Mortgage holders urged to read contract terms

SEVERAL thousand of the country’s mortgage holders could save hundreds of euro a month by checking their terms and conditions.

Those coming to the end of four and five-year fixed rate deals have been advised to check the terms of their contacts to ensure they receive attractive tracker deals when their fixed rate terms expire.

In 2006 and 2007, tracker mortgages were extremely popular with banks. In cases of fixed rate mortgages, many were structured to revert to a tracker mortgage.

Director of, Frank Conway said: “There are likely to be some mortgage holders who took out four and five year fixed rate deals who may have forgotten about the terms of their contracts.

“Some may be about to receive a windfall in lower monthly repayments but it is important they are aware of this and lock into the lower repayments.”

Between 2006 and 2007, four and five year fixed rate mortgages were costing between 4.5% and 5.5%. For fixed rate mortgage holders who are now due to revert back to tracker deals, the monthly repayments on a €250,000 mortgage will fall from about €1,266 to about €988.

“Individual banks generally write to mortgage customers in advance of their fixed rate mortgage deals expiring. They may offer a range of suggested options, including fixing again for a further number of years, which could result in little or no savings for customers.

“It is important mortgage holders check their mortgage contracts to ensure if they are reverting to a tracker mortgage. In some cases, mortgages may also revert to standard variable deals, which will result in higher monthly repayments,” said Mr Conway.

He pointed out that Mario Draghi lowered the ECB base rate of lending to 1.25% resulting in an automatic cut in payments for around 400,000 Irish tracker mortgage holders. Standard variable rate holders, where banks passed on the rate cut also benefited.

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