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The Hidden Costs Of Switching Mortgages In Ireland
Amid the current cost-of-living crisis, many homeowners in Ireland have one burning question: How do the costs of monthly repayments compare with the costs of switching mortgages?
We frequently hear about the benefits of changing providers for many other services, but do the same criteria apply to the biggest monthly expense for most families and individuals?
The answer is that yes, it often does, which is why switching mortgages has become an attractive prospect for many homeowners in Ireland.
With the potential to save thousands of euros over the lifespan of a mortgage – at a time when the cost of everything is soaring through the roof; it’s no surprise that more and more people are beginning to explore their options in this context.
However, while the benefits of switching are most certainly worth considering, the hidden costs and potential pitfalls should also be discussed.
This article delves into all that is involved with switching mortgages in Ireland, enabling you to make an informed decision with all the necessary information to hand.
Why should you consider switching mortgages?
Just as we regularly review our car insurance, home insurance, or energy provider to ensure we’re getting the best value, the same approach should apply to our mortgage. Proactively managing this loan can lead to significant savings, especially for those currently on higher interest rates. Switching to a mortgage with better terms can help reduce monthly repayments and cushion the impact of future rate increases.
When the costs of switching mortgages are too high
In 2024, it was estimated that homeowners might have been paying an average of up to €7,292 in extra repayments per year, simply by not switching lenders.
While statistics such as this highlight how switching mortgage providers can potentially lead to significant savings, it’s crucial to first examine the benefits of remaining with your existing lender before deciding to jump ship. For example:
- If you are coming to the end of your mortgage term, the costs of switching may outweigh the potential savings.
- Certain mortgages come with very high early repayment charges, which may make a switch virtually impossible – and impractical.
- If the market value of your property is less than the balance left on your mortgage, it may prove difficult to find a lender willing to approve a switch.
- If the difference between your current interest rate and the new rate is marginal, the savings you could potentially make may not justify the effort and cost of switching.
What are the hidden costs of switching mortgages?
Just as it’s important to be aware of the hidden costs associated with securing a mortgage, it’s equally as crucial to understand the expenses that inevitably crop up when making the switch. These include:
Early repayment charges (breakage fees of a fixed-term contract)
As mentioned above, an early repayment charge (ERC) can amount to thousands of euros if you switch your mortgage while it is still within a fixed-rate period. To avoid this, it’s vital to review your mortgage contract to determine if you could be affected by an ERC, and if so, how much it might set you back.
Loss of cashback incentives
If you received a cashback incentive as part of your original mortgage, switching lenders won’t result in a penalty. The only exception is in the case of a self-build mortgage, where the home must be completed within the timeframe set out in the agreement. Get up to speed on the terms of any incentives that may have been included in your original contract to avoid such a penalty.
Valuation fees
Most lenders will require a valuation of your property to confirm its current market value before they will consider offering you a new mortgage term – especially if the property’s value has fluctuated since you initially purchased it. The cost of a valuation typically ranges from €150 to €250, depending on the provider you secure.
Adjustments to your insurance policy
When switching mortgages, you may need to update your life insurance and home insurance policies. Changes in your loan amount or the property’s rebuild cost, rather than lender requirements, can influence your premiums. If you’ve paid your insurance upfront rather than monthly, be mindful that a portion of the payment may not be refundable if you switch providers.
Legal fees
When embarking on a mortgage switch, it is mandatory to engage the services of a solicitor to handle the legalities of transferring your mortgage to a new lender. Legal fees can vary, but on average they tend to fall between €1,000 and €2,000.
Lending agency fees
For residential principal dwellings, not all lenders charge fees for switching mortgages. However, if you’re switching to an investment property mortgage, you may encounter costs such as application fees, arrangement fees, or valuation review charges. To avoid unexpected expenses, always check for any applicable fees before making the switch.
The importance of seeking expert guidance when switching mortgages
It’s a fact that the hidden costs of switching mortgages can add up quickly, so it’s advisable to enlist expert guidance to get all the facts and to help you weigh up your options before making your decision. Also, for those approaching the end of their fixed-term mortgage rate, reviewing your options is a no-brainer. Shopping around with the help of a broker can ensure you secure the best possible deal, potentially saving you thousands over the lifetime of your mortgage.
Symmetry Financial Management specialises in helping Irish homeowners navigate the complexities of mortgage switching, ensuring that every financial detail is accounted for.
With our tailored advice and unwavering commitment to transparency, we will help you determine whether switching is the right move for your financial future. Our team of experienced mortgage advisors will help you navigate the process with confidence, ensuring that you fully understand the costs and benefits.
Discover the hidden costs of switching mortgages with our help
We outline both the advantages and expenses associated with switching mortgages by:
- Factoring in hidden expenses, so you can see whether it makes financial sense in the long term.
- Negotiating with lenders on your behalf to secure the best terms and identify potential cost-saving opportunities.
- Explaining every step of the process in plain language and helping you avoid misunderstandings or surprises.
If you’re considering a mortgage switch, contact our team today for expert guidance and a no-obligation consultation!
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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