THE simple answer is yes and the sooner the better.
The European Central Bank is now raising rates (for the first time in over a decade) and we can expect more hikes in the months and years ahead. This will be felt immediately in variable and tracker rates but even fixed rate holders will feel it when their fixed terms end.
Your mortgage is likely to be your biggest household outgoing, so just like any other bill, you should look into switching every few years to ensure you’re getting the best available deal.
Someone who has a mortgage of €250,000 remaining over 20 years, who is currently paying a 4 per cent interest rate and who has at least 20 per cent equity in their home, could save around €250 a month by switching to the cheapest rate on the market.
In many cases, banks will provide cashback to those who switch or a contribution towards the legal fees.
Each bank has its own set of criteria for accepting mortgage switchers and if your financial circumstances have changed dramatically for the worst since you qualified for your initial mortgage, you may have problems switching.
However, if you look to switch mortgage and don’t get accepted, your current lender won’t treat you any differently.
In general, before switching, you should consider factors such as:
1. The outstanding balance on your mortgage. Ask your lender for your current balance if you are not sure.
2. Whether you have a fixed-rate mortgage with your current lender. You may be charged a penalty fee for switching out of a fixed-rate mortgage early. However, lenders often waive this fee and sometimes the penalty may be far less than the savings you’d make by switching mortgage lender.
3. You must still have a good credit rating. A credit check will be carried out by the lender you’re trying to switch to and if you’ve taken out new loans or used credit cards and had difficulties repaying these, you may have problems switching.
4. How much equity is in your home. You may have difficulty switching if you are in negative equity or have less than 20 per cent.
5. The term remaining on your mortgage. You may not be able or want to switch if you only have a few years remaining on your mortgage.
By Philip Cullen of Southeast Mortgages & Financial Services
This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated financial broker, before acting on anything contained in this article.