Homeowners pay over €4,000 in additional mortgage payments each year

A new study finds that homeowners can unnecessarily pay an average of €4,097 in extra mortgage payments annually by not switching lenders.

This is an increase of €657 over the past 12 months with a monthly saving of €135 for every €100,000 owed on a 25-year mortgage for those who switch.

The doddl.ie Mortgage Switch Index has also found that homeowners who are switching to raise money to improve their home’s energy rating can now end up with similar or lower monthly payments thanks to the entry of Green’s new rates into the market.

Mortgage conversion volume increased over 35 percent year-on-year as more households benefit from the recent downward shift in mortgage interest rates.

More converters are now turning to independent market-based advice as four mortgage lenders, including those offering the lowest market rate and long-term fixed rates, only offer their products through intermediaries.

Martina Hennessy, managing director of doddl.ie, said: “This represents a positive shift in consumer behavior as mortgage applicants seek market-based advice and lower rates.

“All banks claim to be customer centric, however, it is the new entrants and non-bank lenders who are leading the way in terms of the lowest market rates and new innovative products such as full-term mortgage rates.

« The burden is now on mortgage applicants to embrace these lenders, not just look at the status quo, and thus put pressure on the core banks to move in the same direction. »

The numbers of those topping the current mortgage also increased significantly with a 43 percent increase in additional mortgage withdrawals year-over-year.

« We’re seeing a significant increase in mortgage holders looking to release equity in their homes to make home improvements and extend money, » Hennessy added.

“Having spent the past year largely at home, people find that in many cases their environment is not suitable for their needs.

« With the supply of quality housing in short supply, mortgage holders are increasingly choosing to renovate with projects ranging from minor upgrades to larger extensions and attic conversions to provide more living and working space. »

Research earlier this year showed that more than half of families are considering home improvement, motivated by increased comfort and warmth in their homes.

« Those who improve their home’s energy rating to B3 or higher are increasingly securing one of the green rates currently on offer from lenders including Haven Mortgages, AIB, Ulster Bank and Bank of Ireland, » said Ms Hennessy.

Haven Mortgages is the latest lender to offer a green rate product with a four-year fixed rate of 2.15 percent for all loans to financing values ​​of up to 90 percent.

“This price is available to buyers and swaps who also have eligible converters for a cash amount of €2,000 on switch.

“If your BER is set to become more favorable due to the home improvement business, lower green rates can mean that even when you release equity for the business, your monthly payment does not increase.

“A low variable rate mortgage holder of 3.15 per cent looking to release equity of €25,000 for home improvements with an existing mortgage of €250,000 will currently repay €1,205 per month over 25 years.

“If this client releases the equity of €25,000 to raise the total mortgage to €275,000 and becomes eligible for a green rate discount, his rate will be 2.15 per cent and his repayment will be €1,186 per month.”