Alison Fearon from Switcheroo.ie mortgages discusses latest trends in the mortgage market
With the rapid rise in interest rates and with more expected to follow many mortgage customers on fixed term product are worried about where rates will be when their fixed term ends. It’s a valid concern but there are options to be explored.
The term "fixed" in a fixed-rate mortgage often leads to confusion. Many customers mistakenly believe they are locked into their current rate and unable to switch to a better one. We want to clarify that being on a fixed-rate mortgage does not mean you're stuck. It simply means that the interest rate remains unchanged during the fixed term. You have the freedom to switch to a different provider without any negative impact on your credit history, and the Central Bank of Ireland actively encourages such switches to help you save on your mortgage costs.
When contemplating a switch from a fixed-rate mortgage, it's important to consider potential "breakage fees." Not all banks charge breakage fees, but if there is one, you should weigh it against the potential savings from switching. A rational economic analysis will determine whether the breakage fee and associated switching costs outweigh the savings.
Breakage fees vary and depend on the capital market interest rates at the time you took out your mortgage compared to the rates when you wish to break the term. If interest rates have increased, there should be no fee. However, if rates have decreased, a fee may apply, and it will be proportional to the remaining time on your fixed term.
The good news is that there are many switcher deals in the market that offer cashback options. You can use these cashback offers to offset any breakage fees and switching costs, making the transition even more financially advantageous.
By registering at Switcheroo.ie, our advisors can guide you through the available switching offers and provide personalised assistance in navigating the process of switching out of your fixed-rate mortgage. They will help you understand the options, evaluate the potential savings, and facilitate a smooth transition.
If you are considering this or any other mortgage product, be sure to get professional advice and register at Switcheroo.ie
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