Auto Enrolment Enquiry
Speak To Us Today
To speak with one of our team about auto enrolment, please fill in your details below and pick a time that suits.
info@symmetryfinancial.ie
What Homeowners Should Know About Switching Mortgages On Government Schemes
There can be undeniable benefits to changing mortgage products or providers, but do these benefits apply if you are switching mortgages on government schemes?
This can be a grey area for many homeowners, who are uncertain of their eligibility to change product or provider while still tied into a government-backed initiative, such as the Help to Buy Scheme or First Home Scheme.
If you’re currently availing of one of the above schemes and want to understand how switching your mortgage could affect your obligations or financial position, we’ve got you covered. Read on to discover the switching rules you need to know!
Switching mortgages on government schemes: The Help to Buy Scheme
Switching mortgage product or provider while on the Help to Buy Scheme (HTB) is a relatively simple process, given that this incentive is centred around helping you with your deposit for a new home.
However, there are a couple of key factors to keep in mind before making your final decision.
What are the Help to Buy Scheme’s switching rules?
You can switch your mortgage with ease while on HTB, provided:
- You live in the property bought with the help of HTB for at least five years following the build or purchase: One of the strict conditions of HTB is that recipients of the scheme use the property as their primary residence for a minimum of five years. If you are simply seeking better mortgage terms, as opposed to searching for a new property, you will not be penalised for switching.
- You are not availing of other government incentives alongside HTB, such as the First Home Scheme or the Local Authority Affordable Purchase Scheme: These incentives have varying rules for the HTB, so there may be some crossover issues when switching. It’s therefore advisable to consult a financial advisor before pursuing a switch to ensure a smooth process.
Switching mortgage while on government schemes: The First Home Scheme
If you’re participating in the First Home Scheme and considering switching mortgage providers, it’s vital to first notify the FHS of your plans by filling out a Mortgage Switching Notification form, which is accessible through their customer portal.
This may need to be accompanied by supporting information, such as an annual mortgage statement and a valuation of your property, as well as your solicitor’s details.
What are the First Home Scheme’s switching rules?
According to the FHS website, there are three important rules to be aware of when switching mortgages while taking advantage of this incentive.
These are as follows:
- If switching to a participating lender, there is no requirement to buy back the equity share.
- If you’re switching to a participating lender and borrowing more money against your property as part of the switching process, you must retain at least 10% equity in your home post-mortgage top-up. It’s also important to note that FHS must confirm it has no objection to you pursuing a top-up before you can complete the switch.
- If switching to a non-participating lender, there is a requirement to buy back the equity share in full, including any accrued service charges.
Seeking the advice of an experienced mortgage switching advisor will help you to navigate the above rules with ease.
Switching your mortgage while availing of the other government incentives
Aside from Help to Buy and the First Home Scheme, there are other government initiatives in place in Ireland designed to assist potential buyers to get a firm footing on the property ladder. However, if you receive one of these schemes, you may encounter difficulties when trying to switch mortgages.
A prime example is the Local Authority Home Loan, a government-backed mortgage aimed at first-time buyers and fresh start applicants, which can be used to purchase a new or second-hand property, or to fund a self-build.
Breaking a Local Authority Home Loan contract to switch mortgage providers may result in early repayment charges. You will also have to start the mortgage process from scratch when transferring to a commercial lender.
Similarly, the Local Authority Affordable Purchase Scheme, which helps people on moderate incomes to purchase a home at a discounted rate, may not promote a straightforward switch.
Because this scheme involves the local authority in question taking a minimum of 5% stake in your home, any potential new lender will need to be approved by the equity holders.
However, these obstacles may prove minimal when compared to the savings you could potentially make by switching. It’s therefore highly advisable to work with a reputable mortgage advisor who’ll guide you through each step of the switching process, providing both clarity and peace of mind.
Explore the rules of switching mortgages on government schemes with expert help
Switching your mortgage while availing of a government incentive doesn’t have to be as complicated as it may seem. At Symmetry Financial, our experienced mortgage advisors are on hand to simplify and speed up the process.
Our switcher mortgage service includes:
- A full review of your current mortgage to identify potential savings
- An assessment of any schemes you receive to assess potential conflicts
- Comparing lenders across the Irish mortgage market to find the right fit for your needs
- Managing communication with lenders, valuers and solicitors on your behalf
- Providing tailored guidance to ensure your mortgage supports your broader financial goals
With expert support at every step, switching your mortgage can be a smoother and more beneficial experience.
If you have queries regarding your ability to switch mortgages while availing of any of the above government schemes, our team is at the ready to offer expert, trustworthy advice.
Contact us today to arrange a friendly, informative consultation with our experts.
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.
Free Webinar:
The Mortgage Process Explained