and easier than switching to a new lender – no need for a solicitor to get involved.
This all seems grand in theory – but remember the insurance policy you took out as part of your mortgage? Yeah, you know your Mortgage Protection plan?
If you made the unfortunate mistake of taking it out with your bank, did they ever tell you what would happen if you tried to switch to another bank?
Sit back and listen up.
Like many things in insurance: it depends.
This time, it depends on two things: did you buy your policy with a broker or insurer or did you buy it with your bank/lender?
If you got the policy with a broker/insurer, it’s a doddle and you can take it with you.
The premium and level of cover won’t change, once the amount you borrow and the term of your mortgage remains the same.
If not, well…
If you bought a block policy, the bank will cancel it when/if you switch your mortgage.
So, you’ll have to apply for cover all over again and it may cost you more, as you’ll be older than when you first took out the policy.
And if you’re not in good health, you’ll have to pay a higher premium or you may not be able to get cover at all.
If you can’t get cover, you won’t be able to switch your mortgage. You’ll be stuck with your current bank.
So you know all that money you thought you could save, well it might be about to get awkward…unless you have the right help.
Not all heroes wear capes, my friend.
Provided you didn’t buy a block policy from the bank, you can switch your mortgage protection at any time.
If you think you have made a grave error and it’s within 30 days of taking out your policy, you can get your premiums refunded.
Outside of the 30 days, you can switch insurer without penalty and the bank can’t stop you.
All you need to do is give the bank a copy of the new policy so they can assign it to your mortgage.
You must disclose any new health issues that have arisen since you took out the original policy. For this reason, you should never cancel an existing policy until you have a replacement policy ready to go.
Just in case, like.
If you’re switching mortgage and you bought your Mortgage Protection from a broker, it’s a doddle, you’re free to take that policy to your new lender.
But if you bought a block policy from a bank, they will cancel your policy so you will need a new Mortgage Protection policy.
This time, if you are switching mortgage, make sure your mortgage life insurance from a broker so you don’t get caught!
If you don’t have a trusted broker, I’d be happy to help you sort out your cover.
Complete this short questionnaire and I’ll be right back with a quote.
Or if you prefer, call me on and we can get to work on saving you money.
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