For most people, their mortgage represents their biggest financial commitment as well as their largest monthly outgoing. Other than making their monthly repayments, many people stop thinking about the competitiveness of their mortgage product once they have moved into their new home. Many other mortgage holders do not believe they are able to improve upon or avail of better value products. Nothing could be further from the truth. At Frank Lenny Financial, we actively encourage clients to review their mortgage on a regular basis. As downward pressure on interest rates increases and competition between lenders for market share intensifies, more and more customers with older mortgage contracts could potentially benefit from better value interest rates, developed specifically for customers wishing to switch their mortgage. Several of the main lenders also offer various cash and legal fee incentives to encourage clients to switch.
In the example* below, we can see a variable rate mortgage of €300,000 over a remaining term of 20 years. In this example, we take a historic (and not uncommon in older mortgage contracts) variable interest rate of 5.5%, and compare it to a typical new business variable rate of 3.5% which may be available to qualifying switcher cases in the market today. The impact of such a difference can be seen very clearly, over the term the customer paying the higher interest rate will pay circa. €77,707 more in interest repayments, an enormous difference.
*For illustrative purposes only, actual figures may differ.