Switching mortgage - change in circumstances

Richard88

Hi all,
Currently on year 6 of a 35 year mortgage with BOI but are preparing for a switch to either avant or KBC for the obvious reason of better interest rates. Our LTV is approx 58%

My understanding is that switching is more or less the same process as first applying (6 months statements, payslips etc)

However since we got our mortgage our circumstances have changed. We now have 2 kids and herself only works part time.

Our credit history is good, have never missed payments / direct debits etc. And the new mortgage repayment would be 70euro less per months on a 7 year fixed rate.

Before I go wasting a brokers time (and my own). Has anybody any experience with this? Will the drop in salary and the 2 dependents really mess up our chance or do they tend to put more of a focus onto how we have been saving and paying our mortgage at the moment?

Any suggestions / opinions are welcome.
Thanks

listermint

You sound like the average person tbf. You should apply and see whats what. Your LTV seems good so go on nothing to lose.

cruizer101

My understanding is there are 3 main criteria you need to fulfil to get approval.

Multiple: Mortgage amount less than 3.5 times gross
Deposit: Deposit of 20% of value of mortgage, equity in current house counts, so you will fulfil this criteria
Repay-ability: your net monthly income minus stress tested mortgage repayment (i.e. if interest rate went up I think 2%) is greater than x (x is figure set by bank which amounts to an estimate of living expenses, it will increase with number of children)

Get in touch with bank and find out if you fulfil those, not much effort involved in that, and will give you good idea.

Noddy33

Richard88 wrote: »

Hi all,
Currently on year 6 of a 35 year mortgage with BOI but are preparing for a switch to either avant or KBC for the obvious reason of better interest rates. Our LTV is approx 58%

My understanding is that switching is more or less the same process as first applying (6 months statements, payslips etc)

However since we got our mortgage our circumstances have changed. We now have 2 kids and herself only works part time.

Our credit history is good, have never missed payments / direct debits etc. And the new mortgage repayment would be 70euro less per months on a 7 year fixed rate.

Before I go wasting a brokers time (and my own). Has anybody any experience with this? Will the drop in salary and the 2 dependents really mess up our chance or do they tend to put more of a focus onto how we have been saving and paying our mortgage at the moment?

Any suggestions / opinions are welcome.
Thanks

I initiated the process last week of switching mortgage and like yourself should hopefully be in a position to avail of Avants <60% LTV low interest rate for 7 years and yes you are right the process is the equivalent of a first time mortgage application.

I cant comment on the potential impact due to change in your circumstances with now having two dependents but my advise is to use the services of a broker as it wont be a 'waste' of either your or their time!! I contacted a broker and found them very helpful and not have clear instructions of exactly what information I need to gather to make the switching process hopefully a relevant straight forward job..........!!

ted1

Richard88 wrote: »

Hi all,
Currently on year 6 of a 35 year mortgage with BOI but are preparing for a switch to either avant or KBC for the obvious reason of better interest rates. Our LTV is approx 58%

My understanding is that switching is more or less the same process as first applying (6 months statements, payslips etc)

However since we got our mortgage our circumstances have changed. We now have 2 kids and herself only works part time.

Our credit history is good, have never missed payments / direct debits etc. And the new mortgage repayment would be 70euro less per months on a 7 year fixed rate.

Before I go wasting a brokers time (and my own). Has anybody any experience with this? Will the drop in salary and the 2 dependents really mess up our chance or do they tend to put more of a focus onto how we have been saving and paying our mortgage at the moment?

Any suggestions / opinions are welcome.
Thanks

Yes it’ll make a difference. Not sure about KBC.but AiB remove your repayment capacity be 250 per month per child. So your salary will be counted as 6k less than it is.

Richard88

Cheers lads. Sure I’ll gather the statements and give it a go anyway ðŸ‘

Noddy33

Hi All,

Apologies for bringing up a previous thread but I thought it might be best suitable to ask here in the hope someone could answer a query for me.

I currently in the process of switching my mortgage to Avant to avail of their 1.95% interest. My fixed period with my original lender EBS is up since May so I have automatically switched over to the higher variable rate until all applicable legal documentation and switch is completed.

I in the position where I have seeking a loan of €140k from Avant which is the balance of my mortgage. However I have work shares that as part of employee bonus scheme have now matured to avoid capital gains tax and I therefore now have access to approx €40k in cash.

Could someone tell me could I use this €40k to pay off a lumpsum on my existing current balance of €140k which is currently owed to EBS now while I am on their variable rate or are there restrictions that would stop me? The advantage to this would be therefore that I would only need a €100k loan instead from Avant when switching to them.

athlone573

Noddy33 wrote: »

Hi All,

Apologies for bringing up a previous thread but I thought it might be best suitable to ask here in the hope someone could answer a query for me.

I currently in the process of switching my mortgage to Avant to avail of their 1.95% interest. My fixed period with my original lender EBS is up since May so I have automatically switched over to the higher variable rate until all applicable legal documentation and switch is completed.

I in the position where I have seeking a loan of €140k from Avant which is the balance of my mortgage. However I have work shares that as part of employee bonus scheme have now matured to avoid capital gains tax and I therefore now have access to approx €40k in cash.

Could someone tell me could I use this €40k to pay off a lumpsum on my existing current balance of €140k which is currently owed to EBS now while I am on their variable rate or are there restrictions that would stop me? The advantage to this would be therefore that I would only need a €100k loan instead from Avant when switching to them.

Almost certainly you can and its just a matter of lodging it to your mortgage account number. Phone EBS to check though.

As to whether its the best thing in your circumstances:
The usual advice is, if you might need some or all of it in the foreseeable future (e.g. to replace a car, for home improvements or a rainy day fund) just to keep it on deposit. It will effectively cost you 1.95% per year but you could be paying lots more if you have to take out a personal loan.

The only other point is, if you're already in the middle of switching, it'll change the figures involved, may confuse people, and if balance gets too low it might be below the minimum size for your new lender. 100k should be OK though.

Noddy33

athlone573 wrote: »

Almost certainly you can and its just a matter of lodging it to your mortgage account number. Phone EBS to check though.

As to whether its the best thing in your circumstances:
The usual advice is, if you might need some or all of it in the foreseeable future (e.g. to replace a car, for home improvements or a rainy day fund) just to keep it on deposit. It will effectively cost you 1.95% per year but you could be paying lots more if you have to take out a personal loan.

The only other point is, if you're already in the middle of switching, it'll change the figures involved, may confuse people, and if balance gets too low it might be below the minimum size for your new lender. 100k should be OK though.

Thanks for the response and yes I completely understand where you are coming from as to where it important to still keep some savings in reserve to cover everyday living scenarios and I would still be planning on doing that.