Wednesday 20 September 2017

Six ways to save a few euros as belts tighten

HOUSEHOLDS are under the cosh after Europe's central bankers yesterday hiked interest rates for the first time in almost two years.

Many mortgage holders will have no choice now but to implement another household austerity plan.

Here are some savings for households hit with higher mortgage costs.

Economise:

Around one third of an average household's spending goes on energy, groceries, television and phone bills.

State body, the National Consumer Agency, has an online tool that lets you enter what you spend on these items and check if you are shelling out more than others in a house similar to yours.

By using the website, at www.economiser.ie, it should be possible to save up to €10 a week, according to the National Consumer Agency.

Over a year ,this works out at savings of around €500.

Reduce your life cover

If you have a mortgage, your lender will require you to have mortgage protection insurance.

This is basically a life insurance product, which pays your mortgage in full if you die.

You may well have taken this out at the height of the property bubble, when these policies were more expensive than they are now.

The cost of life cover has come down dramatically in the past year.

This means you could save a chunk of cash by substituting your current mortgage protection or your life policy for a new cheaper one.

If you have given up smoking since taking out your mortgage protection/life cover you could save up to 30pc on the premiums.

On a policy costing €1,200 a year, the savings could be €360 a year, according to Frank Conway of personal finance brokerage MoneyCoach.ie.

Take the train

Take a bus or train to work and you could save on the double.

If you avail of Iarnrod Eireann or Bus Eireann's commuter taxsaver deals you can buy monthly or annual tickets, less your income tax.

This means higher rate taxpayers can save up to 52pc on the cost of the tickets. See taxsaver.ie And insurers, such as Allianz, offer discounts of up to 20pc on motor insurance if you use public transport to get to work, according to Mr Conway.

Savings of €80 are possible on your motor insurance alone by letting the train take the strain.

Save on home insurance

The cost of your home insurance is made up of two elements -- the contents cover, to compensate you for loss of your valuable items, and cover if the house has to be rebuilt or repaired.

The cost of rebuilding or repairing homes has fallen dramatically.

These reinstatement costs have dropped by 20pc since the recession started, so your home insurance costs should come down.

Check out the Society of Chartered Surveyors website at www.scs.ie for a guide on the cost of rebuilding a house.

The savings here could be in the order of €30 to €60.

Overpay your mortgage

If you pay a lump sum off the mortgage or just pay more than you have to each month you can bring down the monthly repayments, and shorten the term of the mortgage.

Suppose you have 20 years left on a €200,000 mortgage with a rate of 4pc.

By paying an extra €100 each month, you would save over €11,000 in interest and reduce your mortgage term by over two years. Paying a lump sum off the mortgage would see the monthly repayments come down.

Grab a fixed rate

If your bank offers one, a fixed rate makes sense.

AIB, Bank of Ireland, Ulster Bank, National Irish Bank, and KBC Bank allow their customers to fix.

Any fixed rate under 5pc now looks attractive, as we are now likely to see a series of rate rises from the ECB, according Mr Conway.

Permanent TSB, Irish Nationwide and EBS will not allow their customers to fix.

If you have a tracker mortgage it makes sense to hold on to that.

Irish Independent

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