Are mortgage switcher products all they're cracked up to be? Most consumers are aware that they can switch to certain mortgage providers at a reasonable cost. Lenders such as Ulster Bank and EBS will dispense with the usual legal transfer costs of €900 to €1,000 for new mortgage customers transferring their home loan.
They do this with mortgage switcher products, which use title insurance to replace the usual solicitor's report on the property title. Transferringa mortgage is speeded up from typically three months to about ten working days.
"Title insurance is good news for borrowers. It custs down on legal costs, speeds up the switching process and allows consumers to shop around for better rates," said Ronan Mackay, a Senior consultant with Dublin mortgage specialists, NC Brokers.
Traditionally buyers' solicitors check with the Land Registry, local planners and so on to ensure that their clients have a 'clean' title to the property being purchased.
The biggest attraction of switcher mortgages is that they allow home owners to shop around for cheaper mortgage rates. They also allow borrowers to extract equity built up in their home. But does this mean potential problems with title in the future?
"We don't have a scenario where the customer is worse off by using title insurance, rather than the normal conveyancing process", said Dara Deering, head of mortgages at EBS, which recently launched its Quickswitch Mortgage product.
"Any problems that may arise with title - such as planning permission not having been obtained for extensions - will appear via the traditional conveyancing route anyway." Solicitors may not be pleased at being replaced in the conveyancing process.
"Because lenders are only accepting re-mortgages at the moment and you're already living in the property, it means the title has already been checked so the risk isn't that great," said one legal source.
However, she did warn that multiple remortgaging could simply delay title problems that might arise.
For example, if there is no planning permission for extensions on your property or the title deeds have been lost or there is a major boundary dispute, these issues will have to be resolved sooner or later, with or without title insurance.
Other more unusual title complications can be old mortgages that have not been cleared from the title.
A property cannot be sold with such outstanding title issues, as solicitors will not finalise the sale.
Also, if you have built an extension to your home that doesn't require planning permission, you still need an architect's certificate to show the extension size and to confirm that it is exempt from planning requirements. One legal source said: "virtually every property has a planning problem of one kind or another".
Ulster and EBS both use the same insurer - First American Title Company (Ireland) Ltd to underwrite the title insurance product they use, so their product offerings are very similar.
"Research revealed that the biggest barriers to switching mortgages were the legal costs involved and the perceived hassle and time involved," says Deering.
EBS and Ulster both pay the title insurance of new customers switching their mortgages to them. Other lenders such as IIB, Bank of Scotland, Permanent TSB and GE, accept title insurance for mortgage switching, but the borrower has to pay for it, according to Mackay.
NC Mortgage Brokers will pay the cost of title insuarance for customers switching mortgages of €250,000 or more, as will other mortgage brokers.
Competition is intense for mortgage business, and many agents will also pay half the title insurance premium for mortgages under €250,000.