Thinking of Switching?

The switcher market is growing, and according to the latest statistics from the Banking and Payments Federation Ireland (BPFI) there were 445 re-mortgage/Switching loans in November of 2017 to the value of €114 million, which reflected a year-on-year growth of 62.6% in volume.

The Central Bank figures show average Irish variable rate in September was 3.37%. Irish banks are continuing to offer customers some of the most expensive variable mortgage rates in the world, charging nearly twice the euro-area average. As we know, getting a mortgage is not straightforward, and as a Financial Broker we can assist you in this regard. Undertaking a review of your mortgage is the best place to start.

Many lenders are now incentivising switching and re-mortgage to obtain those premium consumers with excellent loan to value ratios and proven repayment ability, with offers such as cash back on drawdown, or money towards legal fees. If you are currently on a fixed rate or variable rate mortgage then switching to a new lender could potentially save thousands of euros over the term remaining on your mortgage.

Switchers are exempt from the Central Bank’s macro prudential rules, so the LTV and LTI restrictions are not as severe.

While lenders offer a higher LTV for those switching, the maximum available is 90%. Also, some lenders have further restrictions on LTV when it comes to apartments, equity release etc. Some may, for example, reduce the LTV for an equity release.

Several lenders offer a 35-year term to age 65 and older where it can be shown that mandatory retirement age is later at say 68 years old and some may even consider increasing the maximum age to 70 for self-employed people or where there is confirmation of repayment ability post retirement.

Some impose a minimum income when assessing consumers for a mortgage. There is also a minimum length of time during which applicants need to be in their current employment. Generally, lenders like 6 months continuous employment with the applicant having completed their probationary period.

Debt consolidation may be the rationale for a consumer moving mortgage lender. Many more switcher cases are for equity release purposes. The lenders have all updated criteria early this year where equity release is sought. Equity release is available to clients who wish to raise funds for numerous purposes including home improvements, educational needs, releasing funds to assist their own children with funds to purchase their first home. Some lenders will release equity to fund the deposit to buy a Buy to Let Investment property. The switcher market is definitely becoming a more competitive market for 2018.

First Time Buyers

In July 2016 the Government introduced the “Help to Buy Scheme” which is designed to help first time buyers who wish to purchase or build their own home. The Scheme allows a first time buyer of a new home/apartment or a self-build to claim a refund of income tax paid over the previous four years. The tax relief is limited to 5% of the purchase price to a maximum of €20,000. In order to avail of the scheme the maximum purchase price that the first time buyers can purchase is €500,000 and the mortgage amount must be greater than 70% of the cost of the property. No relief is available for properties costing over €500,000 or for first time buyers purchasing second hand properties. Where a new property is being purchased in joint names both purchasers must be first time buyers. The Scheme is expected to run until 31st December 2019.

If you are a First time buyer or an existing mortgage holder looking to switch, please call our office on 01 4972544 and someone from our mortgage team will be happy to help.