Making Cents: Switching your mortgage provider could save over €100 a month

And it's not has hard as you may think 

You may be bored of hearing about the benefits of mortgage switching but it is eye-opening to see the potential savings involved

When it comes to offering financial advice, the same key priorities — start a pension as early as you can, have enough funds put away to cover several months of living expenses in case of the unexpected — come up again and again. The danger is hearing the same thing repeatedly leads to people tuning the message out.

Another well-worn piece of financial wisdom is to switch providers of everything from utilities to insurance on a regular basis, in order to avail of the best deals. It is reiterated by almost every expert I interview, and yet switching levels remain low, particularly for more complex financial products.

Which is why I think it is worth highlighting recent figures supplied by two Irish financial advisers. You may be bored of hearing about the benefits of mortgage switching but it is eye-opening to see the potential savings involved.

Mark Coan, founder of Irish money guide moneysherpa.ie, has put together some mortgage switching examples to show both the monthly and overall savings available.

“Graham and Daire bought in 2013 for €440,000 with a mortgage of €395,000 from Ulster Bank over 30 years,” he outlines. “By switching to an ICS five-year fixed rate they will save €250 a month and over €63,000 over their remaining mortgage.”

Significant savings are also available to those who bought during the last property surge.

“Wendy & Paul bought in 2005 back in the boom. They bought a two-bed townhouse in Rathgar for €450,000. They got a mortgage with AIB for €400,000 which they now have 13 years left on.

“They would save €88 a month and €13,000 in total by switching to an Avant Money 15-year fixed rate.”

Mr Coen also offers an example of how someone with a much more recent mortgage can also benefit from a switch.

“Jo bought an apartment for €200,000 with a deposit from her parents and a €180,000 mortgage over 30 years from Bank of Ireland back in 2018. By switching to Avant Money’s seven-year fixed-rate Jo would save €205 per month and over €64,000 over the rest of her mortgage.”

Put simply, Mr Coen believes that almost all mortgage-holders should at least investigate their switching options.

“If you are with one of the traditional bank lenders and not on a tracker, you will probably save over €20,000 by switching to either Avant Money or ICS,” he says.

“The traditional banks carry a lot more costs than these new lenders that’s why the average non tracker rate with a traditional bank is 4.2% while new lenders can charge less than 2%.”

Martina Hennessy, managing director of doddl.ie, who said her company’s most recent mortgage switching index showed that homeowners are needlessly handing over up to €4,258 in extra mortgage repayments per year by not switching lenders. The index is based on the average mortgage drawn down for new lending in both the first-time buyer and second-hand mover markets in the last three months of 2021, which was €263,984.

“The spread between the highest and lowest interest rates available on the market has now grown to 2.55%, meaning a saving of up to €135 per month for every €100,000 owed on a 25-year mortgage for those who switch,” Ms Hennessy says. “Latest figures from the Central Statistics Office also show house price increases of 13.5% in 2021.

“While this is a harsh reality for those looking to purchase a property, it does mean that there is an opportunity for existing homeowners to revisit their mortgage balance relative to their value and unlock lower rates as lenders tier their rates by loan to value.

“With fixed rates as low as 1.95%, now could be a good time to fix and lock in mortgage repayments for a set amount as the cost of living in general increases.”

Deal of the week

If you are in the market for a SIM-only mobile phone plan, it is worth checking out Virgin Mobile’s current deals.

The Unlimited Virgin Mobile Plan offers customers calls, texts and data for just €5 a month for the first six months.

The texts are to any network so no need to worry about being cut off from friends or family on other networks.

After six months, the price goes to €25 per month. But customers sign up to a 30-day rolling contract, rather than a set time, so if you decide it isn’t for you at the higher price you can cancel at any time without a penalty.

If you want a similar package with the benefit of 5G, Virgin has a Mobile 5GB plan for €15 a month, also on a rolling contract.

If interested, switching from another network is straightforward and you can bring your current mobile number with you.

Find out more and sign up at www.virginmedia.ie.