Mortgages - How easy is it to switch?

[ktc]

Edited on moderators request:
We are with KBC Homeloans and have a large mortgage left of approx €350,000 over 24 years, its working out about €1,700 per month - we're not tied into a fixed interest rate at the moment and would get a better deal if we switched, we also have an opportunity to pay off a lump sum of €40,000 next year when a policy is due up.

Already contacted KBC and spoke about this but they're told me they're sending me out a pack which deals with financial planning and to look through this first. I've looked at it online and it seems to be if you're in trouble they'll offer interest-only for a while. I'm not at that stage yet.

 

[Greta]

How much is your house worth now do you think? What your options are depends on your LTV - are you in positive equity?

 

[ktc]

no unfortunately we've no equity in the house, we're tethering on negative equity at the moment.

 

[Greta]

You might not have many options then, other than trying to get a better rate with your lender (perhaps fixed rate if it's lower than your variable one). Might not be worth fixing, though, as you might be able to switch in a year, when you get €40,000 to pay off the mortgage. Though it will depend on the value of your house at that time - if house prices drop further, paying €40,000 off the mortgage might not get you into positive equity.

In any case, if you have this lump sum coming, you are in a good position, as it will at least help you out until things improve.

 

[ktc]

thanks for the advice greta. Do you know if mortgage companies penalise you for moving from them?

 

[Greta]

thanks for the advice greta. Do you know if mortgage companies penalise you for moving from them?

It depends on the terms of your mortgage. With a variable rate mortgage there shouldn't usually be heavy penalties for early redemption but check the small print. There is probably going to be some cost - an exit fee - but it may be fairly small.