Hi I'm mark, founder, editor and contributor @ moneysherpa.ie. We are always looking for new ways to improve both our offering and the money choices available for Irish consumers. If you have any suggestions or areas you would like us to cover, please get in touch with me at [email protected]
Here’s Why You Should Break Your Fixed Rate Mortgage Now
If your fixed rate is due to run out in the next couple of years and you wait until the end of your fixed term it could cost you.
That’s why we currently recommend you should consider breaking fixed mortgage rates and re-fixing.
Due to rising interest rates there is now a high chance that you will roll on to a much higher variable rate than today and have limited options to fix at a lower rate when you do.
Variable rates now are around 3.5% with the Central Bank lending to the banks at 0%. If the Central Bank goes to 2.5% or more in the next 2 years as the markets are predicting, the lenders will pass that on, meaning variable mortgage rates will rise to around 6%.
The average outstanding mortgage in Ireland is €200,000 and the average term people have left is 15 years. That makes the average mortgage repayment about €1,400 a month. So for the average customer a 2.5% increase is about €250 extra on their monthly repayment.
At the moment fixed rates start from 1.95%, but they are also on the rise and are unlikely to be as low by the time you come off your current fixed rate.
That’s why we are now advising anyone with less than two years left on their current fixed rate to look at switching and re-fixing on a long term low rate.
Don’t I have to Pay a Penalty Fee if I Switch in my Fixed Period? – Breaking Fixed Mortgage
You may think there are big penalties for switching before the end of your fixed rate period, but EU legislation introduced in 2016 has actually capped the amount banks can charge for breaking early.
In most cases it is free or almost free to break early and under the same law banks now have to provide you with a calculation of the fee.
You can then take this to a broker to see how much over the break fee you will save by breaking fixed mortgage now over staying in your fixed rate and risking future increases.
The actual calculation under the legislation (European Union Consumer Mortgage Credit Agreement Regulations 2016) is
Break Fee = (Original Interbank Rate – Current Interbank Rate) X Remaining Time in Fixed Period X Remaining Value of Mortgage [1]
It seems that even if break fees could be applied under the calculation both Ulster and KBC are currently waiving all fees as we are yet to see a switcher get charged by either bank.
With interest rates rising and due to rise further the current Interbank rate will rise. This means any remaining fees are likely to fall completely away by the time anyone starting a switch now is fixing their new rate.
How Much Could I Save by Breaking and Re-fixing? – Breaking Fixed Mortgage
For example one moneysherpa.ie customer completed their switch last week by breaking their fixed mortgage term.
They were on KBC’s 2.6% 5 year fixed rate and saved €8,896 over the rest of their term. They had 1 year to run on their fixed rate and 15 years left on their remaining €200,000 mortgage.
When they switched to Avant Money’s 2.4% 15 year fixed rate they reduced their monthly payments by €49 a month which is €8,896 over the rest of their mortgage.
KBC charged no breakage fee, but most importantly by switching they have now guaranteed their repayments can not rise over €1,330 a month for the rest of their mortgage term.
Mark Coan from moneysherpa.ie said “The long term mortgage rates that are currently available could turn out to be today’s equivalent of the tracker.”
“Being able to cap your repayments for the rest of your term is a no brainer for most and folks may look back with regret if they don’t jump on these deals while they are still out there.”
“That’s why we are recommending breaking fixed mortgage rates right now”
moneysherpa turns one today, which set me thinking.
What did I learn in our first 12 months?
Mapping out our first year
It’s been a very big year for us, we have over over €30 Million of mortgages in our pipeline, we’ve started to make headway into other finance products and we have big B2B partners now secured.
To be frank, I’m surprised at how far we have come in such a small space of time.
That’s just the tip of the iceberg though, looking back I feel I’ve been learned more in the last 12 months than in the previous 20 years of my career. Here’s my key takeaways from a whirlwind year.
1) Ask and People Will Take A Chance on You
The level of trust and support we have had from Investors, Suppliers and Employees has been overwhelming and without it we simply wouldn’t have been able to get moneysherpa off the ground.
Investors – Based on nothing more than a good story, we got substantial backing from key angel investors and the Local Enterprise Office to put the fundamentals to make the business a success in place.
Suppliers – A number of key suppliers agreed to discount their rates or even work for free for us based on relationships and the promise of future business.
Employees – Most of all we found some rock star employees who were prepared to give up their corporate pay check to play a key role in building something bigger.
2) It Sure Is Scary Being Out On Your Own
Yes there is no one to interfere with your decisions.
But, that means there is absolutely no one else to blame when those decisions backfire.
Plus the stakes are super high. These are your customers, your employees, your investors and almost certainly your life’s savings all bound up in the success or failure of the company.
This all makes you all too aware of how fragile running a start up actually is.
You are always vulnerable to changes in the market, changes in regulation or your own miscalculation.
Performing the high wire act of balancing the investments you need to make to fuel future growth against your current cashflow is probably the scariest thing of all.
3) Start Up Time is ‘Lumpy’
Unlike corporate time, where your work rhythm is marked out by quarterly results, management reports and the regular patterns of corporate life, start up time operates in fits and starts.
There are incredibly intense bursts of activity when you are building the next technology drop, launching a new product or expanding the team.
But, when you deliver on that activity your business looks so different than it was before, you have no choice but to take the time to get to know it all over again.
Moving onto the next thing before you do this will almost certainly mean you make a wrong move. This means there are times when there is literally nothing to do, but wait and think.
I’ve learned to enjoy it and resist the urge to do something for the sake of it.
In my view thinking is generally underrated.
What’s Next?
The last year has been nothing like any other part of my career.
I realised I can only really compare founding a start up with my experience of being a parent.
Not having a clue what you are doing
Never sure you are making the right decisions
Constantly worrying what happens next
Mostly though, being incredibly proud that you are playing a part of shepherding something new and exciting into life!
With house building ramping up and new homes starting to come on stream, many are starting to dream of owning their first home once again.
By using a combination of the grants available to you, equity release from the family home and the right mortgage lender, that new home might be closer than you think.
Times are still tough for First Time Buyers due to rising prices and some of the tightest lending rules in Europe.
Don’t despair though, with the right approach First Time Buyers may still be able to get a foot on the property ladder.
By using the Help to Buy grant, plus a gift from your parents funded through equity release you can increase the size of your deposit and steal a march on other would be buyers.
In our First Time Buyer Ultimate Guide Ireland 2022, we’ll give you the full run down on everything you need to know if you are a first time buyer, plus some insider tips to help you get your dream home.
1. Who qualifies as a First Time Buyer? First Time Buyers Ireland 2022
To qualify as a First Time Buyer you can’t have had a mortgage before.
If you have ever taken out a mortgage under your name either in Ireland or overseas, you are no longer considered a First Time Buyer.
The good news though is you still count as a First Time Buyer if you previously inherited a house or bought outright. It’s only taking out a mortgage previously that disqualifies you from being a First Time Buyer.
Importantly if there are two people going on the mortgage, both must never had a mortgage before to qualify as a First Time Buyer.
2. How much can I borrow? First Time Buyers Ireland 2022?
The amount you can borrow is set by two things. First the Central Bank lending limits and secondly your mortgage lender’s credit policy.
Central Bank Lending Limits
The Irish Central Bank’s lending limits are some of the tightest in the world, so these are usually the biggest hurdle that needs to be overcome. [1]
The absolute maximum you can borrow under Central bank limits is 4.5 times your annual gross household income, however lenders are only allowed to go this high on 20% of mortgages. These are known as exceptions, 80% of mortgages must be under 3.5 times annual gross household income.
Typically lenders want any loans over 3.5 to go to what they see as the lowest risk customers. So these ‘exceptions’ go to people later in life who are the very highest earners and have lower living expenses than most First Time Buyers.
For the vast majority of First Time Buyers then, the maximum you can lend will be 3.5 times your annual gross household income. So this is how it usually works.
Kate earns €34,000 gross per annum, €24,000 basic and €10,000 last year in bonuses
Liam earns €30,000 gross per annum, €20,000 basic and €10,000 in commission last year
So their joint gross annual income is €64,000 per annum.
The Central Bank limit of 3.5 will allow them to borrow up to a maximum of €224,000.
Lender Credit Policy
On top of the Central Bank limits lenders apply a second set of rules to assess if you will be able to repay the mortgage.
These differ significantly from lender to lenders. By way of example some lenders discount bonus and commission payments completely and others bump up salary contributions if you are in certain professions with job security.
More generally the lender looks at your earning and spending history in the last 6 months to work out how much income will you have left over after you have covered your commitments.
The more money they think you will have left over the more they are likely to lend you.
This makes picking the lender who maximises your earnings and maximising how much you put by in the 6 months before applying for a mortgage really important.
It can even help you get hold of one of those precious mortgage exceptions.
Look for a mortgage broker who has access to all the lenders in the market as some lenders are only available via a broker.
3. What Deposit do I need for a First Time Buyer mortgage? Ireland 2022
The minimum amount of deposit you need to buy is also set by the Central Bank of Ireland.
The good news is that as a First Time Buyer you only need to put down 10% of the properties purchase price upfront. Second time buyers have to stump up a whopping 20% for the deposit.
That said it still makes sense to maximise your deposit if you can.
Ramping up the deposit reduces the mortgage size, which can knock thousands off the interest you will pay or may even help you afford a property that the Central Bank rules may have put out of reach.
With spiralling rents eating into your savings, how can you maximise your deposit?
4. What are the latest help schemes for First Time Buyers? First Time Buyers Ireland 2022
The Help to Buy scheme allows first time buyers to claim 10% of their property value to help them pay a deposit on newly built homes.
It’s a Government tax refund scheme and in order to claim, you must have paid the equivalent amount of 10% of your property value in tax in the previous 4 years before moving into your new home.
In order to claim from this scheme, your home must be valued at €500,000 or less.
The most you can claim is €30,000, so if your home is valued at more than €300,000, you still can only receive €30,000 max.
You may be able to bump up your deposit further with a gift from friends or relatives. The usual route for first time buyers is through their parents, commonly known as the ‘bank of mum and dad’.
It’s unlikely that your parents have fifty grand lying about the house, but they may have equity tied up in the family home that they can access to provide cash for a deposit via a process known as equity release. Equity release allows home owners who have paid down part of their mortgage to get a tax free cash lump some to fund a deposit for their family members or others.
By releasing equity on the family home parents can gifts their kids up to €330,000 tax free, this may be an attractive option for them if the kids are still taking up room on the family couch or wasting thousand of euro’s in rent.
5. Insider Tips for First Time Buyers Ireland 2022
Work with a mortgage broker who will match you with a lender that maximises your mortgage
Reduce your outgoings in the 6 months before applying for a mortgage to maximise your loan
Consider equity release as an option to further increase your deposit and purchasing power
By maximising your deposit and working with a broker with access to all potential lenders, first time buyers will make the most of their chances of securing their dream home.
Next Steps – First Time Buyers Ireland 2022
Are you a first time buyer wanting to find a mortgage for your new property? Contact one of our mortgage sherpas today free of charge!
Trying to save money as a first time buyer? Check out our top ten saving tips in Ireland here!
The impending Ulster Bank closure and the pull out of KBC this year from the Irish market is set to cause significant customer disruption.
There are over 1 million accounts and an estimated 500,000 customers with Ulster Bank and a further 300,000 with KBC. Dwarfing the scale of previous bank closures from Anglo, Danke Bank etc..
Closure notices for Ulster Bank customers are drop through customer’s doors by the end of March 2022 giving Ulster bank customers 6 months to switch to another bank, before your account is closed.
If you don’t switch by then, you will be simply issued a cheque with your remaining balance.
If you a have a mortgage with Ulster Bank this is set to be transferred to PTSB, but with PTSB’s rates some of the highest in the market it probably makes sense to look at switching that as well.
So what options are left for best current account, savings and mortgage?
Don’t panic there are some better and less expensive options out there than Ulster Bank and switching may not be as difficult as you think.
Switching Current Account – Ulster Bank Closure Ireland 2022
Best Digital Only Bank
If you don’t need to lodge cash or cheques then the Digital only banks N26 or Revolut are great options.
They have no monthly fees, the lowest once off fees and the best apps on the market. With features from kids accounts to trading in bit coin already built in and a really slick user experience.
They are also both covered under the EU Deposit Guarantees up to €100,000 the same as the non Digital banks.
One thing to watch out for though is some employers on old payroll systems may struggle with the EU Iban. This will only be a minority of employers however as under EU law everyone should have upgraded their payroll systems a number of years ago to be SEPA compliant.
Revolut already has 1.7 million customers in Ireland and recently became a full bank, so that’s why they are our pick of the bunch.
However, if you still need to lodge cash or cheques you have two options. Get someone with a traditional bank account to do it to their account and then send you the money or get yourself a traditional account from one of the banks below.
Traditional Banks
If digital only isn’t an option for you there are now 5 other more traditional banks you can choose from for your current account. The interest on all these accounts is pretty much irrelevant as it is so low, so what you are looking for is low fees.
If you don’t use your ATM regularly An Post or your local Credit union may be a good options. Both of these come in at €60 a year in fees. However, An Post charge 60c per per withdrawal and your Credit Union will charge around around the same so this can mount up quickly if you head to the cash machine once a week.
In that case we would recommend PTSB’s current account. It’s slightly more pricey at €72 a month, but withdrawals are free.
Switching Saving Accounts – Ulster Bank Closure Ireland 2022
Deposit interest rates are at record lows of around 0.5% with inflation heading for 8% or more, you should probably look at talking to a financial advisor if you have €10K or more to invest.
Investments can yield 4% per annum or more depending on the risk level and can help take the edge of inflation.
If you still want the security of a guaranteed rate the best rates are to be found from banks outside of Ireland. You can access rates up to 1.15% from banks across Europe on raisin.ie or consider a state saving account with around 0.6% interest rates.
If you have less than €10,000 squirrelled away then you may be better off leaving it or transferring it to your current account. The Digital Banks offer the ability for you to separate from your daily account with ‘vaults’ or ‘money jar’ features on their apps.
Switching Mortgages – Ulster Bank Closure Ireland 2022
Ulster Bank have sold their existing mortgages to PTSB and KBC to Bank of Ireland. This means if you have a mortgage with either you and your mortgage will transfer.
PTSB and Bank of Ireland have the highest mortgage rates in the market so many Ulster and KBC customers are considering switching to a different lender. If you are in your fixed rate period then PTSB and Bank of Ireland will have to honour those rates, but after that they could choose to hike rates increasing your monthly repayments.
Ulster’s non tracker rates range from 3.5% to 3.9% which are already some of the highest in the market.
So a typical Ulster mortgage customer on their 3.5% variable rate, with €150,000 remaining over 15 years would save €106 a month by switching to the best deal on the market, that’s more than €19,000 over their remaining term and would avoid the risk of a future rate hike.
Avant Money are offering €1,500 upfront for anyone switching their mortgage from Ulster Bank or KBC. The offer is available until the 31st of March and targets customers thinking of switching from Ulster & KBC as both exit the Irish market this year.
Switching costs are usually around €1,500 for solicitor and valuation fees combined, so this offer will make switching from Ulster and KBC effectively free.
At moneysherpa for example we offer an all in legal package including all outlays for €1,200 including VAT, while estate agent valuation fees are typically around €200. So €1,400 all in.
The repayment calculation is based on switching to Avant Money’s 5 Year fixed rate and using the switching offer to cover their upfront costs.
If you are a tracker however, sit tight. Any new owner will have to honour your existing terms.
You can see how much higher PTSB and Bank of Ireland rates are in the table below.
Probable follow on variable rates post fixed period based on current variable rates by provider
Switching Next Steps – Ulster Bank Closure Ireland 2022
If you have an account with Ulster Bank you will have to switch it in the next month, so act now to beat the rush.
Best Current Account – Revolut
Best Savings Account – Raisin.ie
When it comes to mortgages Ulster didn’t have great rates to start with (3.5%-3.9%) and have now been bought out by one of the banks with the highest mortgage rates in the State, PTSB, so now is a good time to switch to save now and to avoid higher rates down the line.
This applies for anyone with with a variable rate around 50% of Ulster Bank mortgage holders. If you are still in your fixed rate period then sit tight until you are 3 months from the end then speak to a broker. If you are on a tracker don’t worry, the new owner will have to honour your existing terms.
Looking to free up the cash locked up in your home? Equity release can free up cash tied up in your home for holidays, gifting to the kids, home improvements, a new car and more. It can also be a good way to solve financial issues like paying off other debts, freeing up cash for a divorce settlement or to help your kids get on the property ladder.
Equity Release is only open to people over 55 in Ireland, in this article we will give you the lowdown on whether Equity Release is right for you and what options are available. If you are under 55 your can still free up cash from your home with a mortgage top up.
Equity Release comes in two flavours,
Lifetime Loan – You get a tax free loan which you pay off plus interest when you move out and sell.
Home Reversion – You get a tax free lump sum for selling a portion of your home, but are able to continue living there.
Both types of equity release can be a good solution if you need cash, but want to stay in your home and are becoming increasingly popular. You can talk to an an expert equity release advisor here.
The option that’s best for you depends on your particular circumstances so read on to find our if equity release is right for you and which type would be the right option.
What Is It and How does It Work? – Equity Release Ireland 2022
Equity is the cash you would get if you were to sell your home right now. This is the difference between the value of your house and what you still owe on it.
Equity release products are a way of getting at the value locked away in your home without having to sell up and move out. In return for letting you get your hands on the cash right now though, you will have to give more of your homes value away to the financial providers when you eventually move out.
Equity Release is becoming increasingly popular, in the UK over half a million people have released equity from their home. As well as paying off their debts many have used the cash freed up to help their kids get a foothold on the property ladder, giving over £5 Billion to their children through equity release.
According to a recent study in the UK these are the main things that people did with the cash they freed up from Equity Release.
Repay other debts (51%)
Take a holiday (20%)
Improve lifestyle overall (19%)
Give to kids (including as a deposit on a new home) (16%)
Make home and garden improvements (15%)
There are two providers of Equity Release products currently in Ireland, Spry Finance and Home Plus, both of whom have been in Ireland for decades and are regulated by the Central Bank of Ireland.
Life Time Loan
Spry Finance offer what is know as a Lifetime Loan. This is the most popular form of equity release where you borrow some of your home’s value at a fixed interest rate.
You can choose to either leave the repayments to when you move out and sell your home or pay off some of the interest monthly. If you don’t make any monthly payments the interest that builds up will eat into what is left over from the sale of your property for you or your family when you do move out though.
The Spry Equity Release product guarantees however that the money you will have to repay at the point of sale will never be bigger than the value of your home, so you won’t pass on any debt to your family.
Home Reversion
Home Plus offer the other type of equity release, known as Home Reversion. With Home Reversion the provider pays you a tax free lump sum for a portion of your home at a discount to the market price.
So when the property is sold you (or your family/estate) and the provider split the proceeds depending on the share they have purchased. So if house prices have risen since your sold a share of your property you will benefit less.
Before we go any further the question you need to ask yourself is
Is Equity Release Right for Me?
There is a cost to Equity Release either in the interest rate you pay with a lifetime loan, typically around 5.5%, or in the discounted price that is offered for a share of your property with a home reversion.
That’s why you should consider your alternatives carefully before making any commitments.
Down Sizing
Although current mortgage interest payments are at record lows, interest payments really mount up over longer periods. An option that doesn’t involve paying more in interest or discounting your home value is to sell up and move to a smaller property.
You will probably incur around €1,500 in solicitor and valuer fees in the process, but this is much less than you would pay in interest or discount, so financially speaking is a much better option than equity release.
If you’re settled in an area emotionally this can be a big wrench, so you will have to balance the cost to your quality of life with the financial cost of equity release to come to a final decision on what’s best.
Equity Release Pros and Cons – Equity Release Ireland 2022
So here’s some of the key things to consider when thinking about Equity Release
Pros
You can access cash now and continue to live in your home
You can’t lose your home while you live there, it’s insured and in good condition
You won’t leave any debt to your kids due to the “No Negative Equity” guarantee
You are free to do whatever you like with the cash you free up
Cons
Cost through interest (lifetime loan) or discounted sale price (home reversion)
Costs to arrange a solicitor and valuer for your home, around €2,000 in total
Potential impact on means tested social security benefits
Lack of flexibility (you may not be able to downsize later or pay off as early as you’d like)
Equity Release Top Tips – Equity Release Ireland 2022
1) Release your equity in phases
If you are thinking about a lifetime loan you don’t need to take it all out at once. By taking it out over time you can reduce the overall amount of interest that you will pay.
There is no point in having cash from your lifetime loan sat in the bank not being used and earning no interest. So only take out what you need to reduce the interest you pay on the lifetime loan overall.
While we are on the subject never release equity to fund speculative investments, focus on taking out the minimum you need for your own use.
2) Talk to those who might be effected
If your thinking of Equity Release it may make sense for you to talk to members of your family who may be effected.
If you are going to take cash out of the value of your home now, that means there will be less cash from the sale of your home if you die or have to move into long term care.
This can cause issues with family members who may see the family home as part of their ‘inheritance’.
There is obviously no legal reason you have to discuss your decision with them, but it can save some heartache when your decision to take equity release comes to light later on down the track.
3) Get advice
Equity Release is a big decision and you should get advice and guidance through the process from a qualified financial advisor and a solicitor.
You will have to pay for a solicitor, with fees ranging from €1,200 to €2,500 depending on who you use. We recommend Colm O’Cochlain & Co who operate nationwide as they specialise in equity release arrangements and operate nationwide. Please quote moneysherpa if you want to secure the best rate.
In a Nutshell – Equity Release Ireland 2022
Equity release is growing in popularity if you’re over 55 as a way to free up much needed cash from your home and still continue to live there. If you’re under 55 the equivalent is a top up mortgage.
You can use it for yourself or to free up cash for your kids, often to help them get on the housing ladder. It is relatively costly compared to downsizing so you need to weigh the pros and cons of both.
If you do want to go ahead with equity release you should get qualified financial advice.
The most common way to release equity is through a lifetime loan, the only provider of these in Ireland right now is Spry Finance who are regulated by the Central Bank of Ireland.
Looking to free up the cash locked up in your home? A mortgage top up may be what you are looking for, allowing you to release some of the equity tied up in your home.
No matter what you want the money for, our tips will give you the inside track on whether a mortgage top up is right for you and the best way to go about it.
By switching mortgage to a better rate you can often borrow more and still pay less in repayments per month. That’s why the the number of people taking out a mortgage top up, also sometimes known as releasing equity, is on the rise.
A mortgage top up is simply re-mortgaging your home for more than your current outstanding mortgage to allow you to access the amount you have ‘topped up’ by to spend now.
Use our mortgage top up calculator to see what your new monthly repayment will be. Select ‘new mortgage’ to see if your repayments on the topped up amount are less than you are paying today.
If you’re over 60 there are also some other equity release options know as a home reversion equity release or a lifetime loan equity release, which will also allow you to stay put and release some cash.
For most of us though the mortgage top up is the way to go. To find out more about how you can get a mortgage top up and whether it would suit you read on.
Should I Get A Mortgage Top Up? – Mortgage top up Pro’s & Con’s Ireland 2022
Before we go any further the first question you need to ask yourself is
Should I Borrow More At All?
Even though the current historically low mortgage rates mean you may be able to borrow more than you have today and still pay less in monthly repayments, it doesn’t mean you should.
If you can wait and save up instead, you could simply switch your current mortgage loan to the new lower rates reducing your mortgage repayments and giving you the option to reduce the term of your mortgage.
If that’s not an option for you, read on.
Why Are You Borrowing More?
Remember by topping up your mortgage you are securing the loan against your home and probably borrowing across a long period which means making higher interest payments overall.
So if you are thinking of borrowing more long term investments for the future, like home improvements, make more financial sense.
If you are borrowing to fund current spending or consolidating short term debts tread carefully. Although current mortgage interest payments are at record lows, interest payments really mount up over longer periods.
Use our mortgage top up calculator to see what your new monthly repayment will be. Select new mortgage and if your repayments on the topped up amount are still less than you are paying today then you at least have some good options to work with.
3 Top Up Tips – Mortgage Top Up Ireland 2022
There are 3 things you need to consider when you are getting a top up mortgage.
Principal – the total amount you need to borrow
Purpose – what is the top up part of the loan going to be spent on
Process – how do you maximise your approval odds
These 3 p’s are your passport to releasing the maximum amount of cash from your home.
1) Mortgage Top Up Tips – Principle
The principle is the total amount you need to borrow.
Principle = outstanding mortgage + top up amount
In most cases under Central Bank limits the principle can not be bigger than 20% of the value of your home or 3.5 times your annual gross salary.
2) Mortgage Top Up Tips – Purpose
Different lenders have very different policies about what the top up part of your principle can be used for.
That’s why you should use a mortgage broker to match you with the right lender. Some lenders only allow mortgage top ups for home improvement, whilst others pretty much allow anything depending on the size of the top up you are looking for.
Assuming you engage a broker that works with all the lenders on the market here’s how the options break down by top up mortgage amount.
Below €20,000, includes all types of discretionary spend such as holidays, weddings, cars with no receipts required.
€20,000 – €70,000 , things are still pretty flexible. Includes debt consolidation, gifting to children, education, medical expenses. The only real change is you will need to produce the receipts/quotes.
€70,000 up, at this point it’s home improvement only. All lenders offer home improvement top ups, but only some will let you lend up to 80% of the future rather than current value of your home.
Not from €70,000 up it’s likely you are conducting major structural works so you will need quotes in advance and planning permission.
3) Mortgage Top Up Tips – Process
The top up mortgage process works in pretty much the same way as any other mortgage.
Get a mortgage broker. They can help you navigate the process and match you with the right lender.
Get mortgage ready. As part of the application process the lenders will also run the rule over your ability to repay the loan. The 6 months before the application is critical as lenders will look at your bank statements in this period to assess your ability to repay the loan as part of the application.
Get a solicitor and valuer. Again a good broker can help you with this and some lenders will cover the costs.
Get your mortgage protection increased. If your increasing your mortgage you will need to increase your protection, this should be less than €5 more per month and you might even save by switching provider.
Once you receive your loan offer and meet any remaining conditions you will be able to drawdown the top up amount into your bank account and get spending.
In a Nutshell – Mortgage top up Ireland 2022
Mortgage top ups are on the rise with historically low rates giving the option for some of releasing cash now without having to increase their repayments.
That said, you should think about if you really need to borrow and why before you take the plunge.
For example for those looking to get their kids on the housing ladder or improve their home, a mortgage top up can make a lot of sense.
Due to the wide range of lender policies though you should arrange your top up through a broker who has access to all the lenders in the market.
What’s next – Mortgage top up Ireland 2022
Make sure all your documentation lines up and if needed clean house on your finances for the 6 months before you apply.
You should then engage with a broker who can guide you to the best lender and help take the pain out of the paperwork. You can check out moneysherpa’s own in house broker teams the mortgage sherpas here.
Based on the most recent Daft DAFT Rental Price Report moneysherpa.ie analysed how rents now compare to the equivalent monthly mortgage payments on the same properties region by region.
moneysherpa.ie found that in over three quarters of the country monthly rents tot up to over €100,000 more than the equivalent mortgage repayments over 30 years. With West County Dublin showing the highest difference at €297,000 more in rent paid over 30 years versus the monthly repayments with a 30 year fixed rate mortgage.
moneysherpa.ie analysis of Monthly Rent v Mortgage Payments
The region with the lowest gap between monthly rents and mortgage repayments was South County Dublin, however even there renting was over €37,000 more expensive than buying.
The Irish Central Bank imposed lending limit of 3.5 times salary is one of the strictest lending caps in Europe, with would-be buyers being forced to continue renting as they are unable to get a mortgage due to the bank’s rules.
The combination of ‘trapped’ renters and a shortage of new rental supply has led to the spiraling rent inflation seen in the recent DAFT.ie report, with rents up 10.3% year on year on average across the country.
The moneysherpa.ie analysis takes the DAFT.ie rent data and compares it to the equivalent monthly mortgage repayment. Based on the 30 year fixed rate mortgage available from Avant Money for a home of the same value assuming a loan to value of 90%.
Commenting on the analysis Mark Coan of moneysherpa.ie said
“This analysis raises some significant questions about the current Central Bank lending rules, which are in effect creating a chasm between those who can afford property and those that can not.”
“Those that can meet the current lending rules, will pay over €100,000 less to live in their home for 30 years and create an asset that they can pass onto the next generation. “
“Those that can’t, even though they are paying a monthly rent that would be more than their mortgage repayments, are €100,000 worse off and will accumulate no assets after paying 30 years of rent.
“With fixed mortgage rates now available for 30 years there is less risk of current renters defaulting on their mortgage than on their rapidly rising rents. The Central Bank lending rules have to change and change soon to reflect that new reality.”
“The idea that relaxing the rules will inflate housing costs further is misguided, housing cost inflation is due to lack of supply and is already here in the form of rising rents. Relaxing the rules will simply allow more people to own their own homes and help become financially secure”
moneysherpa.ie has also developed a free online calculator that can be used to calculate how your own monthly rent would compare to a mortgage repayment.
Average regional rents, house prices and monthly mortgage repayments over 30 years.
Region
House Price
Monthly Rent
Monthly Mortgage
Monthly Difference
Total 30 Year Difference
South County Dublin
€625,801
€2,258
€2,154
€104
€37,380
Monaghan
€208,932
€925
€719
€206
€74,089
Donegal
€177,740
€826
€612
€214
€77,102
Leitrim
€158,246
€779
€545
€234
€84,340
Kilkenny
€262,027
€1,162
€902
€260
€93,613
Mayo
€185,864
€915
€640
€275
€99,075
Tipperary
€208,980
€1,001
€719
€282
€101,389
Cavan
€183,454
€934
€631
€303
€108,902
Galway
€241,335
€1,138
€831
€307
€110,615
Wicklow
€383,508
€1,630
€1,320
€310
€111,552
Longford
€168,327
€897
€579
€318
€114,327
Roscommon
€171,621
€912
€591
€321
€115,645
Clare
€219,745
€1,087
€756
€331
€119,009
Limerick
€215,172
€1,085
€741
€344
€123,956
West Meath
€244,409
€1,192
€841
€351
€126,245
Offaly
€225,152
€1,126
€775
€351
€126,349
Carlow
€228,590
€1,146
€787
€359
€129,288
Waterford
€270,703
€1,300
€932
€368
€132,541
Sligo
€172,192
€961
€593
€368
€132,578
Laois
€218,219
€1,146
€751
€395
€142,140
Wexford
€256,295
€1,300
€882
€418
€150,396
Cork
€255,576
€1,300
€880
€420
€151,287
Kildare
€307,638
€1,544
€1,059
€485
€174,611
Meath
€301,992
€1,525
€1,040
€485
€174,768
Kerry
€229,574
€1,300
€790
€510
€183,509
Louth
€249,525
€1,396
€859
€537
€193,345
South City Dublin
€446,415
€2,145
€1,537
€608
€218,997
North County Dublin
€352,134
€1,897
€1,212
€685
€246,551
North City Dublin
€370,992
€2,006
€1,277
€729
€262,422
City Centre Dublin
€354,432
€1,996
€1,220
€776
€279,343
West County Dublin
€329,858
€1,962
€1,135
€827
€297,556
Data based on Q4 Daft.ie House Price and Rent report and latest mortgage rates from moneysherpa.ie.
moneysherpa.ie is an independent personal finance websitend regulated by the Central Bank of Ireland and was founded by Mark Coan who previously held senior positions with the Irish Independent and Permanent TSB.
You might have heard that the average mortgage switcher in Ireland saves over €20,000, but that sounds too good to be true, right?
I mean if that was true everybody would be doing it surely and you’d be straight on google to get switched yourself, so there must be a catch?
Spoiler alert: There’s no catch.
That’s why record numbers are switching right now with more joining in everyday.
So we thought in this article we would share some real life examples of 3 of our recent mortgage switchers. That way you can see for yourself what people are actually saving and what’s actually involved in being a mortgage switcher.
Read on to see what mortgage switchers just like you have saved in the last few months and how much you could save by switching.
Noel & Naeiri, Mortgage Switch from PTSB to ICS – Mortgage Switcher Example
Noel & Naeiri Gavin have a home in Navan and switched their mortgage using online broker moneysherpa.ie. Noel works in engineering and Naeiri is a stay at home mum.
Due to a combination of the strong property market in Navan and a number of home improvements they made to the house, the value of their home increased to over €500,000.
This reduced their loan to value to less than 60%, which is the size of the mortgage compared to the value of the property, allowing them to access better mortgage rates.
They originally took out their mortgage with Permanent TSB which has one of the highest rates in the market.
The fixed rate they were on was expiring in a few months so they contacted Moneysherpa for guidance on their next step.
If they did not take action the mortgage would revert to the general variable rate from PTSB, which was 3.7%.
Probable follow on variable rates post fixed period based on current variable rates by provider
moneysherpa advised them that they could save even more by switching provider to ICS mortgages, who’s fixed rate packages at 2.29% APRC recognise and reward the reduced risk from a low Loan to Value ratio when your property is worth more than your loan value.
Noel & Naeiri were able to reduce their mortgage payments and take 4 years off their mortgage saving over €38,000 in the process by completing the switch.
Murray and Jennifer, switched from AIB to Avant Money – Mortgage Switcher Example
Murray and Jennifer living in Drogheda switched their mortgage from AIB to Avant Money with moneysherpa. They saved over €10,000 with Avant Money’s 7 year Fixed rate and were able to use the savings they made to pay off their mortgage earlier.
Avant Money have some of the lowest rates on the market, their 7 year fixed is one of our favourites starting from 1.95% and locking in your savings for 7 years.
AVANT MONEY RATES (APRC calculated on €100K loan, 30 years, valuation of €185, security release €40)
ICS Mortgages pip Avant at the post for the shorter fixed term products due to their more flexible credit policy. However if you have a sparkling credit history the Avant Money 3 year and 4 year fixed at 2.39% & 2.43% respectively are so close it makes no difference.
Sandra, Switching from PTSB to Avant Money -Mortgage Switcher Example
Sandra Chubb from Ballyfermot switched her €110,000 mortgage from PTSB to Avant Money in January.
She saved over €10,000 by lowering her interest rate from 3.4% to 2.01% APRC with Avant Money’s 7 year fixed product.
By reducing her interest rate by over 40% she was able to afford to reduce her mortgage term from 21 years to just 12 saving thousands in interest payments.
“They were really friendly, gave me independent advice and helped me pull together the paperwork. Most people don’t realise they are in a position to save so much by switching”
That’s why we would recommend using a broker to help you switch to a fixed rate product with a low on-going rate from either Avant Money or ICS.
The lenders with the lowest rates can usually only be accessed by brokers, many brokers are free to use and they can take the pain out of the paperwork.
moneysherpa switchers Graham & Daire were with Ulster Bank and saved €63,000 by switching according to the Irish Examiner
Over 25% of all mortgage holders will save over €10,000 by switching
It makes more sense than ever to compare mortgage rates Ireland 2021 with massive savings available. There probably isn’t another financial decision that has as big an impact on your wallet.
A big thanks to Noel, Naeiri, Murray, Jennifer and Sandra for letting us share their stories.
The non bank lenders ICS, Avant Money and Finance Ireland have really leapt ahead of the pack this year with a 0.5% discount across all mortgage types. This has left the banks, who are weighed down with legacy costs, trailing in their dust.
Annual Percentage Rate Charge (APRC) calculated on a €100,000 loan over 20 years. APRC represents the average rate across the lifetime of a typical mortgage and is recommended as the best rate to use for comparisons by the CCPC. [1]
Ulster KBC switching. Avant Money are offering €1,500 upfront for anyone switching their mortgage from Ulster Bank or KBC. The offer is available until the 31st of March and targets customers thinking of switching from Ulster & KBC as both exit the Irish market this year.
Ulster Bank have sold their existing mortgages to PTSB and KBC to Bank of Ireland. This means if you have a mortgage with either you and your mortgage will transfer.
Higher Rates on the Way for Ulster and KBC customers? – Ulster KBC Switching
PTSB and Bank of Ireland have the highest mortgage rates in the market so many Ulster and KBC customers are considering switching to a different lender. If you are in your fixed rate period then PTSB and Bank of Ireland will have to honour those rates, but after that they could choose to hike rates increasing your monthly repayments.
You can see how much higher PTSB and Bank of Ireland rates are in the table below.
Probable follow on variable rates post fixed period based on current variable rates by provider
Free Switching Costs – Ulster KBC Switching
Switching costs are usually around €1,500 for solicitor and valuation fees combined, so this offer will make switching from Ulster and KBC effectively free.
At moneysherpa for example we offer an all in legal package including all outlays for €1,200 including VAT, while estate agent valuation fees are typically around €200. So €1,400 all in.
Example Switching Saving – Ulster KBC Switching
So a typical KBC mortgage customer on their 4.25% variable rate, with €172,000 remaining over 16 years would save €187 a month and €35,983 over their remaining term. The repayment calculation is based on switching to Avant Money’s 5 Year fixed rate and using the switching offer to cover their upfront costs.
If you are with KBC or Ulster and not on a tracker, the new Avant Money €1,500 switching offer means you will probably save over €20,000 without having to pay any upfront fees.
Ulster and KBC have been bought out by the banks with the highest mortgage rates in the State, PTSB and Bank of Ireland, so now is a good time to switch to avoid higher rates down the line.
You can book a free appointment to check out if you would save here.
Buying a home is probably the biggest financial decision you will ever make and one of life’s most stressful times. So you are probably super keen to know how long does mortgage approval take and can you get pre-approval or approval in principle like yesterday.
Knowing how mortgage approval and pre-approval works in Ireland can help you secure your dream home and reduce your stress levels.
That’s because how you apply makes a big difference to how much you can borrow and how long the whole process will take.
With our Ultimate Guide to how to mortgage approval Ireland 2022, you could borrow up to 4.5 times your joint income and get the whole thing done and dusted in less than 3 months.
Here’s our top 3 how to get mortgage approval Ireland 2022 tips
Maximise your savings in the 6 months before you apply to maximise what you can borrow
Understand how best to navigate the mortgage approval process to minimise delay
Use a broker with a wide selection of lenders to maximise your mortgage approval odds
If you want to find out more before diving in read on to see understand how you can get mortgage approval and maximise how much you could borrow while minimising the hassle factor.
Work Out How Much You Can Borrow – How long does mortgage approval take Ireland 2022
The first step is to work out how much mortgage you can get, you might not need to borrow up to your limit, but it will help you to understand your maximum budget in case you find yourself in a bidding war for your new gaff.
To help avoid a credit bubble like the one that went pop back in 2008 the Central Bank sets some absolute maximum limits that no lender can go beyond.
If you are buying your home to live in, the limit is the lower of either
Income – 4.5 times your joint gross income per year
Deposit – 10 times your deposit
Wait a minute before you rush off and bid on that dream home, the Central Bank only allows 20% of all borrowers in any year borrow up to these limits.
The lenders are therefore very picky about who gets these ‘exceptions’ only putting forward people with squeaky clean credit histories and very high levels of disposable income.
If you fall outside the top 20% of applications then the limits are
Income – 3.5 times your joint gross income per year
Deposit – 10 times your deposit for first time buyers and 5 time for others
As part of the application process the lenders will also run the rule over your ability to repay the loan. Based on this they may lend you less than the limits above or indeed nothing at all.
For most people the 3.5 times salary limit is the one that applies and gives the best idea of your budget. However if you need an exception to make up the numbers or want to maximise your odds of approval you can use our instant Approval In Principle (AIP) tool below.
Our tool runs the numbers based on your income and expenditure and instantly spits out your odds of mortgage approval across the lenders. Even better we will then automatically email you with a provisional Approval In Principle that you can use to view property and start your house hunting!
Maximise My Approval Chances – How long does mortgage approval take Ireland 2022
Even if you have enough disposable income for mortgage approval on paper based on our provisional AIP calculator we then have to back this up with evidence.
Lenders try to work out, based on information on your application for what’s know as a full Approval In Principle, the likelihood of you not paying back the mortgage in full. If a loan goes south that’s a big hole in their profits, so the more risk they think you are the less they will lend.
This means you can maximise the mortgage you can get by knowing what they are looking for and getting your finances in shape in advance of mortgage approval.
This is why the question how long does mortgage approval take can have a different answer depending on your circumstances. A switcher can be done in 6 weeks as they have solid proof they can make the repayments, while someone who doesn’t have evidence of spare cash left over might have to wait up to 6 months before even applying.
The 6 months before the application is critical as lenders will look at your bank statements in this period to assess your ability to repay the loan as part of the application.
So what are the key things you can do to maximise your approval chances?
Maximise your Income – Many lenders include 50% of overtime, bonuses and commission, so maximising these can be a big help.
Clear your outstanding loans – These eat into your ability to repay and are usually higher interest than your mortgage will be.
Secure your employment – Make sure you have finished any probation period or have a long term contract.
Don’t splurge – Minimise your outgoings, so you show consistent evidence of saving some money at the end of every month.
Delete your Paddy Power app – Any major spend on online gambling is a big no no and don’t try to be smart by moving it to your Revolut account the lenders are wise to that and will ask for statements.
Keep your nose clean for 6 months and you will demonstrate to the lenders you can be trusted and will maximise your mortgage potential.
Get Some Help – How long does mortgage approval take Ireland 2022
So you have 6 months of sparkling clean bank statements and you are sick of living on your mates couch, what do you do next?
You have two choices to kick start the application process.
Apply to one of the lenders directly
Apply to a lender through a broker
Which lender you apply to can make a huge difference to your approval chances and what you will pay over the course of the mortgage. That’s why we recommend using a broker for your application.
A broker can look at your situation and match you with the best lender to maximise your approval chances and minimise your repayments. Brokers are often free to use and are impartial as they get paid the same commission 1% of the mortgage value by all the lenders.
Not all brokers are created equal though. Check out if your broker has:
Access to the best lenders for rate Avant Money, ICS, Haven and Finance Ireland
No fees or low fees for your type of application
An online application process to make the paperwork easier
A best rate guarantee
What Happens Next – How long does mortgage approval take Ireland 2022
Once you have chosen your broker you can get the application underway.
1. Apply Online
First up you will need to confirm your personal and financial details to get your instant Approval In Principle. You can jump right in below to start the process now.
Once you have your provisional approval you can upload supporting documents like your bank statements and proof of identity onto the brokers application platform.
These documents are needed to help prove you can repay the mortgage and also prove you are who you say you are.
2. Choose Mortgage & Lender
Your broker then reviews your details plus documents and recommends the best lender and mortgage product. As each lenders approval policy is different they will match you with the best one for you.
For example, ICS lend more to public servants and is good for short term fixed rates. Avant Money on the other hand don’t do exceptions above the 3.5 salary, but have the best long term fixed rates.
They will also run you through the other options and why they think they aren’t a fit for you at this point.
3. Get Full Approval In Principle (AIP)
Your broker will then use the documents and details you submitted to apply for approval with the rate and lender you picked. It can take 3 days to 3 weeks to get approval depending on the lender you choose (your broker will fill you in on this).
You can now go bid on a property knowing you have an approval in your back pocket!
4. Get Final Loan Offer
Once your offer has been accepted your broker will have it valued by an independent estate agent. This is so the lender can have confidence that the asset that they are securing the lending on (your new house), is worth what you say it is.
Once the lender has all the details on the property from the broker they issue the final offer, which includes any conditions before you can access or ‘drawdown’ the loan. These are usually things like you must have a life protection policy and home insurance in place, which your broker will help you arrange.
5. Complete House Purchase
Ta Da! The moment you have been waiting for, once the conditions are met the loan is released and you get the keys to your new home!
In a Nutshell – How long does mortgage approval take Ireland 2022
How you apply for a mortgage makes a big difference to how much you can lend, how long it takes and your approval chances.
Then you need to make sure all your documentation lines up and if needed clean house on your finances for the 6 months before you apply.
You should then engage with a broker who can guide you to the best lender and help take the pain out of the paperwork. You can check out moneysherpa’s own in house broker teams the mortgage sherpas here.
Finally, make sure you know the process and where you are in it, so you can reduce your stress and maximise your chances of getting your dream home.
More people have completed a mortgage switch this autumn than for a decade. Over 1,616 in Q3 2021, the highest since 2009.
The mortgage switch is back because interest rates have now hit historic lows.
The average saving for a mortgage switch at the end of 2019 was a whopping €21,626. With over 150,000 Irish mortgage holders set to save a staggering €1.5 Billion by switching.
With rates falling and prices rising since 2019, those switching savings have only gotten bigger since then.
Mortgage switching is set to explode in the coming months quadrupling to the rates seen in other countries across Europe and back at the height of the boom.
Why Mortgage Switching is the New Black – Mortgage Switch Ireland 2022
According to the latest figures from the Banking and Payments Federation [1] more people have completed a mortgage switch this autumn, at 1,616, than since 2009 just after the banking crash.
The chart below shows 1% of the 674,176 mortgage holders in Ireland are now switching every year, that’s over 6,700 and it’s only heading one direction.
Switching rates since 2014 (Source: BPFI Report Q3 2021)
The mortgage switch is so fashionable right now due to mortgage rates hitting record lows.
2015 Existing Rates 4.3% v New Rates 3.9%
2020 Existing Rates 3.48% v New Rates 2.68%
So back in 2015 a mortgage switch would cut your mortgage rate by 0.40%, but by the end of 2019 the difference had doubled to 0.80%. That makes new rates over 20% cheaper than existing rates, a record saving.
You can see this increase in ‘spread’ in the chart below. The Standard Variable Rate for Existing Loans in green has hardly dropped at all, as the banks have tried to keep their existing customer rates high.
The 1 to 3 year fixed new lending rate in red however has plummeted as new lenders, Avant Money, ICS and Finance Ireland, have entered the market.
Mortgage Rates (Source: Central Bank of Ireland Economic Letter No.12 2020)
These rates are the lowest since trackers were on the go back in 2008.
This widening rate gap alone is enough to drive increased switching, but increasing house prices have further sweetened the deal. As home values rise the loan to value ratio gets smaller.
Lenders see low loan to value ratios as less risk, allowing customers to access even lower rates.
The mortgage switch double whammy, the widening rate gap and lower loan to values, is creating a switching surge.
How Much can you Save by Switching Mortgage? – Mortgage Switch Ireland 2022
So this begs the question, should I switch and how much will I save if I do?
There are over 670,000 residential mortgage holders in Ireland right now, 36% of these are on a tracker mortgage tied to the European Central Bank rate. If you’re on a tracker you almost certainly would be better off staying put.
That leaves the 64% of mortgage holders not on a tracker, which equals over 430,000, 27% of all Irish households.
Almost all of these will save something by switching, even those on a fixed rate, but this is where it gets really juicy.
According to the Central Bank almost 150,000 will save more than €10,000 by switching, a combined saving of over €1.5 Billion. You can see exactly how the 150,000 breaks down below.
Central Bank Switching
Fixed
Variable
Tracker
Total
All Mortgage Holders
171,105
259,276
243,795
674,176
Save something
29,082
153,190
0
182,272
Save more than €10,000
20,837
89,657
110,484
Save more than €30,000
8,076
28,499
36,575
Central Bank of Ireland Economic Letter 12 2020
We ran the numbers for an average mortgage switch ourselves, just to be sure.
Average mortgage switch = €235,401
Average term = 22 years
Average reduction in rate = 1%
= An Average Saving of €21,626
Yes you read that right, the average mortgage switch saving was €21,626 according to the Central Bank’s own figures.
Hang on a minute, shouldn’t mortgage switching be much higher if there is €1.5 Billion to be saved?
It most certainly should, switching in Ireland lags almost all developed countries world wide with only 1% switching every year.
Italy has over four times that rate of switchers at 4.1% and the Aussies see over 8% of their variable rates switched per year. Across the pond in the UK switching rates are also more than double that here.
As the savings between existing and new rates are much bigger than that seen in other countries, what exactly is going on?
Part of the reason is due to tracker mortgages. The super generous terms offered by the Irish banks back in the boom, has led to over a third of all mortgage holders staying put and holding on to what they have for dear life.
The rest of the gap is usually put down to the idea that it’s not in the Irish psychology to switch, we are a nation loyal to a fault. Let me bust that particular myth right here, the data shows the Irish love a great deal as much as anyone.
Remember our first chart showing how we were at record switching levels? Let’s zoom out a little on the data and see the trends if we go back in time a little further.
Switching Rates since 2003 (Source: BPFI)
That’s right, before the crash mortgage switching in Ireland was running at 4% per year, right up there with other nations.
Due to negative equity and uncompetitive rates in the eight years after the crash Ireland simply got out of the habit of switching. It’s just not been a thing for almost a decade, so has fallen off the radar.
I’ve listed the top 4 reasons for not switching below, based on the latest Central Bank data.
Reasons for not switching (Source: Central Bank)
So what are the answers to each reason?
I do not know what the legal costs of switching would be. Answer: The solicitor cost and a valuation should cost less than €1,500 all in.
I might switch if there was a long term guarantee of interest rate advantage. Answer: With Avant Money for example you can fix your rate for up to 30 yrs.
I do not know if I would save money. Answer: You almost certainly will if you’re not on a tracker.
Switching would be too complex. Answer: Use a broker for both advice and to take the pain out of the paperwork they’re free to use in many cases.
With the barriers falling and savings increasing it’s only a matter of time until we are back up at the 4% mark and mortgage switching is the new big thing.
In a Nutshell – Mortgage Switch Ireland 2022
After falling out of fashion the mortgage switch is about to make a comeback.
Rates are at record lows and savings at record highs.
The average saving is €21,626 massively out weighing the costs of switching
You can fix rate anywhere up to 30 years to ‘lock in’ your savings
If you use a broker you can switch for free in less than 3 months
The clock is ticking though, with inflation rising to over 5% variable rates will probably start to rise over the next 6 months. By switching to a new lender with a fixed rate of 5-15 years you can make savings of over €10,000 while also protecting your home from increased repayments.
What’s Next – Mortgage Switch Ireland 2022
It makes more sense than ever to compare mortgage rates Ireland 2022 with massive savings available. There probably isn’t another financial decision that has as big an impact on your wallet.
The non bank lenders ICS, Avant Money and Finance Ireland have really leapt ahead of the pack this year offering 0.5% lower than other lenders across all mortgage types. This has left the banks, who are weighed down with legacy costs, trailing in their dust.
We all know switching your mortgage is the biggest thing you can do to save loads of cash, but what if I told you there was a way to make these savings not just once, but four times over.
Sounds too good to be true right? It isn’t if you are prepared to put the effort in. By using the right strategy you can make the absolute most of all the juicy switching offers currently available.
There are nine different mortgage lenders in Ireland right now, with over 250 different mortgages on offer. In this rundown we will recommend the best switcher mortgage short term, the best switcher mortgage for the long term and the best switcher mortgage for multiple switchers.
The right switcher mortgage for you depends on whether you are looking to switch and stick or if you want to switch multiple times.
Based on our review of all 250 switcher mortgages in the market we recommend the following options.
Best switcher mortgage short term switching – ICS 3 year Fixed Rate
Best switcher mortgage long term switching – Avant Money 15 year Fixed Rate
Best switcher mortgage multiple switcher – PTSB Variable Rate
Read on to see which approach is the best fit for you and how much you could save.
Multiple Switch, Cash Back Hack – Switcher Mortgage
Irish Mortgage providers use either introductory fixed rates or once off cashback offers to tempt new customers to switch.
Cashback offers from EBS, PTSB and Bank of Ireland give you 2% of the total mortgage amount back in cash when you take out the mortgage. So on the average switch of €240,000 that’s €4,800 in cash at drawdown as shown below.
You should tread carefully though as the rates from these providers are some of the highest in the market. Surprise surprise, as you can see from the table below the highest follow on and variable rates are with the three providers with the cash back offers.
Probable follow on variable rates post fixed period based on current variable rates by provider
If you are prepared to switch multiple times though you can get your hands on the cash back offers without paying the higher on-going rates. One of the few times you can really have you cake and then get to eat it afterward.
So if you take out a variable mortgage with PTSB you can take up the cashback offer, then switch to Bank of Ireland take out another variable rate cashback offer, then EBS for your final variable rate cashback offer.
On the average switcher mortgage of €240,000 that’s
€4,800 Cash Back (PTSB)
€4,800 Cash Back (BoI)
€4,800 Cash Back (EBS)
Total Cash = €14,400
Even better when you have picked up your cash from EBS you can then switch to a fixed rate deal through a broker with Avant Money or ICS to get on a low interest rate. This last step is really important as it can save you as much as the multiple switch hack.
Check out our advice on the best longer term low interest rate options below.
Best Long Term Switcher Mortgage – Switcher Mortgage
The Avant Money 15 year fixed rate producthas the lowest introductory rate of 1.95% in the market for the first fifteen years, with a market leading APRC over the lifetime of the mortgage of 2.29%.
If you know you staying put and want to lock out future interest rate rises this may be the mortgage for you.
If you want to save on legacy rates, but want to keep your options open then there are still some good options out there.
The low fixed rate period is shorter so the overall cost of the mortgage is higher, but the mortgage rate across the term is still around 2.5% APRC.
ICS Mortgages pip Avant at the post for the shorter fixed term products due to their more flexible credit policy. However if you have a sparkling credit history the Avant Money 3 year and 4 year fixed at 2.39% & 2.43% respectively are so close it makes no difference.
What You Should Do, the Verdict – Switcher Mortgage
So should you make multiple switches?
Taking the cashback offers and switching multiple times is perfectly legal. As long as you choose a variable rate rather than a fixed rate you aren’t tied in to a minimum period before switching.
You will have to pay solicitors fees though for each switch, these come in at around €1,000 a switch, although many solicitors will knock a bit off for multiple switches if you haggle.
You also need to be prepared to put in the hard yards, although switching is a lot easier than taking out a new mortgage, switching 4 times over isn’t to be taken lightly.
Finally, mortgages are a major financial commitment and can be pretty complex. While your working through your multiple switch master plan, the market might change, the providers conditions might change and your own circumstances might change.
For most people then making the switch once to a lower on-going interest rate is the best policy. You still save thousands without all the hassle and risk of the multi switch strategy.
That’s why we don’t recommend the multi switch strategy. The reality is that although on paper the multi switch strategy makes sense, for most of us life gets in the way and it’s way too much hassle.
That’s why we would recommend using a broker to help you switch to a fixed rate product with a low on-going rate from either Avant Money or ICS. The lenders with the lowest rates can usually only be accessed by brokers, many brokers are free to use and they can take the pain out of the paperwork. The payback might not be as immediate as with the multi switch strategy, but for much less work you will still save thousands and get the best value.
If you are prepared to put in the work and take on the risks involved in a multi switch strategy however, don’t forget to talk to a broker about that final step to switch to a long term lower rate, otherwise you will lose almost all you gained by collecting those cash backs in the first place.
What’s Next – Switcher Mortgage
It makes more sense than ever to compare mortgage rates Ireland 2021 with massive savings available. There probably isn’t another financial decision that has as big an impact on your wallet.
The non bank lenders ICS, Avant Money and Finance Ireland have really leapt ahead of the pack this year with a 0.5% discount across all mortgage types. This has left the banks, who are weighed down with legacy costs, trailing in their dust.
Overall, the Avant Money 15 year fixed rate came clearly out on top as the overall best mortgage rate. With their market leading APRC of 2.29%, which saves an amazing €20,000+ for switchers in most cases. Avant Money’s 7 and 4 year products are also a great choice for those looking for shorter or medium fixed terms.
If you want to get your savings started right now, set up a free no obligation video call with a mortgage sherpa here.
Annual Percentage Rate Charge (APRC) calculated on a €100,000 loan over 20 years. APRC represents the average rate across the lifetime of a typical mortgage and is recommended as the best rate to use for comparisons by the CCPC. [1]
The simplest way to switch mortgage is to speak to a mortgage broker. Brokers fees are usually paid for by the lenders and many have exclusive access to lenders with the best rates. Avant Money, ICS and Finance Ireland have the lowest rates and are only available via brokers.
What is mortgage switching?
Mortgage switching is taking out a new mortgage with a new lender, usually because the new lenders interest rate is lower and using that mortgage to pay off the old mortgage. The average saving on switching in Ireland is over €20,000, leading to increased numbers of switchers.
How much does it cost to switch mortgage providers?
It costs around €1,400 to switch mortgage if you do it right.
A solicitor gathers the right paperwork and checks the terms of the new loan. The fees usually come in between €1,200 to €1,600 including VAT.
An estate agent values your home. So the bank can put you on the right rate and usually comes in at €150 excluding VAT.
How much are the legal fees to switch mortgage?
Legal fees to switch mortgage usually come in from €1,000 to €1,500. The solicitor has to request the deeds from your old bank and then handles the paperwork with your new bank. They will also make sure you understand the terms of the new loan before you sign the new loan agreement.
moneysherpa have a panel of recommended solicitors that will complete a switch for €1,200 all in including VAT.
Do I need a solicitor to change mortgage?
Yes, under law you need a solicitor to switch mortgage. The solicitor will transfer the deeds from your old lender to your new lender and to advise you on the terms of the new loan offer. Having a solicitor also gives you and your bank confidence in the paperwork. A mortgage broker will handle the solicitor for you.
How much to switch mortgage?
Average costs to switch mortgage are under €1,400 inc VAT to cover a solicitor and estate agent. If you shop around you should be able to find a mortgage broker who is fully paid for by the lender and will manage the solicitor and estate agent on your behalf.
How long does it take to switch mortgage lenders?
It usually takes 6-12 weeks to switch mortgage lenders. Switching mortgage is pretty straightforward compared to buying a property first time round.
First you need to pass your new lender’s credit check, this is usually pretty quick, as you already have evidence you are paying a mortgage with your old lender.
Then you need to get a solicitor involved to handle the contract paperwork. Finally, a local estate agent selected by the new lender values the property.
What is involved to switch mortgage provider?
There are 4 steps to switch mortgage provider.
Find the best lender using an online calculator
For credit approval you will need to prove who you say you are and provide evidence of your ability to repay the loan. To confirm you are on the right rate the new lender will also ask you to get your home professionally valued.
Now comes the legal bit, which is much simpler than when you buy. Your solicitor gets the paperwork sorted, checks you understand it and you sign.
Now for the money switch, drawdown. When all the boxes have been ticked your new lender will ask you to fill in a new direct debit to collect your repayments.
Step 2 – Find a mortgage broker fully paid for by the lenders
Step 3 – Gather your paperwork, bank statements and salary certificates
Step 4 – Use your broker to manage the solicitor and estate agent
Step 5 – Enjoy your new mortgage savings every month
How easy is it to switch mortgage?
Using a mortgage broker can make the switch mortgage process very straightforward, they will handle all the paperwork for you. If you shop around you should be able to find a broker that is fully paid for by the lenders. Solicitors fees and Estate agent fees are also covered by some lenders. It takes 6-12 weeks to complete the switch from start to finish.
How do I switch mortgage lenders?
To switch mortgage or to remortgage you simply take out a new mortgage with a new lender and use that to pay off your old mortgage provider. Typically this is to avail of a lower mortgage rate with the new lender on the same mortgage amount or to increase the mortgage known as ‘topping up’ to release equity from your home. It makes sense to consult with a mortgage broker before switching.
How often can you switch your mortgage provider?
There’s no limit on how often you can switch your mortgage provider, even if you have received a cashback offer.
If you are still in your fixed rate period you need to watch out for ‘breakage fees’. Under EU law the fee is capped in line with the cost to the lenders of providing the rate. This depends on the difference between the interest rate when you fixed and the interest when you switch.
As a result, often there are no fees at all, but the only way to be sure is ask your bank what your fee would be.
How many times can you switch mortgage?
Under EU law there is no limit on how many times you can switch your mortgage. This also means that you can avail of multiple cashback offers. The best rates however are fixed rate mortgages which can have penalties if you switch within the fixed period.
When can you switch mortgage?
You can switch mortgage for free if you are outside your fixed rate period, usually 3 or 5 years after you took out the loan. Even if you are in the fixed rate period you may be able to switch without penalty due to EU law. Ask your lender to calculate what ‘break out’ fee would apply in your particular case.
Can you switch from a fixed rate mortgage?
You most certainly can switch from a fixed rate mortgage. A lot of people think this always incurs a fee, but due to an EU law banks can now only cover their costs with these fees. This means the fee the bank is allowed to charge depends on the difference between the rate when you fixed and the rate when you switch. You should ask your bank what fee would apply to you, more often than not it turns out there are no fees at all.
Can you switch mortgage if in negative equity?
If your loan is larger than the value of your property, switching can be tricky as the bank ‘backs’ the mortgage with the value of your house. It often makes sense to get an up to date valuation
and then talk to an experienced mortgage broker about your options if you think you might be in negative equity.
How much will I save if I switch mortgage?
If you bought after 2008 you may be one of the 200,000 mortgage holders on rates of 4.2% APRC, meaning big savings if you switch mortgage. The average saving for these customers is around €20,000 over the duration of the mortgage. Even if you aren’t on a 4.2% rate, you will probably save thousands by switching.
How does a mortgage calculator work?
The mortgage calculator uses the rate you can get. This usually depends on the size of the loan and the value of the property. A calculator selects the right rate for your particular loan to value and then applies this to work out the total cost of your repayments based on the length of mortgage you need.
How do you remortgage a house?
To remortgage you take out a new mortgage with a new lender and use that to pay off your current lender. Usually to improve the rate or increase the mortgage amount. This known as mortgage switching in Ireland and remortgaging in the UK, but it is the same process.
What is a remortgage?
A remortgage is a new mortgage on a property already with a mortgage. Usually that new mortgage is used to pay off the previous mortgage. Often the new mortgage is at a lower rate reducing the repayments and saving money for the mortgage holder. In Ireland this is often known as switching mortgage.
Why remortgage?
There are two main reasons why people remortgage or switch their mortgage.
To reduce your repayments and save money. New customer rates in Ireland are almost half existing customer rates, so remortgaging can save mortgage holders significant amounts in interest payments
To release equity tied up in your home. To allow investment or major purchases at mortgage interest rates which are lower than other types of loans.
Remortgage Ireland 2022. When I headed up mortgage products at PTSB, the low numbers of people remortgaging in Ireland was a shock. Despite huge savings we still have one of the lowest rates of remortgaging on the planet.
Remortgaging is simply taking out a new mortgage to pay down your old mortgage, either to get a lower rate (known as switching) or to release cash tied up in your home (know as top up or equity release).
Anybody who took out a mortgage after 2008 and is no longer on an introductory rate is likely to save around €25,000 by remortgaging. Over half of all mortgage holders, that’s over 450,000 households, will save at least €5K.
Why is the remortgaging rate so low? Well, most people don’t know how much they can save or how to remortgage. By the end of this article you will be one of thew few lucky ones able to take advantage of the record low interest rates for those remortgaging right now!
Almost certainly, interest rates are at a record low. Almost half of what the majority of people are paying.
If you are one of the 66%+ people who took out a mortgage after 2008 you should definitely look into remortgaging. This is because you’re probably on what lenders call a standard variable rate.
Irish Standard Variable Rates are some of the highest in Europe, at 4.2% [1]. Remortgaging to a new business rate will halve your interest rate to around 2%.
If you’re one of the lucky few on a tracker mortgage with rates of around 1%, remortgaging almost certainly doesn’t make sense for you.
How much would I save by remortgaging Ireland 2022?
If you are in the majority of Irish mortgage holders (66%+) who would save big by remortgaging, working out exactly how much you would save isn’t complicated.
Our handy mortgage repayment calculator automatically calculates the rates available at your LTV and estimates out how much you would save if you remortgaged to the best rate in the market.
If you want to see all the providers mortgage rates and your repayments for your LTV you can click the more information button.
The loan and term outstanding is easy to get as it is sent to you each year by your lender and doesn’t change that much each year. For people remortgaging last year the loan was €170,000 and the term 15 years on average. [2]
The more your home value rises the lower the rate you can get when you remortgage. This is what lenders call the Loan to Value ratio or LTV. If you’re not sure about your home value it’s easy to estimate.
If you bought before the crash in 2008 your house is probably now worth about what you originally paid for it as the market has pretty much bounced back since then.
If you bought after 2008 it should be worth roughly what you bought at, plus give or take an additional 4% for every year since you bought. So if you bought ten years ago you can add on 40%, nice!
How much hassle and cost is it remortgaging Ireland 2022?
Fortunately remortgaging Ireland 2022 isn’t like applying for a mortgage the first time around. You can now do it totally online and for free.
There are still some upfront costs you have to watch out for, you still need to get a solicitor to handle your house deeds and help you with the new mortgage agreement. You will also need to get your house valued by an estate agent to help set your mortgage rate.
The higher the value of the house the lower the loan to value rate, which means less risk for the bank, which means a lower rate for you.
All in switching costs usually come in at around €2K including the VAT, way lower than the potential savings.
Even better lenders, who are keen for new business, often pay for your solicitors fees and to get your home valued and for you to use an online switching platform like moneysherpa’s. AIB, KBC and Ulster all offer over €1,500 towards the cost of switching. BoI, PTSB and EBS all offer 2%+ cash back which often works out at even more.
Plus, they will handle all the paperwork for you.
How do I remortgage Ireland 2022?
If you use a service like moneysherpa’s it is pretty straight forward. The main thing you need to worry about is what to do with the money saved. Seriously, do you?
1. Pocket the savings
If you bought after 2008, have around €170,000 and 15 years left on your mortgage you should be looking to save over €180 a month in saved interest payments.
That would be €32,400 saved over the 15 years, without including cash back payments if you keep switching. This can make a really positive difference to the household budget and give you some welcome financial wriggle room.
2. Pay off the mortgage earlier
This is personal favourite as you effectively double down with your savings.
If you use the €180 a month you save to pay off your mortgage quicker, you can reduce your term by over 10% without paying anymore than you do today. Saving you another €4,307.
That’s €32,400 + €4,307 = €36,707 saved.
3. Release more cash
If the lower monthly repayments from remortgaging mean you can borrow more, known as topping up your mortgage you could free up the cash tied up in your home. Because it’s secured on your home, a mortgage is one of the cheapest ways of securing credit. This can be a great way to fund big once off investments, but be careful if you might struggle to repay the higher amount.
In a nutshell – remortgaging Ireland 2022
Remortgaging is a great way to save. 1 in 5 people will save over €25,000 and over half will save over €5,000 by remortgaging in Ireland 2021.
Rates are better than ever and many mortgage brokers will handle the paperwork for you for free as they are paid by the lenders. Talking to a broker can help you work out the best option for your own circumstances, whether you are looking to simply save, fix your rate or free up cash.
Don’t let mortgage switching costs put you off switching. Switching mortgage improves your financial shape more than anything else bar winning the Lotto. In fact, if you bought after 2008 you will probably save over €20,000 by switching to lower rates.
That said, there are some upfront costs you need to know factor in, read on to find out what they are, how you can cover them with cash back and why switching still makes loads of sense.
What are mortgages switching costs and switching mortgage legal fees?
The good news is that switching your mortgage is much less stressful, easier and nowhere near as costly than buying a new home. That said there are still some solicitor and estate agent upfront mortgage switching costs.
Don’t panic though these costs are usually much less than the savings from switching and with some lenders switching mortgage legal fees and estate agent costs are fully covered with upfront payments.
There are no land registry or search fees involved with switching, but you will need a solicitor to do a bit of paperwork for you. Switching mortgage legal fees cover the solicitor costs to:
Request your house deeds on behalf of the new bank from your current bank
Review and advise you on the terms of the loan the new bank is offering you
Witness and process the loan agreement for the new bank
These steps give everyone involved in the switch peace of mind, the bank knows your ownership of the property is kosher and you understand the deal being offered to you by the bank.
As well as switching mortgage legal fees, the other mortgage switching cost is a valuation fee. An estate agent selected by the bank will also value your home, this allows the lender to make sure you are on the right mortgage rate.
How much are mortgage switching costs, switching mortgage legal fees and how much is it to switch?
So how much are the mortgage switching costs all in?
Switching mortgage legal fees range from about €1,000 to €1,500 excluding VAT at 23%. Typically solicitors in Dublin will be at the higher end of the range.
moneysherpa have agreed an all in switching price of €1,200 including VAT for customers switching with one of their mortgage sherpas [1]. As well as the VAT this all in fee includes
Legal Fees
Bank Fees
Search/Land Fees
Declaration Fees
The other mortgage switching cost is the valuation fee which is much less at around €150.
So if you shop around, your all in costs should come in well below the €2,000 mark inc VAT.
Which banks cover mortgage switching costs, switching mortgage legal fees and what options are there?
Many of the lenders don’t want these costs to put off potential switchers so pay an upfront cashback incentive. These incentives usually cover mortgage switching costs including mortgage legal fees with cash to spare.
Ulster, AIB and KBC offer €1,500, €2,000 and €3,000 to cover mortgage switching costs.
PTSB, EBS and BoI offer 2% and 3% of the mortgage loan as cashback. So on a typical loan size of €200,000 that’s €4,000 to €6,000 into your hand, covering your legal fee costs and then some.
These deals are really useful if you can’t afford to cover the mortgage switching costs, but would save by switching. They also are a great option if you are looking to switch multiple times, as under EU law lenders can’t stop you taking more than one cash back.
That said, if you can afford to pay the mortgage switching costs upfront and are looking to get on the best long term deal, you should us the APRC rate rather than the cash back deal to choose your mortgage provider.
In our latest mortgage market reviewthe Avant Money 7 year fixed rate product came out on top, despite having no cash back at all. The 7 year fixed rate is €6,775 cheaper than the best cash back product available on a typical loan size of €200,000.
That’s why you are often better to ignore cash back if you can and cover the mortgage switching costs yourself if you can afford it.
Does it still make sense to switch after mortgage switching costs and switching mortgage legal fees?
If you bought your house after 2008 you are probably on rates of 4% plus.
The rates for switchers right now are at an all time low at around 2%.
This big difference in rate means that you would save over €25,000 by switching on a typical mortgage size of €200,000.
This means that even after you factored in the mortgage switching costs including the legal fees, you would save over €23,000 over the lifetime of the mortgage.
The really great news is that comparing rates and switching is easier than ever thanks to services like moneysherpa.
moneysherpa have agreed an all in switching price of €1,200 including VAT for customers switching with one of their mortgage sherpa. Our recommended solicitor panel cover the majority of the country and are experts in property conveyancing, so if you choose to work with one of our mortgage sherpa’s we will point you in the right direction.
Financial literacy is crucial to having successful financial outcomes, yet only 55% of people in Ireland understand 3 out of the ‘big 4’ financial concepts [1]. This is almost 20% lower than in the UK, Germany, Denmark, Sweden and the Netherlands.
Drilling into the data for Ireland the new moneysherpa study has three main takeaways.
The 18-44 age group is 20% further behind the curve than older age groups
Dublin lags rest of the country for financial literacy
Unlike findings in most other countries Irish women are 15% ahead of men when it comes to financial savvy
Financial literacy matters more now than ever. According to a recent survey conducted by Laya healthcare, the single biggest source of worry for Irish people today is financial worry [2].
In an increasingly dog eat dog financial world where traditional safety nets like defined benefit pensions and jobs for life have fallen away, Irish consumers need to be able to financially fend for themselves.
Yet study after study has shown we are singularly unprepared for this task, with young people in particular lacking the basic skills and knowledge to make smart financial decisions.
Anne Richards, CEO of Fidelity International one of the largest financial providers in the world, believes real world money maths matters “Armies of people leave school knowing their SOHCAHTOA [trigonometry]” she said “perhaps teaching children and young students the building blocks of how mortgages, credit cards, insurance and pensions work … might be more useful.”
Financial Times
The good news is that these building blocks can be boiled down to just 4 fundamental concepts that are easy to learn and teach.
The ‘big four’ concepts you need to know
The 4 concepts behind financial literacy are very straightforward, yet over 66% of people worldwide failed to get 3 out 4 of them correct in the S&P Finlit survey.
Diversification, spreading risk to reduce the overall level of risk = “never put all your eggs in one basket.”
Inflation, the value of money isn’t fixed, it is simply a function of what you can buy with it.
Numeracy, 2 + 2 does equal 4, good basic arithmetic is the cost of entry for financial literacy
Compound Interest, is the interest you earn on your money, plus the interest it’s already accrued
The last one compound interest is a particularly slippery customer, because of the powerful mathematical process that lies behind it.
Albert Einstein is said to have called compounding “the most powerful force in the universe.”
“Compound interest is the eighth wonder of the world,” Einstein reportedly said. “He who understands it, earns it. He who doesn’t, pays it.”
The exponential growth curve that results from compounding is often hard for us to get our head around and the source of many financial mis steps.
Irish financial literacy survey deep dive findings
18-44 age group under prepared for financial decisions
The moneysherpa survey shows that the 18-44 age group are over 20% less financially literate than the 45-64 age group.
This is crucial as it is at this stage many of life’s critical financial decisions are made. Financial mistakes made before 44 are quite literally compounded as the years roll by.
By the time we reach our peak financially at 45+, the decisions we have made on our pensions and mortgage may have set us on a path that it is hard to break from.
Dublin lags the rest of the country in financial literacy
Generally financial literacy falls in line with economic development. As Ireland’s economic powerhouse you might expect Dublin to lead the country in financial literacy.
In fact Dublin financial literacy is 5% lower than in the rest of the country.
In a region with higher income levels and house prices, low levels of financial literacy could have long term consequences.
Irish women bucking world wide financial literacy trend
In countries rich and poor around the world financial literacy surveys have consistently shown women coming out around 15% lower than men in financial literacy.
This is usually attributed to cultural factors or access to education, reducing both financial confidence and knowledge.
Interestingly the Irish survey data shows women leading men in financial literacy by 15%. Turning the trend seen elsewhere completely on its head.
Maybe Brehon Law has something to do with it…
Test your own financial literacy
At this point you may be wondering how you would score for financial savvy. Our quickfire 5 question quiz tests you for the same concepts used in the survey and S&P Finlit report, gives you a score and will point you in the right direction if you get any answers wrong!
In a nutshell – Financial Literacy
Financial literacy in Ireland is almost 20% lower than in other Northern European countries and is particularly low in Irish men aged 18-44.
Only 55% of people in Ireland understand 3 out of the ‘big 4’ financial concepts. Almost 20% lower than in the UK, Germany, Denmark, Sweden and the Netherlands.
The 18-44 age group is 20% further behind the curve than older age groups
Dublin lags rest of the country for financial literacy
Unlike findings in most other countries Irish women are 15% ahead of men when it comes to financial savvy
The moneysherpa financial literacy survey was conducted over 3 days from April 30th 2021. Using a statistically valid sample, weighted to align with Irish demographic data. The questions were based on the 2015 S&P finlit survey and various OECD reports. Irish data is given as comparative across segments only to allow for differences in data collection across the various finlit data sources used.
Did you know that money & finance is the most frequent source of worry for Irish adults today, more than family or health? [1]
The source of this worry is financial security. Yet when it comes creating that security, Irish investing and pension participation is less than half UK rates. [2,3]
Why? People need to overcome their financial fears and that’s the problem moneysherpa was born to fix.
My story
Whilst I was responsible for financial services for Ireland’s 3rd largest bank PTSB, I was puzzled by this financial in-action. I couldn’t square the number of people with savings earning no returns or on high mortgage rates and the low levels of switching.
It was only years later, when I started consulting for a financial advice firm, that it dawned on me. The problem was a powerful cocktail of two things, fear of finance and friction in the buying journey.
I got to understand their motivation a lot better by talking to people about their finances over a coffee one on one. In these conversations I’d hear the same themes over and over again.
Savers stuck with earning low returns because they weren’t aware of how to build a portfolio or even better a pension. Mortgage holders sticking with interest rates twice as high as they should be, because they were worried they might lose their house by switching or that the process would be as painful as when they first bought.
Even the people that had overcome this initial fear then found themselves bogged down in tricky choices and paperwork. Giving up before actually making an investment, setting up a pension or switching their mortgage.
In talking to all kinds of people about their finances, I realised that this fear and friction was driven by lack of clear information, impartial advice and supporting services.
Our solution
Existing financial information in Ireland is too wordy and generic. Advice too expensive and compromised, while support to help customers take action easily?
It simply doesn’t exist.
In other countries like the US & UK, customers have already been empowered to take control of their personal finances by startups like moneysherpa. These countries boast 20% higher financial literacy and double the level of financial engagement seen in Ireland [4].
So we assembled a handpicked team of technologists and financial experts and decided to build moneysherpa, to better support the financial journey of Irish customers.
What makes us different
At moneysherpa we empower people to reach their financial goals.
Helping them make smarter decisions and then put them into practice.
We do this by delivering 3 things.
The right information, at the right time. We track what people are actually asking and make sure we give a straightforward answer. Using smart Search Engine Optimisation and our team of qualified expert contributors to produce on point content.
Un-compromised free advice. We provide impartial reviews and recommendations on the best approach and financial providers for our customers. Supported by our strictly impartial editorial code so no financial provider gets unfairly promoted. We are also totally transparent who we get paid by, what for and by how much.
The help they need. We make getting and switching personal finance providers easier. Our on site tools crunch the numbers for you, guiding you to the best rates, the provider most likely to approve your mortgage or working out exactly how much you will really save. Our sherpa customer teams will then guide you through the process of switching mortgage or making an investment over a series of video calls and emails.
Our secret sauce lies in the way we have built our platform from the ground up to solve these challenges for our customers.
Our journey
We have talked to hundreds of customers, jumped over all the required regulatory hurdles, built multiple unique tools and services, then spent hours testing and tweaking all the moving parts. Yet we are only just getting started.
Initially we will be focussed on helping people invest and switch their mortgage. Future developments will see us expand to other financial services, including pensions, savings, loans and insurance.
As well as offering our services direct to consumers, we are also able to open up our technology to selected partners using our cloud based architecture.
This will raise the bar for the Irish financial services industry as a whole. We will be announcing our first partners in the coming weeks
What’s next?
If you share our passion to re-shape the personal finance landscape in Ireland, you can follow our progress on our social channels below or by signing up to our newsletter. If you want to suggest a great idea, an article or you are a potential partner you can reach me on [email protected]
If you want to make smarter investment or mortgage choices, you already know where to go ;-).
New information available from the property price register shows that Dundalk mortgage holders could save over €68 million euros by switching their mortgages to lower rates.
With the gap between existing and new business rates wider than ever, there are record savings for Dundalk mortgage switchers.
Mortgage switcher rate savings
To compare different mortgage rates you are better off using the Annual Percentage Rate Change (APRC) rather than the headline rates according to the Consumer Protection Commission. The APRC includes hidden fees and the full cost of the mortgage, so gives a much better picture of real savings.
The average APRC for those who bought after 2008 is 4.2%, according to the Central Bank of Ireland [1], but new business APRC rates are now as low as 2.29%, according to the money guide moneysherpa.ie , that’s 1.91% lower.
This means Dundalk mortgage holders can almost half their rate by switching.
One thing to watch out for though, before 2008 Dundalk mortgage holders are likely to be on a tracker mortgage. These mortgages have an APRC of around 1%, so it is unlikely you will save if you bought before then.
How many Dundalk mortgage switchers will save?
According to the property price register [2] just under four hundred houses are sold in Dundalk every year. Since 2008 almost 5,500 homes have been sold in and around Dundalk.
Just over of a third of houses sold are in new developments built since 2008, these include:
Rathmount
Earlsfort
Marlmount
Mount Hamiliton
Lis na dara
Saltown
Castleross
On average, according to the Central Bank, half of those sales are funded with a mortgage, this means there are around 2,500 Dundalk mortgage holders stand to save by switching.
How much is the average saving for mortgages in Dundalk?
According to the Banking and Payments Federation Ireland (BPFI) [3], switchers have an average mortgage of €242,000 and 15 years of payments left.
Based on currently available new business rates, Dundalk mortgage holders would save over €25,000 each and €62.5m in total if they switched right away.
How do Dundalk mortgage holders switch?
The good news is switching isn’t complicated and is usually free according to Daire McConnon of moneysherpa.ie.
“The banks are very keen for new business at the moment, so most cover any costs involved. The process is also much simpler than getting a new mortgage as you already have a home loan. “
“If you get a local broker or switching service to help you, they will handle all the paperwork for you and they are paid for by the lenders so are free to use .”
In a nutshell – Dundalk mortgage switcher savings
The fall in new business mortgage rates has made it attractive for the people to switch their mortgage.
There are over 2,500 Dundalk mortgage holders who bought after 2008 will make big savings by switching.
Switching isn’t complicated and a local broker can help you switch by handling the paperwork for you.
Switching mortgage Ireland 2022. As someone who used to be responsible for mortgage products at one of Ireland’s largest mortgage lenders PTSB, the low numbers of switchers in Ireland always surprised me.
Anybody who took out a mortgage after 2008 and is no longer on an introductory rate is likely to save around €25,000 by switching. That’s over two hundred thousand Irish households. Over half of all mortgage holders, 450,000 households, will save at least €5,000 by switching mortgage Ireland 2021.
These are some of the largest savings in Europe, yet Irish mortgage holders switch at half the rate seen in other European countries.
The key reason for Ireland’s low mortgage switching rate is that most people don’t realise how much they can save or how easy it is to switch these days.
Read on to find out how much you would save by switching mortgage Ireland 2021, plus everything you need to know on how to switch mortgage and get saving.
Almost certainly, this is because your interest rate drives how much you save and there is a huge difference between existing and new business interest rates.
If you are one of the 66%+ people who took out a mortgage after 2008 and aren’t on a introductory fixed rate you should definitely look into switching. This is because you’re almost certainly on what lenders call a managed variable rate or standard variable rate.
These interest rates remain some of the highest in Europe, at an average of 4.2% [1]. Switching to a new business rate with a new mortgage lender will halve your interest rate to around 2%.
But, if you are one of the lucky people with a tracker mortgage, switching almost certainly doesn’t make sense for you. Tracker mortgages were sold between 2001 to 2008 and ‘track’ the ECB base rate. If you are on a tracker your interest rate is probably around 1%, much better than any rate available in the market today.
Irish lenders have kept old customer rates high to pay for the fall out of the financial crash and the cost of funding the tracker mortgages. But, due to international banks entering the market they had to lower new customer rates.
This difference, between the old customer and new customer rates, is why switching mortgage Ireland 2022 delivers such a big saving.
So will you save? To keep things simple we have grouped mortgage holders into three big groups.
Introductory rate (2%), the 7% of people with fixed rate (new in last 1-3 years) – Stick
Tracker rate (1%), the 25% of people who bought between 2001-2008 – Stick
Standard rate (4%), the 66%+ of people who are not on an introductory or tracker rate – Switch
You can check for certain which interest rate you are on, by digging out your annual mortgage statement or by putting your monthly repayments into our handy calculator below.
How much would I save by switching mortgage Ireland 2022?
If you are in the majority of Irish mortgage holders (66%+) who would save big by switching, working out exactly how much you would save isn’t complicated.
You just need to know 4 things.
1. current monthly repayment – How much does your mortgage cost every month?
2. home value – How much is your home worth today?
3. loan needed – How much do you still have left to pay on your current mortgage?
4. term needed – How many years do you have left to pay on your current mortgage?
Our handy mortgage repayment calculator takes these four things, automatically calculates the rates available at your LTV and estimates out how much you would save if you switched to the best rate in the market.
The loan and term outstanding is easy to get as it is sent to you each year by your lender and doesn’t change that much each year. For people switching last year the loan was €170,000 and the term 15 years on average. [2]
The more your home value rises the lower the rate you can get when you switch. This is what lenders call the Loan to Value ratio or LTV. If you’re not sure about your home value it’s easy to estimate.
If you bought before the crash in 2008 your house is probably now worth about what you originally paid for it as the market has pretty much bounced back since then.
If you bought after 2008 it should be worth roughly what you bought at, plus give or take an additional 4% for every year since you bought. So if you bought ten years ago you can add on 40%, nice!
How much hassle and cost is it switching mortgage Ireland 2022?
Fortunately switching mortgage Ireland 2022 isn’t like applying for a mortgage the first time around. You can now do it totally online and for free.
Plus, if you go for an online switching platform or a broker, they will handle all the paperwork for you and get your home valued.
Sometimes if your income or the value of your property has reduced or other commitments have increased lenders won’t allow you to switch your mortgage. This is rare though as in most cases your home value will have increased and your loan value decreased as you made your monthly payments.
Don’t worry though, our online mortgage application tool checks this out automatically, so we can help you get in better financial shape or find a more suitable lender if needed.
How do I switch mortgage Ireland 2022?
You’re probably over the hump already if you have worked out your savings and found the best rates using our repayment calculator. At this point you’re only 4 steps away from cashing in on your mortgage switching savings.
Our moneysherpa mortgage team will then run the numbers. Including getting your home valued by a licensed local estate agent to get you the best rate for your LTV.
If you are happy with your new deal, we pay off the mortgage you have with your current provider and get your new mortgage up and running.
In a nutshell – switching mortgage & saving Ireland 2022
1 in 5 Irish mortgage holders will save around €25,000 and over half of all Irish mortgage holders will save over €5,000 by switching mortgage Ireland 2022.
With changes in regulation and new online platforms available it’s now very straightforward to switch and save.
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