If you currently have a mortgage, you may want to change to a different mortgage or an alternative lender to secure a better deal….
When should I review my mortgage?
Should you have come to the end of a special deal with your mortgage and will now be entering onto your bank's standard variable rate (SVR) you may wish to change to another mortgage. For example, you may have been committed to a fixed /capped rate for three years and the three years are now coming to an end.
Irrespective of what stage you are at in your mortgage, you should get a statement from your lender every year informing you as follows…
• An analysis of what you paid over the year and when you paid it
• Total interest charged over the year
• The balance still outstanding at the date the statement was produced
• The term remaining on the mortgage
• The cost of settling your mortgage in full , including any charges that you might incur
• If there are any charges for early repayment and at what stage will these charges will no longer be applicable.
What are the reasons for changing your mortgage?
There are a range of different types of mortgages with repayment options and ways to pay your mortgage. You may prefer the security of knowing that your payments won't rise above a certain level with a fixed rate or a capped rate, or you may want the flexibility to pay extra or take payment holidays.
• You've come to the end of a special deal - if this is the case, you'll most likely move to your lender's SVR, which can fluctuate either way with interest rates. You will need to consider if you can afford higher payments if interest rates increase.
• Your personal circumstances have changed - you may find that your mortgage no longer suits your requirements . For example, your net income is now lower than before, or you now have a larger family. If your income has increased or you have come into some money, it may be preferable to secure a mortgage that allows you more flexibility to make extra payments without incurring a penalty.
• You wish to change a joint mortgage - if the number of owners changes, e.g. a joint owner is bought out after a relationship breaks down, then the mortgage will have to be amended as well.
• Refurbishing your home – If you are contemplating renovations to your existing property and need to finance the cost, lenders will consider offering additional funds to finance these improvements.
• There has been a change in interest rates….if you took out a mortgage when interest rates were high and are now lower, you may be able to change to a mortgage that offers lower rates thereby allowing you to pay back less. Alternatively, if you took out a mortgage that tracks interest rates and it looks as if rates are on their way up, you may want to connect to a mortgage with a fixed or capped rate, so your repayments aren't too expensive.
• To release equity ..you need some cash - if your home has increased in value since you bought it, it may be possible to release some of the equity. The equity is the difference between the amount of your mortgage and the new value. For example if your home is worth €500,000 and you took out a mortgage for €300,000 you could take out a new mortgage for say €400,000 and use the additional finance.
• You want lower monthly payments - it may be an idea to see if you can reduce your monthly repayments if they are overly expensive for you. . You can do this by switching to a mortgage with a lower interest rate or extending the term of your mortgage, although this will depend on how close you are to retirement age.
When should I not switch my mortgage?
• When you are fully satisfied with the deal from your current lender
• When your credit history is undermined
• When your Mortgage is greater than the value of the property
• When you have less than 5 years remaining on the mortgage
• When you are on a fixed rate and the breakage prepayment penalty fee is higher than the actual savings
When can I release equity from my house?
• To fund a purchase of a new property
• To buy out a co-owner
• To finance home improvements
• To Supplement your income
• To pay off existing loans and thereby reduce monthly outgoings
• To pay school/university fees
• To fund a new business venture
Is it possible to change over to a better rate with my existing lender?
Yes, you might be able to secure a better deal by changing to a different rate with your existing lender. Nowadays, many lenders can offer more competitive rates than they did before. If your property has increased in value, you may well be eligible for a better Loan to Value rate.
Can I change over to another lender?
Yes, it may well be possible to transfer your mortgage to a lender offering more competitive deals.
What penalties will I have to pay to switch my mortgage?
Before you decide to switch, you should carefully check your mortgage agreement to see whether you could incur redemption fees. Usually, redemption fees only apply to fixed rate mortgages. These penalty charges vary from lender to lender and can be costly.
Prior to deciding on making any changes to your mortgage arrangements, it is prudent to seek independent financial advice from your broker. Bear in mind, your existing mortgage lender will only give you the options available with themselves.
At Citywide Financial Solutions, we will compare your existing deal to the new one offered and give you the best expert advice on all options.
How do I go about changing my mortgage?
Firstly, you will need to find out from your lender if there are any relevant fees or penalties for paying off your mortgage early or changing over to a new deal.
Then contact us at Citywide Financial Solutions to complete an overall review of the mortgage for you. Once you have an overall comparison you can make an informed decision to either switch lenders or remain with your existing lender.
Can I change the term of my mortgage?
If you are having difficulties with your monthly repayments, your lender may give you the option of extending the term of your mortgage. This will lower the amount you pay every month but will add more interest over the term of the loan.
Should you have extra cash to spare, depending on the type of mortgage you have..variable or fixed, you may be able to pay extra off your mortgage and thereby saving money by the reduction in the amount of interest incurred.
Can if I pay a lump sum off my mortgage?
If you have cash to spare, it’s possible to pay a large single payment off the capital of your existing mortgage. This will result in either reducing your monthly repayments or reducing the overall term of the mortgage…but the end result will mean that you will repay less interest and therefore save yourself money.
If you do go down this route, it’s imperative that you instruct your lender to pay the lump sum off the capital part of your mortgage.
What if I'm selling one home to buy another?
With your lenders agreement, you can simply arrange for the mortgage on the new property to have the same mortgage term end date as on your previous home. If you have a existing Tracker mortgage, it will be particularly advantageous.
Should property prices have fallen since you purchased your last home, there is a risk that selling it might not make enough to pay off the amount you currently owe.
At Citywide Financial Solutions, our expert team will guide you through with the best options.
Can I change the names on a joint mortgage?
If you bought the property originally with another person and the joint ownership arrangement is terminated, it's essential to make sure that the mortgage is changed to reflect the new circumstances.
If you are no longer a joint owner, ensure that your name is taken off the mortgage. Until the mortgage is changed, you will remain jointly responsible for the mortgage debt. This means that you will still be legally obliged to pay back the outstanding debt, even if you are no longer living in the home.
If you are to be the sole owner, the other joint owners will want their name omitted from the mortgage for the same reasons.
Either you need to get a new lender to finance the buying out of the existing joint mortgage holder or ask your existing lender to agree to doing it. Both will want to complete a full financial assessment before they agree to it .
At Citywide Financial Solutions, our expert team of qualified advisors are always available to guide you through the best options on all of the above.
If you have a query about switcher mortgages, we’d love to help
Get in touch by calling us on (01) 513 8710 or emailing on info@citywidefinancial.ie