Six hours work can save €4,000 a year on mortgage payments, experts say

Homeowners are paying over €4,000 in extra mortgage repayments per year on average by not switching lenders.
Six hours work can save €4,000 a year on mortgage payments, experts say
General view of estate agents signs (PA)

Just six hours of work can save the average homeowner more than €12,000 over three years, a new mortgage switching index has revealed.

Homeowners are paying over €4,000 in extra mortgage repayments per year on average by not switching lenders, according to figure from online mortgage platform Doddl.ie.

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 Q1 2021, currently €253,562.

Martina Hennessy, managing director of mortgage platform Doddl.ie has urged homeowners not to miss out on savings by switching lenders (Conor McCabe/PA)

There is a 32% difference between mortgage repayments on the highest and lowest rates on the market, one that has widened from 28% a year ago.

This means a saving of €135 per month for every €100,000 owed on a 25-year mortgage for those who switch.

It takes between six and eight weeks to complete a mortgage switching transaction.

However, the mortgage holder’s input is front-loaded at the early stages, according to Doddl.ie managing director Martina Hennessy.

“A survey of the time inputted by our mortgage switchers showed an average of six hours was spent between research, compiling documentation, completing application forms and engaging professional valuation and legal services,” said Ms Hennessy.

“The research and consideration phase takes one hour.

“This involves checking our mortgage switching calculator to see if you can save and then discussing options with an adviser.

“The largest body of time involved in the process is three hours for putting together the documentation for both the application and completion of the switch.

“Providing entry to the valuer and meeting your solicitor to sign the new loan offer takes on average two hours.

“The most popular rate chosen by our mortgage switchers in Q1 2021 was a three-year fixed product.

“Taking the annual savings per the doddl.ie mortgage switching index of €4,090 per annum over a three-year period means a saving of over €2,000 for every hour spent completing the switch.”

Doddl.ie say availing of the services of a mortgage broker can cut the time spent conducting research for the most suitable product.

Many mortgage switching platforms offer a free service with access to all major lenders in the market and a digital application process.

There was a month-on-month leap of 30% in the number of new switcher approvals between February and March, driven by a surge of inquiries following the announcement of Ulster Bank’s exit from the Irish market.

“Irish mortgage holders generally pay up and, for the most part, don’t question the interest rate they are charged,” said Ms Hennessy.

“However, Ulster Bank’s announcement in February saw customers who ordinarily may not have considered switching taking control of their mortgage and, in doing so, saving themselves thousands.”

The numbers switching mortgage in Q1 overall increased by over 15% on the same period in 2020, with more people using time during the latest lockdown to switch and save.

This trend is expected to continue, with the announcement of new 15 and 20-year long-term rates by Finance Ireland, and Avant Money reducing a number of their fixed rates, prompting those in search of security to consider switching.

The rise in switching volumes in Q1 coincides with a fall in the number of top-up draw downs, which are down 27.5% year on year.

Many mortgage holders who are looking to top-up for home improvements have chosen to shop around for better market rates as opposed to just topping up with their existing mortgage lender.

More in this section

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.