Buying a home is likely to be the most important financial decision you make, and getting the right deal on your mortgage could make a huge difference to the amount that this costs you. Many people do not bother to switch their mortgage provider, but studies show that 1 in 5 people could save money by doing just that.
Switching your mortgage provider might sound like a lot of work, and it can be a time-consuming process, but with the potential to save thousands, and even tens of thousands, of euros, it is well worth the effort. If you work with an experienced property solicitor to handle your re-mortgage, you will find that the process is much less stressful, and you will have peace of mind knowing that all the details have been handled correctly.
Different Types Of Mortgage
The type of mortgage you have will depend upon your personal financial situation and your preferences, and will usually be one of the following:
- Fixed mortgage. A fixed rate mortgage is a great option if the financial climate is uncertain or if you are worried about not being able to make repayments if interest rates rise. Choosing this type of mortgage means that your repayments will be fixed for a certain term, usually 2-5 years but occasionally up to 10 years. The shorter terms will offer the best rates, and this will mean you know exactly what you will be paying each month for the duration of the agreed term. It is important to be aware that interest rate rises will not increase the monthly repayment, but neither will any drops in interest rate be reflected in your repayments. Fixed rate mortgages tend to have several fee penalties built in, and this may be very expensive if you want to re-mortgage or switch lenders before your agreed term ends.
- Variable mortgage. A variable mortgage, sometimes called a tracker, follows the rises and falls in interest rates and adjusts your monthly repayments accordingly. For example, you might have a variable mortgage rate that is 2% above the base interest rate, and your payments will vary according to the changes in the base rate over the course of your term. This is a more flexible option than a fixed rate mortgage, and it is often possible to extend or overpay on your mortgage without incurring penalties. However, it is not as predictable as a fixed term option and you must be certain that you could continue to make repayments if interest rates increased significantly, or you could be at risk of losing your home.
Should You Re-mortgage?
Re-mortgaging is a personal decision that could have a dramatic effect on your finances. You should consider the following questions before making your decision:
- When did you last re-mortgage? If you have not re-mortgaged for many years, you may find that the value of your property has increased and that you can access much more favourable mortgage rates. The loan amount you need in relation to what your property is worth is known as loan to value (LTV). If you own more than 40% of your home and are seeking to find a new mortgage for the rest of the value, you are likely to be able to access excellent rates.
- How much do you owe on your mortgage? If you have an outstanding mortgage loan of less than €50,000, you are unlikely to benefit from re-mortgaging.
- Has your property fallen in value? If the value of your property has dropped, you may find that you owe more on your mortgage loan than the property is worth. This is known as negative equity, and you will almost certainly not be able to re-mortgage if you are in this situation.
- Are there fees for switching lenders? If you are already in a fixed term mortgage, you may find that you have to pay high exit fees for ending the agreement early. You should check the details of your current agreement as you may find that waiting a few months could save you thousands of euros.
How To Re-mortgage
If you have decided to re-mortgage and are eligible to do so, you should take your time to find the very best deal available to you. You can search the current options available to you online, or work with a mortgage broker or independent advisor to find the deal that suits you best. A broker or advisor will either take a fee directly or take payment via your mortgage provider, and although this may add to the costs, you are likely to save a great deal of money and time by using their professional expertise.
You will need to provide photo identification for yourself, and a joint mortgage holder if applicable, as well as proof of address, proof of earnings, and six months of bank statements. This is essential in order to prove that you can comfortably pay the mortgage you are trying to secure, and your expenditure may be taken into account as well as your earnings.
You will usually need to work with a conveyancing solicitor to remortgage your property, and this is another way to ensure that the process runs smoothly. Property law is complex and it important to have the legal and financial protection of working with an experienced property solicitor in order to protect your interests. Your property solicitor will ensure that the property deeds are obtained from your existing mortgage provider and that all details are correct, and will handle the details of your new mortgage offer. Your new mortgage lender will need to see that you have appropriate security for the loan you wish to take out, and your property solicitor will be able to provide the necessary proof after examining your title deeds.
Find Property Solicitors in Cork
If you are buying or remortgaging a property, you can ensure that the process runs smoothly by talking to our specialists at Irwin, Kilcullen & Co Solicitors. Simply contact us online or call us today on +021 4270934 to see how we can help.