Switching Mortgage Provider to Release Equity?
What is Equity?
Equity is the difference between the remaining balance on your mortgage and the market value of the property. For example, if your home is worth €400,000 and your mortgage is €100,000, then you have equity in your property of €300,000.
You may wish to release equity for several reasons such as:
- You would like to renovate your house
- You would like to add a garage, extension and / or landscape the garden
- You would like to upgrade the interior of your home
- Medical expenses
- To raise a deposit on an Investment Property
- Education costs for your children
Steps you should take
- Check with your existing lender to check if they will allow a top up to your existing mortgage
- Confirm the existing interest rate and the balance outstanding
- Ask what other rates are available?
- Call Financial Sense to compare interest rates and ask us about cashback offers. Cashback is where a Lender will give you cash back after your Mortgage is drawn down to cover expenses such as legal costs. These are available from time to time from various Lenders.
Are you eligible for an Equity Release?
Most Lenders will allow an equity release up to 80% loan to value. However, the reason for the equity release is also important. Talk to us and we will advise how best to package your application prior to presenting to a Lender.
Equity releases are suitable for people who fulfil the following criteria:
1. You are in positive equity i.e. your mortgage balance is less than the property value
2. The equity release does not exceed 80% loan to value
3. You are currently on a variable rate. While this is not essential, you may incur additional costs when redeeming / clearing your mortgage if you are on a fixed interest rate
4. The term remaining on your mortgage is at least 5 years or greater
Why use Financial Sense?
Using a Mortgage Broker such as ourselves saves you the time and hassle involved in going directly from Bank to Bank or Lender to Lender. We will take this difficult and cumbersome process away from you personally through the work of a dedicated Mortgage Adviser, Yvonne Walsh, who will liaise with the lenders and guide you simply through the mortgage process step by step.
Buying a house and getting a mortgage can be a challenging process with many people finding it very stressful and time consuming. Working with Yvonne will make your life easier as she will answer any questions you may have and ensure that the process runs as smoothly as possible.
We deal with a select number of Lenders who have very competitive interest rates. We can advise you on the best interest rates available from these Lenders and which ones are most likely to approve your application based on their lending criteria.
At Financial Sense, we deal with the following Lenders:
• Haven (AIB)
• Finance Ireland
• ICS Mortgages
What do lenders base their decision on?
Income: Lenders will look at your annual income and some may take bonuses and overtime into account. Some may factor in rental income if you plan to rent out a room.
Age: What age you are now, what age you will be when you retire and/or when the mortgage ends.
Outstanding loans: if you have other loans or a high credit card balance this may reduce the amount you can borrow or may affect your ability to get a mortgage.
Employment status: A lender will look at whether you are in permanent employment or on probation. If you work on contract they may require you to be employed for at least 12 months with the same employer or be on a second contract with the same employer.
Residential status: Are you a resident in Ireland or a returning emigrant.
Outgoings: Lenders will take your other financial commitments, such as childcare, into consideration.
Money management: Lenders will look at your bank statements and assess things like ability to meet direct debits and standing orders, if you are using an overdraft facility on a regular basis, if there is evidence of excessive use of online gambling etc.
Savings: This shows that you have saved enough for your deposit and have the ability to save a set amount of money on a regular basis.
Credit history: This shows your track record of paying other loans in the past. A poor credit history can prevent you from getting a mortgage.
Property value: The purchase price of the home you want to buy (if you have one in mind) and the value of your current home, if you plan to sell and buy a new home.
Amount you wish to borrow: This is the amount you apply for and is the difference between the purchase price of the property and the deposit you have saved.
Guarantor: Someone acting as guarantor and agreeing to repay the loan if you can’t.
Number of applicants: Are you borrowing by yourself or with someone else.
- Proof of Identity – Passport or Driving Licence
- Proof of Residence – A recent utility bill* *No more than 3 months old e.g. ESB, telephone, Credit Card Statement
- Employment Detail Summary (previously known as the P60)
- Payslips – 3 months up to date payslips
- Salary Cert – this is completed and stamped by your employer
- Bank Statements – 6 months original continuous Current Account Bank Statements for both personal and business bank accounts (the latest dated within the last 3 months)
- Existing Mortgage – Mortgage statement for current property
- Balance of Funds – Estimated value of current property and likely profit to be made from sale plus 6 months continuous savings statements, if applicable
- Credit Card Statements – 6 months continuous original Credit Card statements
- Existing Loans – Minimum 6 months statements for any borrowings held
Additional items for Self Employed:
- Accounts – Last 3 years Audited/Certified Accounts and Tax Returns
- Form 11 – for last 3 years
- Chapter 4 – for last 3 years
- Tax Affairs – Letter from Accountant confirming tax affairs are up to date/tax clearance cert
You also need to satisfy relevant credit checks potentially including those from other countries if you have lived outside of Ireland in the past
Need Some Guidance?
Call us on:
Tel: (059) 913 3800
For Mortgages of €100,000 or more, we charge a fee of €350 including VAT. For Mortgages less than €100,000 we charge a fee of €500 including VAT.
WARNINGS: In accordance with the provisions of the Consumer Credit Act 1995, the following are for your attention:
WARNING: YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT. THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME.
Note: The above notice in respect of adjustments to repayment rates will not apply during any period when the loan is at a fixed rate.
In accordance with the provision of the Consumer Protection Code (CPC) 2012 the following are for your attention:
WARNING: IF YOU DO NOT KEEP UP YOUR REPAYMENTS YOU MAY LOSE YOUR HOME.
WARNING: IF YOU DO NOT MEET THE REPAYMENTS ON YOUR LOAN, YOUR ACCOUNT WILL GO INTO ARREARS. THIS MAY AFFECT YOUR CREDIT RATING WHICH MAY LIMIT YOUR ABILITY TO ACCESS CREDIT IN THE FUTURE.
The following warning applies in the case of variable rate loans:
WARNING: THE COST OF YOUR MONTHLY REPAYMENTS MAY INCREASE.
The following warning applies in the case of fixed rate loans:
WARNING: YOU MAY HAVE TO PAY CHARGES IF YOU PAY OFF A FIXED RATE LOAN EARLY.