Another mortgage firm is waiving legal fees for homeowners who refinance, as Irish consumers are proving themselves willing to switch mortgages for a better deal.
National Credit Mortgage Brokers admits that this week’s ‘switch and save’ offer was inspired by Ulster Bank’s ‘switcher’ mortgage introduced at the start of this year, and reportedly so successful that it has prompted a wave of counter-offers from borrowers’ original mortgage lenders.
The web site of ncmortgagebrokers.ie is similar to that of primafinance.ie, another national broker, in letting consumers search online for the best rates across virtually all lenders and substantially waiving legal fees for those who obtain their new mortgage through the broker.
Prima shows rates for all of the 11 mortgage lenders, even National Irish Bank which does not take broker business.
NC Mortgage Brokers excludes from its rates the three lenders from which it gets no business: NIB, Bank of Ireland, and First Active. However, it fully covers normal legal costs so long as the loan is for at least €250,000. That’s higher than what Ulster Bank says is the typical amount, €150,000, and NC caps its legal benefit at €999. On loans under €250,000 NC will pay up to €499 in legal fees.
Prima excludes ‘outlays’ from its legal fee waiver, which applies to all refinances of over €80,000. Outlays are one of three legal costs faced by those refinancing, the others being ‘legal’ and VAT.
However, the outlay charge – which Prima puts at a likely €250, others at up to €500 – is “under review”, says Tice O’Sullivan, financial adviser. “These offers are going to become more commonplace”, he forecasts.
Ulster Bank includes all legal fees on loans of over €75,000, with the very rare exception of the stamp duty that applies on mortgage deeds when a loan of more than €254,000 is being refinanced.
However, customers unwilling to stay five years with Ulster will owe the bank their legal fees, and, of course, Ulster offers just its own loans.
NC Mortgage Brokers claims to compare all mortgage loans from its chosen eight lenders, whereas Prima compares the main products of 11 lenders: AIB, Bank of Ireland, Bank of Scotland, EBS, First Active, ICS, IIB, Irish Nationwide, NIB, Ulster Bank, TSB.
The NC site is the first to allow consumers quickly gauge which lender (subject to its exclusions) is cheapest in each loan category, such as the five-year fixed, for example.
“That’s one little thing we’re working on” says Prima’s O’Sullivan. The same information, as of late Wednesday is found on our Good Buys table.
NC Mortgage Brokers updates its site on a Friday while Prima says it revises its rate information any day that changes come in.
Both NC and Ulster Bank will only waive customers legal fees if they use title insurers, at no extra cost. Prima instead requires them to use a network of its approximately 30 solicitors nationwide.
Another Dublin-centered firm, Win Win recently began using its own solicitors network in a free legal deal that is part of a general marketing offer of multiple consumer concessions.
Ronan Mackay, Business Development Manager with NC Mortgage Brokers, said “Legal fees are a lottery. Solicitors will charge up to 1pc of the purchase price of the house, if they can get away with it”. Based on current average house prices that currently translates to €3,300 in Dublin, or €2,220 down the country.
In addition, the interest rate savings on Ulster Bank’s switcher would translate to €683 a year for borrowers availing of a 2.85pc U First Flexible Tracker versus a Bank of Ireland 3.6pc standard variable rate, on a €150,000 loan that’s 60pc loan to value for a 20-year term.
That’s only available to those who become banking customers too, with the U First current account on which €9 is payable, but most transaction fees are covered.
Prima claims to have tripled its mortgage lending this year by introducing its legal fee deal. Meanwhile, Ulster Bank has increased its share of the mortgage market “by over 50pc,” thanks to its switcher mortgage, said Tayna Waters, lending and insurance manager. Over two-thirds of switcher customers came from other banks, he added.
Prima’s O’Sullivan said he heard that Ulster Bank’s switcher business had slowed as other lenders, seeing that they were losing business to Ulster Bank began counter-offering customers with the same terms that Ulster Bank offered.
Asked about this, Ms Waters said: “Business hasn’t slowed that significantly”. She added: “Many customers are so annoyed that a counter-offer only happens when they say they are leaving that they leave anyway”.