Getting a better deal on your mortgage is going to become easier. New Central Bank rules introduced at the beginning of the year will deal with the dysfunctional nature of the mortgage market. The new rules mean that lenders will have to inform borrowers if savings can be made on their mortgages. If there is a better rate available they will have to inform you.
Ireland has the highest interest rates in the Eurozone. The average rate on a business mortgage in Ireland is 3.05% as opposed to 1.77% in the Eurozone. This equates to a difference of €215 on a loan of €200,000
So it is worth your while looking for a better deal?
With the new rules you may not even have to move lenders but simply avail of better rates from your lender. One calculation show that Bank of Ireland customers who are paying 4.5% on variable rates. The rate could be cut to 3pc by fixing for one year. That would be a saving of €250 a month on a €200,000 mortgage. This is a significant saving for any home.
Moving to new lender could result in a bigger saving.
But why are people not switching if there is so much savings to be made. In this article Escape the banking ‘confusopoly’ show that the banks make it hard for people to understand the deals.
The banks are relying on people not understanding the interest rates and the financial side. Most people would prefer to not think about all this. Getting the best deal involves being proactive and talking to your bank or lender.
Another solution is to talk to your financial advisor. Let them do the work for you and see if there is a better deal out there. This can be very cost effective as the broker earn their fees from the lenders and not from the borrower. This is a great option of your are not too sure about the calculations or do not like approaching the bank.
Talk to your financial advisor and see what the savings you could be making.