Are you getting the best rate on your mortgage?
May 31, 2024
Last month’s report by the Banking and Payments Federation Ireland (BFPI) shows a decline in switching and remortgage activity. It seems like many of us tend to prefer the status quo when managing our financial affairs.
Changing tack could benefit your pocket. By switching to the best possible rate, you could save thousands. Here is our quick start guide to put you on the right track.
Compare different rates
Shop around to get the best interest rate you can. Use our independent mortgages comparison tool to do the hard work for you. Our tool will compare the rates of all the different mortgage providers and show you what is available.
You just have to enter some basic information about your current mortgage and the options for the different mortgage providers will come up. You will then be able to decide if it makes sense to stick with your current mortgage or not.
Top Tip
Focus on the interest rate offered by mortgage lenders. It will determine the overall cost of credit and should always be your main consideration.
Research in time!
If your current mortgage rate is due to end soon, make sure you start researching all the other options in time. Contact your mortgage provider and find out how much you still have to pay on your mortgage at your current rate. It might be better for you financially to end the rate sooner.
If you are on a fixed rate mortgage and do not act in time, when the fixed period ends, your lender will place you on their default variable rate (standard) which can end up costing you more. Signing up for a new mortgage may seem like a hassle but it can certainly save you money.
Reduce your rate
Factors such as rising property prices could impact your rate for the better without you realizing it. The loan to value ratio (LTV) is a strong example. The LTV ratio is the amount you owe on your mortgage in proportion to the value of your house. Lenders generally offer lower rates to borrowers with lower LTV ratios. Your house may have gone up in worth so you may qualify for this lower mortgage rate. If you’ve paid a large chunk of your mortgage, your LTV ratio will be higher too.
Improving your home’s building energy rating (BER) is another way to potentially cut your rate. You may qualify for a ‘green mortgage’ if you have recently increased your BER. Green mortgages are among the lowest interest rates on the market. Our comparison mortgage tool includes green mortgages.
Weigh up ‘special offers’
Many lenders offer incentives encouraging you to switch your mortgage to them. For example, cashback offers are attractive because they give you money in the short term.
These special offers might not make financial sense in the longer term when you work out the total cost of the mortgage. The lenders offering these incentives often charge higher interest rates.
Our Money Hub has further information on switching mortgages.
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