Why And How To Switch Your Mortgage

The joy and excitement that goes hand in hand with becoming a homeowner can quickly begin to mellow when the reality of a lengthy mortgage term sets in. Whether large or small, your monthly mortgage repayment is likely to make the biggest dent in your pocket over the course of a year. Multiply this by 30 or more, and you’re looking at a few decades of substantial expense.

Luckily, there is light even before you reach the end of the tunnel, in the form of a mortgage switch. In fact, depending on your current rate, switching your mortgage could save you up to €3,000 per year, which amounts to a significant nest egg over the course of an entire term.

This fact aside, the thought of readdressing your mortgage situation may be enough to put potential switchers off at the first hurdle. However, the possible pros far outweigh the cons involved, so it is most definitely an avenue worth exploring.

Why should you consider switching your mortgage?

As previously mentioned, switching could lead to substantial savings, which is a very attractive prospect. A combination of falling interest rates due to an increase in competition within the market and lenders’ enthusiasm for enticing new customers with impressive deals, means that there has never been a better time to consider making the switch.

Add to this the fact that an estimated 80 percent of Irish homeowners on a standard variable rate may be significantly out of pocket (think thousands as opposed to hundreds) because they haven’t contemplated the idea of switching their mortgage, and it seems like a no brainer.

However, while those currently paying a high mortgage rate should most certainly look into the process, it is worth noting that it will not be a viable option in certain circumstances, for example if your income is now lower than it was at the time of mortgage drawdown or if you are in negative equity or as a result of missed payments on the mortgage or any other loans.

You may also be restricted if you’re currently paying a fixed rate mortgage, but there are ways around this if you are in a position to pay a fee to break this contract.

How do you go about switching your mortgage?

Once you have assessed your eligibility for switching your mortgage, there are a number of initial steps you should take.

Firstly, you could save yourself a lot of time and hassle by contacting your current lender and explaining that you are thinking of making the switch. They will look at the numbers, consider your case, and may reduce your mortgage rate in an effort to retain your custom.

If a bargaining attempt with your existing bank is unsuccessful, the next step will be to establish the loan to value ratio, which is the amount you owe on your mortgage in relation to the current market value of your property. You will need to carry out a valuation on your home in order to receive an up-to-date loan to value ratio for a new lender to consider.

Once you have done your research, you should contact your new lending institution of choice to discuss your options and fill out the relevant paperwork. You will need all the same documentation that was required when you first applied for your mortgage, including bank, credit card and loan account statements from the previous six months; your last three months payslips; your most recent employment detail summary; and a completed certificate of income.

You will also need to hire the services of a solicitor – again, a repeat of the first time around – to liaise with your previous and soon-to-be lenders and to oversee the signing and transfer of all documentation. While the initial up-front costs that come with switching your mortgage may be a deterrent, many lenders are now offering cash incentives to cover the cost of solicitors’ fees and other expenses.

It may seem like a confusing and daunting process but switching your mortgage can in fact be incredibly straightforward, especially with the help of an experienced financial advisor. Symmetry Financial’s mortgage brokers will examine certain facts about your existing mortgage, such as your loan-to-value ratio and your current mortgage rate, in order to help you decide on the best way to progress.

The beauty of working with a team of professionals like Symmetry Financial, is that it gives you options; the option to fully understand the process, to consider a wider range of choices and finally, to select the one that best suits you, based on expert advice tailored to your circumstances.

If you’re interested in finding out just how much you can save on your mortgage by making the switch, contact Symmetry Financial today for a consultation with a dedicated mortgage broker.