# Why don't more borrowers switch mortgage provider?



## Sarenco (17 May 2015)

The banks have told us that the mortgage switcher market in Ireland is very small and I'm curious as why this is the case.

*Is negative equity preventing SVR mortgage holders from switching?*

According to a Central Bank study published in 2014, 64% of performing borrowers had positive equity in their homes in mid-2012.  Given the fact that house prices have risen since mid-2012 and mortgages have continued to be paid down over the last three years, it seems reasonable to assume that the majority of SVR mortgage holders have significant positive equity in their homes.

*Is unemployment preventing SVR mortgage holders from switching?*

According to the above Central Bank study, 85% of performing borrowers were in employment in mid-2012 and unemployment has fallen somewhat since that time.

*Are incomes too low to meet new LTI limits?*

According to CSO statistics, median disposable income per individual fell from a peak of €20,758 in 2008 to €17,551 in 2013 (the latest year for which I can find statistics).  While there may have been a marginal rise in median disposable income over the last 12 months or so, it seems plausible that lower disposable income will prevent certain borrowers from switching.

Also, the  personal circumstances of some borrowers will have changed such that there will have been a material fall in disposable household income (for example, one spouse leaving the workforce to care for children or elderly parents).

*Are the costs of switching too high?*

Many lenders will make a significant contribution towards the legal costs of switching (e.g. Ulster make a €1,500 contribution) and will often offer other incentives (e.g. free house insurance for a year) such that the net costs of switching are often negligible.

*Are the savings simply not worth the hassle?
*
Obviously any savings will depend on individual circumstances.

To take one example, an SVR mortgage holder with a rate of 4.5% on an outstanding principal amount of €300,000 and an outstanding term of 25 years, will save €*45,403* (assuming the interest rate differential remains consistent throughout the term and there are no early repayments of capital) if refinanced at 3.55% (the lowest variable rate currently available).  It is worth bearing in mind that this is a tax-free saving.

There is certainly some hassle involved with switching but the potential savings can be very significant.

It seems to me that it is likely that there are tens of thousands of SVR mortgage holders that would very significantly benefit from refinancing their mortgages and are in a position to do so.  Breaking this level of customer inertia would inject some much needed competition into the mortgage market, which would be in all our interests as it would free up resources for spending elsewhere in the economy.

Thoughts?


----------



## thunder (17 May 2015)

I can only speak for my own situation. Bought in 2007, refused a tracker. Stuck on variable mortgage and high negative equity.


----------



## demoivre (18 May 2015)

Sarenco said:


> *Are the savings simply not worth the hassle?
> *
> Obviously any savings will depend on individual circumstances.
> 
> ...



No guarantee at all that the status quo regarding rates will remain in place over the 25 years. KBC bank have some of the best offers available for new customers. However I know of two families, several years in to their mortgages, who are being charged 4.5% ( SVR mortgage) by KBC on their PPR mortgages which is close to if not the most expensive in the market.


----------



## Sarenco (18 May 2015)

demoivre said:


> No guarantee at all that the status quo regarding rates will remain in place over the 25 years.


 
That's certainly true. 

Is there any reason why the families in question would not consider re-financing with another lender?  For example, Ulster Bank currently offer a Discounted Variable Mortgage <80% at 4% APR (Standard Variable Rate minus 0.40% for the life of the mortgage).  Ulster Bank pay a fixed amount of €1,500 towards a switcher's legal fees and also offer a free valuation.  I obviously don't know the outstanding amount or term of the mortgages in question but, by way of an example, reducing the rate on a €300k mortgage with 25 years remaining from 4.5% to 4% would result in a saving of €*24,144.50* over the term of the mortgage. 

If that stops being the best deal available, well switch again!


----------



## Chantilly (18 May 2015)

Locked in a fixe rate for another 3 years, with substantial negative equity..will have to assess market opportunity to switch bank in 2019 !  The penalty cost for breaking off the fix rate is higher than potential savings with the lowest rate currently available..besides a high SVR does not make my case a good one for switching to date :-(


----------



## gnf_ireland (18 May 2015)

I have recently gone through the process of switching. Its fair to say it is equivalent to applying for a brand new mortgage, and I believe this is a headache most people would prefer  to avoid. I think peoples financial affairs are probably not "mortgage application ready" at a given point in time, and people probably change spending patterns to clean up their accounts before they apply in general.

The cost of switching is also a barrier in my mind, and although while banks offer incentives for this, there is an associated cash flow impact to it as well that needs to be considered.

I also believe that Irish people generally are not financially savvy. We are not good at shopping around for the best deals and have a level of loyalty that is questionable at times - whether it be to utility companies, banks or whatever. Back to the old saying - "the devil you know is better than the devil you don't"

I am also willing to speculate that the people who are likely to benefit most from switching are those who bought after 2009 (when trackers were not available), and a portion now have children (and associated childcare bills) so they may not be offered a mortgage now under the new rules !


My switching process took ~4 months, but that said I am self employed so makes things a little trickier. There was also a legal hick-up along the way around moving the house into joint names. But that said, the move will save me 1500 euro a year (all things being equal) and this is better in my pocket than in the banks !


----------



## Sarenco (18 May 2015)

gnf_ireland said:


> I have recently gone through the process of switching. Its fair to say it is equivalent to applying for a brand new mortgage, and I believe this is a headache most people would prefer  to avoid. I think peoples financial affairs are probably not "mortgage application ready" at a given point in time, and people probably change spending patterns to clean up their accounts before they apply in general.
> 
> The cost of switching is also a barrier in my mind, and although while banks offer incentives for this, there is an associated cash flow impact to it as well that needs to be considered.
> 
> ...



Hi gnf

I take your point that the likelihood is that a certain number of borrowers that took out mortgages post-2009 would not meet the necessary underwriting standards to switch due to changed personal circumstances.  Having said that, roughly half of all outstanding PDH mortgages are non-trackers so there must still be a very large cohort of borrowers that could and would benefit financially from refinancing their mortgages.

What I find odd is that in the US it is quite commonplace to refinance a home loan multiple times during its term but there appears to be a reluctance to do so here.  Closing costs for refinancing a home loan are also generally quite high in the US so that can't be the reason for the difference in attitude.  When you consider that the potential savings can run to thousands, if not tens of thousands, of euro over the life of the loan, the level of inertia here seems very puzzling.

I also take your point that cash-flow constraints may be a barrier to switching for some borrowers.  Another good reason for maintaining a decent cash reserve at all times is to be in a position to avail of refinancing opportunities when they arise.


----------



## Bamocom (18 May 2015)

Performing borrowers stuck with Danske Bank, unable to switch, will be faced with either default or a forced sale when the rates increase again. They d'ont do fixed rates anymore, and have no wish to  to compete in this market. They want to exit, so much for New Banks entering the market.

In this country Variable Mortgage holders,are best served by a cap on on the rates, or good value fixed rates as in modern democracies.

In this free market, consumers  d'ont seem to get value.High medical costs, high utilities costs, high Childcare costs,   etc etc ..... and very very High mortgage costs.

So competition alone  is not the answer,switching is not going to fix the problems,  a holistic solution to a complex problem is needed in this not so competitive market.


----------



## shweeney (19 May 2015)

gnf_ireland said:


> I am also willing to speculate that the people who are likely to benefit most from switching are those who bought after 2009 (when trackers were not available), and a portion now have children (and associated childcare bills) so they may not be offered a mortgage now under the new rules !



This was the case with us when I spoke to KBC - we have low LTV and our current mortgage payment is reasonably manageable compared to our income, but KBC wouldn't offer us enough to switch, presumably because we have kids.  Most they could give us was about 2.5 times income when we were looking for 3 times.


----------



## Sarenco (19 May 2015)

shweeney said:


> This was the case with us when I spoke to KBC - we have low LTV and our current mortgage payment is reasonably manageable compared to our income, but KBC wouldn't offer us enough to switch, presumably because we have kids.  Most they could give us was about 2.5 times income when we were looking for 3 times.



KBC certainly appear to have relatively strict underwriting criteria, which presumably explains why they can offer the lowest variable rates in the market.

Have you tried any other lenders?  For example, Ulster Bank have a fairly decent switcher offering for relatively low LTV borrowers.  It's worth the effort, in my opinion, as even a 0.25% reduction in a variable mortgage rate can represent a very significant saving over the lifetime of an average home loan (whatever Shane Ross might say!).


----------



## demoivre (20 May 2015)

Sarenco said:


> KBC certainly appear to have relatively strict underwriting criteria, which presumably explains why they can offer the lowest variable rates in the market.



And as already pointed out  KBC Charge some of their SVR mortgage holders the highest rates in the market ie 4.5%.


----------



## Sarenco (20 May 2015)

demoivre said:


> And as already pointed out charge some of their SVR mortgage holders the highest rates in the market ie 4.5%.



Fair enough but is it not case that an SVR of around 4.5% is pretty standard across all the banks?  Interestingly, the SVR across the UK mortgage market also hovers in or around this figure (although I would guess that the % of borrowers at this rate is relatively low).

Incidentally, I agree that some legal protection from price gouging is warranted for borrowers that are not in a position to refinance their loans (whether due to negative equity or income constraints) and I have suggested a formula in this regard on another thread.


----------



## demoivre (20 May 2015)

Sarenco said:


> Fair enough but is it not case that an SVR of around 4.5% is pretty standard across all the banks?



No definitely one of the highest. See here, scroll down the home page.


----------



## Sarenco (20 May 2015)

demoivre said:


> No definitely one of the highest. See here, scroll down the home page.



Is that not a list of LTV variable rate mortgages?  My comments above only related to SVR rates.


----------



## demoivre (20 May 2015)

Sarenco said:


> Is that not a list of LTV variable rate mortgages?  My comments above only related to SVR rates.



Every mortgage has a LTV ratio.


----------



## Sarenco (20 May 2015)

demoivre said:


> Every mortgage has a LTV ratio.


 
Well, yes, I suppose that's true but an LTV mortgage normally refers to a mortgage where the initial interest rate is determined on the basis of the LTV ratio at the time that the home loan is advanced.  In contrast, the SVR is the "default" variable rate that applies regardless of the LTV ratio. 

Some lenders (e.g. Ulster Bank) actually describe their LTV mortgage rates as reflecting a certain discount to their SVR throughout the term of the loan.

From memory, Bank of Ireland, PTSB, Ulster Bank and KBC all have an SVR of 4.5%.  Danske's SVR is somewhat higher and AIB's SVR is somewhat lower (or at least it will be when the recently announced reduction takes effect).


----------



## Sarenco (21 May 2015)

According to figures recently published by the IBF, there were a grand total of 172 mortgage refinancing transactions in the first quarter of this year and 503 in all of 2014.

Those figures are stunningly low when you consider that there are tens of thousands of SVR mortgage holders that would very significantly benefit from refinancing their mortgages and are in a position to do so.

Are people really that keen on paying inflated variable interest rates to their lenders?  And we wonder why SVR rates are so high in Ireland...


----------



## elcato (21 May 2015)

The main blocker is the legal fees. At best for a switch they are about 1k. I have no clue what needs to be re-checked but is there an argument for tackling this fee like within a certain timeframe or something ? I'm sure there are very valid reasons for the cost but just curious as to why if everything is in order first time around why the cost to switch is not far off the original seeing as the bank don't insist on an update of the legal state of a house every year or so.


----------



## Sarenco (21 May 2015)

elcato said:


> The main blocker is the legal fees. At best for a switch they are about 1k. I have no clue what needs to be re-checked but is there an argument for tackling this fee like within a certain timeframe or something ? I'm sure there are very valid reasons for the cost but just curious as to why if everything is in order first time around why the cost to switch is not far off the original seeing as the bank don't insist on an update of the legal state of a house every year or so.


 

PTSB, Ulster Bank and KBC will each make a contribution of between €1,000 and €1,500 towards the legal costs of switching and Bank of Ireland will give a switcher cash back equivalent to 1% of the amount of the loan.  In addition, some lenders will offer other incentives to switchers, such as free house insurance for a year.


----------



## Sarenco (24 May 2015)

The Sunday Business Post reports today that, based on recently published IBF data, mortgage switches quadrupled in the first three months of 2015 compared to the similar period in 2014.  However, the amounts involved are tiny - only €41 million out of the near €1 billion in mortgages drawn down in the quarter were switcher mortgages.

I think it should be relatively clear from the events of the last few days that a political campaign with rather vague, unfocused demands regarding variable mortgage rates is unlikely to yield significant results.  However, it is equally clear that there is a very significant cohort of non-tracker, variable rate mortgage holders that are not availing of the substantially lower rates available to switchers.

There is no doubt that an active switcher market would drive down variable rates accross the board as lenders would cut their rates to retain performing mortgages on their books.  At an individual level, switching mortgage providers is a far more effective strategy than lobbying politicians.

As always, the gods help those that help themselves.


----------



## Concerning (24 May 2015)

Hard to see why SVR customers don't make more of an effort to secure better rates by (1) moving to LTV based offering with existing provider (subject to positive equity), (2) choose cheaper fixed rates now on offer (available option, even for those in negative equity), or switch to alternative provider offering rates at 3.5% compared to highest SVR offered by some banks at 4.5%. I assume legal costs are a factor but if you can save 1% plus per annum, why not vote with feet? It seems existing providers will offer better rates to retain custom anyway...so as previous comments say, help yourselves instead of depending on political masters to make a difference.


----------



## Sarenco (24 May 2015)

Concerning said:


> I assume legal costs are a factor but if you can save 1% plus per annum, why not vote with feet?.



Most lenders in the switcher market will cover most (if not all) of the legal costs associated with switching, together with free valuations and other incentives, such as free home insurance.


----------



## shweeney (25 May 2015)

Sarenco said:


> KBC certainly appear to have relatively strict underwriting criteria, which presumably explains why they can offer the lowest variable rates in the market.
> 
> Have you tried any other lenders?  For example, Ulster Bank have a fairly decent switcher offering for relatively low LTV borrowers.



Yes - PTSB offered us enough to switch, but right now I'm waiting to see what happens with Noonan's July deadline...


----------



## Sarenco (25 May 2015)

shweeney said:


> Yes - PTSB offered us enough to switch, but right now I'm waiting to see what happens with Noonan's July deadline...


 
The PTSB switcher offering is fairly reasonable at low LTVs - <50% LTV @ 3.76% APR variable; <60% LTV @ 3.87% APR variable; <70% LTV @ 3.97% APR variable .  PTSB will make a contribution of €1,000 towards the costs of switching.

However, I think the Ulster Bank three-year fixed rate offering (fixed until 31/08/2018) for <60% LTV @ 3.65% is more attractive, particularly as Ulster Bank will make a payment of €1,500 which should more than cover all switching costs.

I really wouldn't anticipate any major changes to the variable rate market arising out of the Minister's chat with the banks.


----------



## BHOG (25 May 2015)

Will PTSB offer these LTV rates to customers already with an SVR in the bank who would switch to a fixed rate for a better rate?  We pay 4.5% on our SVR and would qualify for 3.87% on that fixed LTV offering.


----------



## Sarenco (25 May 2015)

BHOG said:


> Will PTSB offer these LTV rates to customers already with an SVR in the bank who would switch to a fixed rate for a better rate?  We pay 4.5% on our SVR and would qualify for 3.87% on that fixed LTV offering.




I'm sure they would (and they certainly should) if they thought that such a valuable customer (from PTSB's perspective) was about to cross the road to another lender!

If I was in your position, with an LTV of <60%, I would look for approval in principle from KBC and Ulster Bank and then request PTSB to match their offers - if PTSB won't match the best competing offer, then switch.  Banks no longer reward loyalty.

Also, depending on the principal amount outstanding on your mortgage, Bank of Ireland might be worth considering.  A three-year fixed rate mortgage with BofI, at an LTV of <75%, is currently 3.85% - not the best fixed rate available on the market but Bank of Ireland will pay 1% off your mortgage balance.  So if you have a relatively large outstanding mortgage, albeit with a low LTV, and you want to fund a short term expense (such as a family holiday), then BofI might be the way to go.

Assuming your LTI is not too high, there is really no reason why you should be paying a 4.5% SVR.  You could save yourself thousands, if not tens of thousands, of Euro over the medium to long term by switching mortgage provider (or at least threatening to do so).


----------



## BHOG (25 May 2015)

Thanks Sarenco. Unfortunately we would not meet lending criteria of a new lender due to one of us no longer in employment. For this reason, it would make a big difference to us if we could avail of a lower rate in the same bank.
We did ask PTSB about 6 months ago and were refused. They said these rates were for new business only and would not apply to existing SVR customers.


----------



## Sarenco (26 May 2015)

I doubt any lender would offer an existing borrower a lower rate unless they felt under some competitive pressure to do so. 

I'd keep an eye on developments though - it looks like Ulster Bank are prepared to let existing variable rate borrowers switch to lower fixed rate mortgages.  To be honest, I'm not sure what's in it for UB but PTSB and other lenders may well follow suit. 

Does your outstanding loan amount exceed 3.5 times your gross household income?  If not, I still think it would be worth approaching other lenders about a possible switch.


----------



## gnf_ireland (26 May 2015)

shweeney said:


> Yes - PTSB offered us enough to switch, but right now I'm waiting to see what happens with Noonan's July deadline...


Nothing wrong with this, but the process of applying takes time also. You dont need to decide what you are going onto until much closer to the time. With KBC I had 2 months to accept the Letter of Offer, and this was after we got to that stage in the process. There is no harm in commencing the process now and seeing how far you get with the 3 main options - PTSB, Ulster and KBC - all of which offer incentives to move. You can add BOI to the list if you have a decent mortgage and the 1% clawback is financially worthwhile to you over a 2 year payback window


----------



## Sarenco (26 May 2015)

gnf_ireland said:


> Nothing wrong with this, but the process of applying takes time also. You dont need to decide what you are going onto until much closer to the time. With KBC I had 2 months to accept the Letter of Offer, and this was after we got to that stage in the process. There is no harm in commencing the process now and seeing how far you get with the 3 main options - PTSB, Ulster and KBC - all of which offer incentives to move. You can add BOI to the list if you have a decent mortgage and the 1% clawback is financially worthwhile to you over a 2 year payback window



That's useful information gnf.  

Could you give us an estimate as to how long the process took from your first contact with KBC to drawdown?  Also, did you learn anything from the process that you would do differently if you were to refinance now?  Finally, did you arrange everything yourself or did you go through a broker?

Sorry for all the questions


----------



## gnf_ireland (26 May 2015)

Sarenco said:


> Could you give us an estimate as to how long the process took from your first contact with KBC to drawdown? Also, did you learn anything from the process that you would do differently if you were to refinance now? Finally, did you arrange everything yourself or did you go through a broker?



@Sarenco I have no issue in answering questions on this. I will set up a different post on it over the next few days and include a blog type thing of what happened at each step along the way. 

In my particular case, there was a few complexities which slowed things down. House was in my name only as it was brought the week before we got married; KBC wanted joint mortgage/joint ownership for the family home. My wife has a house bought before we got married in negative equity, but on a low tracker mortgage. I am also self employed (independent IT consultant) which adds a little bit extra in the paperwork required.  We also have two children in full time childcare due to start school in 2017 & 2018 respectively.


For me, it was 4 months from first contact to drawdown, although this could be done in 2 months except for complexity on self employed status in February (requiring lots of additional documentation to be issued and confusion on the banks side on what proof of employment meant) and BOI title deeds getting lost in early March and contract issue joint names on property issue in late March/early April. I assume most would not have the same issues.

Things I would do differently:
- Would have applied to a number of banks at the same time and got to Approval in Principle stage. At that point I would have asked they for their standard mortgage contract documentation for review, just in case there would be items in it I would not be too happy with. That said, I am used to reading contracts so it would be a bit easier for me
- Arrange for title deeds to be returned from bank once Approval in Principle has been received. It speeds up the entire process. The cost of ~60 euro is a bit like a valuation cost - needs to be done to move it forward

I did not go through a broker. I went into KBC hub and done it all with one of the people there. It was an easy enough process. That said I done the same for my original mortgage with BOI

Note: I also cancelled by credit card with BOI and moved that to KBC, and opened a current account with KBC as part of the process. I still have my BOI current account for the moment at least, but there are minimal transactions going through it at this stage (~3 a month currently)

Also worth noting that KBC are giving me 1,000 euro switcher rebate back off the first mortgage payment - so on 1st June I will pay 1000 less than normal. This might be useful for people wondering about cashflow issues. 
The 1000 euro rebate did NOT cover the legal costs of the move for me. I have yet to get the final bill, but will be closer to 1600 euro + 127 for the valuation. That said I got 230 off my house insurance for the year, so net cost me ~ 500 euro to switch. Also note I did NOT use the solicitor as for the original house purchase.


----------



## Sarenco (27 May 2015)

Many thanks for your detailed response gnf - that's really helpful.  If you could find the time to pen a "how to" type post that would be fantastic.

On your legal costs, I can certainly see how transferring the property jointly to yourself and your wife, coupled with the fact that you used a new solicitor (who presumably had to read the title from scratch), would have added materially to your legal costs.  Even allowing for that, I wonder how long it will take for you to recoup your net costs - I suspect you will make it back in a couple of months.


----------



## Brendan Burgess (15 Jul 2015)

Sarenco - great thread. Don't know how I missed it.  




gnf_ireland said:


> I will set up a different post on it over the next few days and include a blog type thing of what happened at each step along the way.



gnf - This would be a great help to people, given your experience.  Carmel outlined her experience in this thread.  Any chance you could outline your case in a similar manner? 

*We switched mortgage from BoI to KBC, and we would encourage others to do so as well!*


----------



## Brendan Burgess (15 Jul 2015)

Sarenco said:


> The Sunday Business Post reports today that, based on recently published IBF data, mortgage switches quadrupled in the first three months of 2015 compared to the similar period in 2014. However, the amounts involved are tiny - only €41 million out of the near €1 billion in mortgages drawn down in the quarter were switcher mortgages.



Hi Sarenco

Unfortunately, I don't think that the figures are even that high. 

The Central Bank is due to report some research on switching this week, which I believe will show the rate of switching to be 30 per month. ( I couldn't find the article you refer to or the IBF data but I suspect it could be approvals.) 

30 mortgages at around €250k each would be €20 million a quarter. 

The CB estimates that 15,000 borrowers could recover their costs of switching in one year. 

Brendan


----------



## Brendan Burgess (15 Jul 2015)

A big reason for not switching omitted from the first post, is that many mortgages are just too small and have only a few years left. 

If you have a Bank of Ireland mortgage with a balance of €50k  and you are paying 4.5%, you might find it hard to get mortgage approval for such a low amount. Let's say you switch to KBC at 3.5%, you will be saving €500 a year. 

You would be better off asking BoI for a rate cut and they will probably cut the variable rate for you.

Or they may suggest that you fix at 3.6%.   It would make more sense to fix at 3.6% than pay €1,000 to move. (Not sure what the minimum mortgage is to qualify for the contribution towards legal fees from KBC and Ulster.) 

Brendan


----------



## ClubMan (15 Jul 2015)

Brendan Burgess said:


> A big reason for not switching omitted from the first post, is that many mortgages are just too small and have only a few years left


So is it true to say that the two main reasons are (a) arrears/bad credit rating locking a borrower to their current lender and (b) mortgage too small or too little left on term to bother?
Are there any indicative numbers on these two groups compared to the total PPR variable rate numbers?


> (Not sure what the minimum mortgage is to qualify for the contribution towards legal fees from KBC and Ulster.)


€40K with UB: [broken link removed]
Can't see anything obvious on KBC site.


----------



## Brendan Burgess (15 Jul 2015)

ClubMan said:


> So is it true to say that the two main reasons are (a) arrears/bad credit rating locking a borrower to their current lender and (b) mortgage too small or too little left on term to bother?



I don't think we can say the relative size of each factor. I would have thought that Negative Equity or LTV >80%/90% were bigger factors. 

Brendan


----------



## Brendan Burgess (15 Jul 2015)

*Only 60 people a month are switching mortgages at present!*

Extracted from [broken link removed]







In 2005, there was a huge saving to be made. People were switching from SVR mortgages to trackers. They had certainty about the benefit of switching - they knew that it would be a long term saving over the life of the mortgage. And, of course, Danske and BoSI were aggressively chasing market share.


----------



## elcato (15 Jul 2015)

Personally I am not changing because

1) I am on a low enough rate 3.9%
2) I am an accidental(ish) landlord so can write off 75% of interest
3) My outstanding mortgage is <90k
4) Legal costs make it not worth while


----------



## ClubMan (15 Jul 2015)

Who's your lender?
3.9% still seems high.


----------



## elcato (15 Jul 2015)

AIB


----------



## ClubMan (15 Jul 2015)

You seem to be on a PPR rate for the BTL?
If the mortgage is 90K then I guess that you're < 60% LTV in which case can't you get 3.5% or 3.6% variable depending on the term?
Or one of the lower fixed rates c. 3.5%?


----------



## elcato (15 Jul 2015)

The saving is not great enough for me to want rock any boat plus I want to be in a position to pay off whenever I want.


----------



## Sarenco (15 Jul 2015)

Brendan Burgess said:


> A big reason for not switching omitted from the first post, is that many mortgages are just too small and have only a few years left.



Fair point but I suppose a mortgage with a relatively low outstanding balance or term probably falls within the "not worth the hassle" category, from the perspective of both the lender and borrower.


----------



## Sarenco (15 Jul 2015)

elcato said:


> The saving is not great enough for me to want rock any boat plus I want to be in a position to pay off whenever I want.



What boat are you trying to avoid rocking?  

Have you worked out the potential savings before deciding that it's not worth the hassle?  Why would switching to another variable rate mortgage stop you paying off whatever you want (also I believe some fixed rate mortgage providers do not penalise borrowers for making payments ahead of schedule)?

It's obviously your decision but remember that customer inertia is a banker's best friend.


----------



## Brendan Burgess (15 Jul 2015)

Sarenco said:


> Fair point but I suppose a mortgage with a relatively low outstanding balance or term probably falls within the "not worth the hassle" category, from the perspective of both the lender and borrower.



I think it's worth distinguishing between those who could save money by switching but don't, and those where the costs of switching exceed the savings in interest. 

Brendan


----------



## elcato (15 Jul 2015)

Sarenco said:


> What boat are you trying to avoid rocking?


The boat that Clubman pointed out that they could potentially query whether it's still my PPR.


Sarenco said:


> Have you worked out the potential savings before deciding that it's not worth the hassle?


 Yep.
I am in a position to pay it off now but will wait till I move back into it. (This timeframe is hard to pin down right now but is not expected to be more than a few years.) I believe cash is king for the moment so prefer to have savings at a cost than to have to go back to the days of proving to the bank that you don't need the loan your applying for in the first place.


----------



## Sarenco (15 Jul 2015)

Brendan Burgess said:


> I think it's worth distinguishing between those who could save money by switching but don't, and those where the costs of switching exceed the savings in interest.
> 
> Brendan



Agreed but each of Ulster, BOI and KBC (who I would suggest have the most attractive offerings at the moment) now offer a cash-back incentive that should more than cover the cost of switching in virtually all cases.

However, notwithstanding the fact that the cash back incentive may cover the cost of switching, there will obviously still be circumstances where the amount outstanding and/or the remaining term are such that proceeding is simply not worth the time and hassle, from the perspective of either the borrower or lender.


----------



## Sarenco (15 Jul 2015)

elcato said:


> I am in a position to pay it off now but will wait till I move back into it. (This timeframe is hard to pin down right now but is not expected to be more than a few years.) I believe cash is king for the moment so prefer to have savings at a cost than to have to go back to the days of proving to the bank that you don't need the loan your applying for in the first place.



Understood.  

This strikes me as a relatively expensive way of retaining a degree of flexibility or optionality but you've obviously thought it through.


----------



## gnf_ireland (17 Jul 2015)

Brendan Burgess said:


> Sarenco - great thread. Don't know how I missed it.
> 
> 
> 
> ...




Brendan - that's done now

Apologies for the delay. With 2 kids under 3 time online can be random at best


----------

