Homeowners Switching to New Green Mortgages Could Save Thousands of Dollars in Repayments

Homeowners who switch mortgages to raise funds to improve their home’s energy rating can now end up with lower monthly payments.

This is thanks to the arrival on the market of new low cost ecological mortgage rates.

Green mortgages are offered by a number of lenders and the rates are lower than the rates for conventional home loans.

Money changers can save thousands of dollars on their annual mortgage payments and end up with a cheaper home to heat, according to Ireland’s latest independent mortgage switching index Doddl.ie.

Research conducted earlier this year showed that more than half of households are considering upgrading their homes, motivated by increasing the comfort and warmth of their home.

Doddl.ie Managing Director Martina Hennessy said: “Those who upgrade their home’s energy rating to B3 or above are increasingly getting one of the green rates currently offered by lenders including Haven Mortgages , AIB, Ulster Bank and Bank of Ireland.

“Haven Mortgages is the latest lender to introduce a green rate product, with a four-year fixed rate of 2.15% on all loans up to 90% of the funding. “

She said this rate is available to buyers and money changers, with money changers also being eligible for a cash amount of € 2,000 when changing.

If the BER (Building Energy Rating) is set to become more favorable due to home improvement work, lower green rates can mean that even when equity is released to pay for the work, the monthly repayment does not increase. Ms. Hennessy gave the example of a holder of a low variable rate mortgage of 3.15 pc seeking to free up € 25,000 of equity for home renovations.

Assuming these homeowners have a mortgage of € 250,000, they are currently paying € 1,205 per month over 25 years.

“If these people freed up equity of € 25,000 to bring the total mortgage to € 275,000 and became eligible for the green rate discount, their rate would be 2.15 pc and their repayment would be € 1,186 per month .

The Irish Independent Doddl.ie Conversion Index found the volume of mortgage conversions to have increased by more than 35% in the past year.

This is because more households are taking advantage of the recent drop in mortgage interest rates.

According to the index, homeowners can pay an average of € 4,097 in additional mortgage payments per year without switching lenders.

This is an increase of € 657 over the last 12 months. This means monthly savings of up to $ 135 for every $ 100,000 owed on a 25-year mortgage for those who change.

The index is based on the average mortgage used for new loans in the first-time home and used mover markets in the second quarter of 2021, currently € 254,020.

The entry into the market of lenders such as Avant Money, which has now been joined by ICS Mortgages to offer rates as low as 1.95 pc, has resulted in an increase in the market share of brokers, Ms Hennessy said. .

Meanwhile, there has been a 43% increase in the numbers for those who top up their existing mortgage from April through June.

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