Fancy having a few extra €50 notes in your wallet at the end of the month?
A Cork-based mortgage broker is reporting a flurry of activity in the mortgage switcher market since the beginning of the year, as an increasing number of mortgage holders learn of the option which could potentially save them a whopping €311 per month and €112k over the lifetime of an average €350k mortgage.
Brokers forecast the switcher market alone will experience double digit growth in the first six months of 2018. Apparently Fianna Fáil’s proposals to ban cash incentives have led to the spike in enquiries.
“Currently the mainstream lenders are offering sizeable cash incentives to certain cohorts of the mortgage market to encourage them to move lenders.” Joey Sheahan, Head of Credit at MyMortgages.ie, explains.
“The merits of this are up for debate but Fianna Fáil are putting forward a proposal to ban these cashback offers. If accepted, the Bill could come into force by the Summer, so we are going to see large swathes of people who might have, up until now, been on the “switching fence”, make moves to avail of these offers before they are taken off the table”.
Mr Sheahan believes that more mortgage holders can and should switch lender to reduce their monthly payments:
“Changes in the way lenders operate have meant that many only charge a very small, if any, break out fee from fixed rate mortgages, so what was once a significant monetary hurdle to switching is now obsolete in many cases.” he added.
1,319 people switched or re-mortgaged in the first half of 2017 and this number could go as high as 2,000 during in the first six months of 2018. A sample case set out by MyMortgages shows how a couple with €390,000 outstanding over 28 years at a variable rate of four percent switched to a four year fixed rate of 2.6 percent, which lowered their monthly repayments by €300 and saved interest of €99,000 over the remaining term.
Mr. Sheahan advised, “If this couple were to keep their monthly repayments at the same level as the higher interest rate, they could reduce the term of their mortgage by almost six years.”
Worth a fact finding phone call, right?