Rental income is generally falling and investors are coming under major pressure
LIMERICK mortgage holders have been advised to take a more savvy approach when dealing with lenders.
It comes from the Select Finance Group who, in a review of the mortgage market, have highlighted that lenders are currently making things increasingly difficult for existing mortgage customers, and while it’s not always easy to transfer mortgages from one institution to another, there are several factors of which customers need to be aware.
According to Trevor Grant, managing director: “The average house price in Limerick currently stands at approximately €237,000, down over 9% on this time last year. For those with mortgages on properties which are decreasing in value, now is a very worrying time. It is imperative that people keep their repayments as low as possible in an effort to manage their personal finances effectively.
“There are a variety of ways in which people can ensure they are getting the best deal on their mortgage, one of which includes comparing the rates offered by their current lender and switching to another provider if these are not the most competitive. If people are unhappy or unsure as to whether or not they are getting the best deal, I would advise them to engage the services of an independent mortgage expert who will provide impartial and comprehensive advice”.
Grant has urged mortgage holders throughout Limerick to be wary of the following issues and seek advice where necessary:
“In many cases, lenders are offering expensive rates to those customers maturing from fixed or discounted rates. Look at the alternatives with the other institutions, before accepting any offer from your bank. Don’t assume that the current credit crisis will prevent you from transferring your loan to another bank.
“Lenders are often keen to get people off tracker mortgages, so when existing tracker rate customers apply for a top-up, they may decline the top-up in the hope that the client will move the entire mortgage elsewhere. Alternatively, they may use the opportunity to switch the entire loan to a “standard” rate contract. Again, know your options and don’t simply accept this.
“With so many home owners coming under financial pressure, it is imperative that they address their monetary issues prior to falling into arrears, either by contacting their lender or by talking with a mortgage broker and by looking at all the options – there are opportunities to switch for better deals, negotiate lower rates, and/ or seek an interest only option for a specified period or even a payment moratorium.
“With many buy-to-let mortgages now coming to the end of their interest only periods, some lenders are reluctant to extend the interest only term and borrowers are being asked to start making capital payments. Rental income is generally falling and so investors are coming under major pressure. So if you, as an investor, cannot afford to make capital payments, tell your lender and ‘play hardball’ with them, if necessary.
“Buy-to-let investors typically don’t require life cover on their mortgage on the belief that with the ongoing rental income, the property pays for itself, and if they died, their spouse could always sell it to repay the mortgage. As selling property has become increasingly difficult of late, and with many of these properties under water in terms of valuation, some investors are cleverly taking our pension term life insurance to cover the mortgage, which is a tax deductable method of solving the problem”
He concluded, “There is over €120billion worth of mortgages currently financed by lenders in Ireland. In these challenging times, people need to tighten their purse strings more than ever before. We would urge people to keep a close eye on their personal finances, as a review of their monthly repayments and lenders could lead to significant savings – particularly in relation to mortgages. While researching the various providers can be a time-intensive task, it could save people a lot of money in the long run, plus people can choose to avail of the services of an independent mortgage broker who can conduct this research in their behalf”.
