Money І Should you switch mortgage provider?

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According to the Central Bank, one in five consumers who have a mortgage could save by switching. But before you make the big move, there are many things to consider.

As your biggest financial commitment, it is natural that you want the best terms and conditions for your mortgage. But even when other providers dangle a better offering in front of you, many of us are paralysed by fear of the big change.

Switching is not easy, but it is also not impossible. With the possibility of getting a better rate, it is in your best interests to do your homework and maths.

To switch, you have to be eligible. They will primarily look at your loan-to-value ratio which is how much you owe on your mortgage in relation to how much your house is worth. As such, those in negative equity will find it  almost impossible to change. If you have a small outstanding balance, certain banks may not want to take on the account.

They will also consider your credit rating, your payments over the last 12 months, your current mortgage set up. If you are on a fixed and tracker mortgages, for instance, this may impact your eligibility. 

If you feel you are eligible, check out the many mortgage comparison tools that are now available. Rates are constantly changing but it’s good to have a broad overview of market conditions.

Be warned when switching. Introductory packages offered may sound enticing but make sure you look at the entire package and not just the incentives, such as discounted insurance.

Unfortunately, there are legal and administration fees associated when breaking away from your original provider. It may be better to inform your current lender of any deals you are being offered to see if they can match that.

If you are unsure of what to do, it may be a worthwhile investment to get professional financial advice.