How much have you saved in the Credit Union?
You should be able to remortgage at 3% which would cost you €1200 a year from your home loan lender on €40,000 or €900 a year, if you already have saved €10,000.
What rate would the Credit Union lend to you at? Would they let you withdraw the €10,000 and borrow only €30,000. In many cases, they insist that you keep the €10,000 in shares and borrow the full €40,000.
If they do this and they charge 6% on the loan, you will pay €2,400 a year in interest. You will probably get €200 dividend on your €10,000 shares. So the net cost to you of the credit union would be €2,200 a year.
To me, there is a huge difference between €2,200 a year and €900 a year. It is well worth incurring some legal costs to make this savings.
In summary, you need to find out:
1) What rate will your mortgage provider charge you?
2) What rate will the Credit Union charge you?
3) Will the Credit Union allow you withdraw all your savings like the mortgage provider will?
4) What will the legal costs be in remortgaging?
Brendan