Here's how to go about changing your bank or switching your mortgage — you could save €10,000
Meeting with a new mortgage provider might seem like a lot of hassle but the entire process may only take 6-8 weeks and save you a whole lot of money in the interim.
It’s an era of massive change in the Irish banking market. With KBC and Ulster Bank heading for the hills, people are left searching for a new place to bank. Even if you are not affected by the KBC and Ulster exits, moving bank and mortgages may seem like a daunting task but don’t let that put you off. Take the process one step at a time and at a pace that suits you and if you do feel like you want a change then it is possible.
If you do want to change, bonkers.ie has a great comparison toolkit on its website that helps compare the likes of current accounts and loans at the various banks. It can be a great starting point. Darragh Cassidy of bonkers.ie said that there are two ways that you can switch account.
“You can use the Central Bank's switching code or you can simply do it yourself. Each option has its pros and cons. Regardless of which process you use, it's important to note that if you have an overdraft with your existing bank, you’ll need to make sure that your new bank is happy to give you one too. Otherwise, you’ll need to clear your current overdraft before switching. The CCPC (Competition and Consumer Protection Commission) also has a comprehensive guide to switching here.
The Central Bank reports that switching mortgage lenders can save you up to €10,000. An easy way to cut your monthly mortgage bill and save money is to switch to a cheaper one. A cheaper mortgage could be available from your existing lender or offered by a completely different lender which you could switch to.
With the switching code, the first step will be contacting your new provider and they will supply you with a switching pack. Try not to get frustrated along the way in this process. Slow and steady wins the race and it can be done. The same is the case when it comes to your mortgage.
Joey Sheahan, who is head of credit at the online brokerage, mymortgages.ie said people are put off by the misconception that changing mortgage provider is a very arduous task comparing it perhaps to the process they initially went through to get a mortgage. According to Sheahan, people can reduce the interest rate on their mortgage by up to 2% by switching. There's a more detailed guide available here.
“But switching is a whole lot more straightforward than it seems when they have a credit history, because the borrower has established a good track record where repayments are concerned and has demonstrated affordability. To begin the process, you should contact your existing lender.” Then you can start shopping around."
“The more equity you have in your home, the better the new terms are likely to be available to you, but you can switch even if your loan is 90% of your value.”
Even €100 of monthly savings results in a yearly saving of €1,200. On a 20-year mortgage, that’s a saving of €24,000.
Review your mortgage terms Trevor Grant, chairman of the Association of Irish Mortgage Advisors said that tens of thousands of Irish mortgage holders are significantly overpaying on their mortgage and said mortgage holders should review their mortgage every two or three years: “People still believe in loyalty to their lender and this is absolutely costing them rather than saving many of them money. People often find getting their first mortgage stressful and they believe that switching will be the same but this is not the case, it is a much more straightforward process.”
Also if you are on a fixed rate you can still switch mortgage providers and you could save a lot of money too by doing so.
“Moving from one lender to another is not very complex. There are also Central Bank rules in place to ensure a timely application and approval process,” said Mr Grant.
The mortgage switching process will usually take around six to eight weeks but could save you a lot of money in the long run.
