Owning a home is one of life’s major milestones and a huge financial commitment. When applying for the loan the future homeowner should never agree to a mortgage until he or she has knowingly accepted the best deal. As time goes on, your “best deal” may not be today’s best deal and switching your mortgage could save you thousands!
Since January 2019, The Central Bank of Ireland has released a set of new criteria regarding mortgage lending that has made switching your mortgage easier than ever. The Central Bank implemented measures mortgage lenders must complete when applying or switching your mortgage including:
- Telling you about cheaper mortgage options 60 days before you come out of a fixed-rate mortgage
- Informing you if you can switch to a cheaper mortgage based on how much equity is in your home
- Clearly explaining the pros and cons of any mortgage incentives such as cashback offers
- Giving you a comparison of how much your mortgage costs versus other options offered by your lender if you ask for one
- Displaying all the information you need to switch, including telling you how long it will take
- Giving you a decision within ten business days of receiving a completed mortgage application
So Why Switch?
These measures will ensure the mortgage lender has given you the best options available when you seek to switch. Be aware, many factors including repayment history, loan-to-value ratio, mortgage term, and others are considered when applying but the savings will drastically outweigh the cost!
According to the Competition and Consumer Protection Commission (CCPC), if you were to have 20 years left on your mortgage of $200,000 paying €1,160 per month at a 3.5% interest rate and total cost of credit being approximately €78,000, you could be saving around €12,000 by switching to a lower interest rate of 3%. That would happen by lowering your monthly payment to €1110 and the cost of credit to €66,000. Fifty euros doesn’t sound like a lot but over the lifetime of the loan would amount to €12,000. What would you do with an extra €12,000?
What about Variable Loans?
When switching a variable rate mortgage, lenders must clearly inform you of how they set their variable interest rates and a statement explaining their policy for setting each variable rate. Also giving you up-to-date communication to justify why rates have risen. Most importantly, lenders are required to show what other options are available, this includes an annual basis as well as when the lender increases the variable-rate. These requirements, explanations, and more are available to variable rate homeowners looking to switch!
Do Many Mortgage Owners Switch?
The answer is no! Based on data from the Central Bank of Ireland, less than 3% of mortgages were switched in 2019 but 3 in 5 mortgages in Ireland could save €1,000+ in the first year. With this much potential for savings, it would be irresponsible not to consider switching!
The Bank believes that the Irish people don’t realize how much they could save by switching, they think it’s difficult to compare mortgages, and they believe the whole mortgage process is too long and complicated.
This couldn’t be farther from the truth! With companies like OnlineApplication that are solely focused on removing pain points of the application process, now is an easier time than ever to consider switching!
The Future of Lending
OnlineApplication can provide approvals in as little as 7 minutes! It’s challenging the status quo of the industry with fewer meetings, automated processing, clients submitting documents on their phone or computer, and finally packaging and sending it to banks in seconds!
With rapid approval in principle based on bank calculators and compliance and regulation built in its trusted by major banks like AIB, Ulster Bank, and the Bank of Ireland!
It’s a win for everyone involved! For Consumers, it reduces time and manual applications as well as speeds up approval times and makes the process transparent. For Mortgage Brokers it removes the need for multiple platform logins and creates a single point of access for better advice and faster loans. Finally, for Banks it removes inefficiencies & regulatory processing and speeds up underwriting to create faster income, margin, and returns.
There’s no excuse for not considering switching your mortgage and now never an excuse not to use OnlineApplication to do it!
Central Bank of Ireland. “How Is the Central Bank Making Mortgage Switching Easier?” Central Bank of Ireland, www.centralbank.ie/consumer-hub/explainers/how-is-the-central-bank-making-mortgage-switching-easier.
Competition and Consumer Protection Commission. “Switching Your Mortgage? Review Your Options.” CCPC Consumers, www.ccpc.ie/consumers/money/mortgages/switching-lenders-or-mortgage/.