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 ass 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 (now rising meteorically again) was the habit of switching mortgages.
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 also easy enough 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.
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.)
Which all seems grand in theory – but remember the insurance policy you took out as part of your mortgage? Yeah, you know your Mortgage Protection policy?
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.
If you’re switching mortgage and you bought your Mortgage Protection from a broker, well done, 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, make sure you buy it 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 the short form below and I’ll be right back to you.
Or even better, call me on 057 93 20836 and we can get to work on saving you money.
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