How to wipe 10 years off your mortgage with one simple change
Read the full article here: www.rte.ie
Getting a mortgage can be a long and drawn-out process for most people, and one that many people only expect to do once in their lifetime. Perhaps that is why so many Irish people don’t consider switching their mortgage.
The difference between the highest and lowest interest rates has grown to 2.55% and you could save thousands of euros by moving to a lower interest rate.
This large spread means monthly repayment savings of up to 31.9% are possible for mortgage holders – working out at a saving of €140 per month for every €100,000 owed on a 30-year mortgage.
If a mortgage holder switches their mortgage to the lower rate but continues to repay the same monthly amount the impact on the overall term of the mortgage and interest is hugely significant.
“Mortgage holders need to optimise their mortgage rate and terms, the impact of lower interest rates is hugely significant,” says Martina Hennessy, Managing Director of mortgage platform doddl.ie.
“A mortgage holder with this average mortgage of €300,000 and a 30 year term paying the highest rate of 4.5% repaying €1,520 per month could reduce their mortgage term by a full 10 years by switching where eligible to the lowest 1.95% rate and make the same repayments.”
“Sticking with a lender who is charging you a higher rate than you can achieve on market does not make sense. Interest adds no value to your mortgage so it is essential that you review your mortgage at regular intervals to assess if you can save by moving to a better rate,” she added.
“With so many mortgage holders taking terms of up to 35 years when they first purchase a property reducing interest rate and continuing to repay the same mortgage amount results in an accelerated repayment of your mortgage and saves tens of thousands in mortgage interest.”
Obviously, there are lots of other variables you should consider when it comes to your mortgage. For example, moving to the lowest interest rate on the market might not suit you best in the long term. So, if you are considering switching, you should look at a full assessment of your needs and requirements by a qualified professional to assess what is the best move for you.
It is important to review your mortgage at regular intervals to ensure your mortgage terms meet your requirements and that you are paying the optimal rate for your loan to value and financial position.
There is a legal and valuation fee which you will incur when you switch your mortgage. Most lenders offer a ‘switcher package’ which ranges from value €1,650 to up to 2% of your mortgage back in cash at draw down.
Curious as to whether you can save by switching? Check out the mortgage switching calculator – input four pieces of information and you will immediately see if you can save by switching.