Personal Finance

Barry McCall looks at simple ways to reduce your mortgage payments and St. Patrick’s Credit Union explains new account numbers for pensioner members.

Adjusting to higher rates

While recent rises in interest rates have probably hit first time buyers and others with very large mortgages hardest, the fact remains that almost everyone with a home loan is feeling the pinch to some extent or another. Indeed, we have had numerous queries from readers regarding the best ways to cope with these rises.

And the increases have been significant. Monthly mortgage repayments for most people have increased by more than one fifth or 22% over the past two years or so. This means that a person or couple with a relatively low mortgage of €100,000 over 20 years would have seen their repayments rise from around €545 per month to €665 in quite a short period of time. This works out at almost €1,500 per annum in after tax income and for many people might mean the cancellation of the annual family holiday.

But there are some simple and fairly easy ways to reduce your mortgage payments and take at least some of the pain away. The first, as always, is to do a bit of shopping around. Ireland’s mortgage market is now intensely competitive with more than a dozen lenders competing for your business – so take advantage of it.

A quick survey of the offers from just a few of the institutions shows how much better people can do by switching away from a standard mortgage. For the purposes of this survey we used an example of a home with a value of €600,000 and an outstanding mortgage of €100,000 over 20 years.

National Irish Bank’s Loan To Value ECB (European Central Bank) tracker mortgage came out best at €619.23 per month. Next was AIB at €616 for the first year and €624 thereafter; then came PermanentTSB on €624; Bank of Ireland on €626; and First Active on €632.

This is just a small sample of the many lenders out there and it shows that it is possible to save around €45 per month, or more than €500 a year, on your mortgage just by shopping around. And you don’t actually have to switch. Just arming yourself with some information from the competition and telling your existing provider that you are thinking of switching will probably be enough to secure a lower rate and significant savings.

If that isn’t enough to balance the household budget, you can also consider extending the term of the mortgage from 20 to 25 years. This will save an average of €75 per month across the various providers. In fact, when combined with a bit of shopping around, a term increase can reduce monthly repayments to the level they were at two years ago.

While this may seem like a desperate step, putting back by five years the date that you will own your home, it is not really that bad. It will give you some much needed breathing space now and if your circumstances improve in future through higher income or lower expenses due to children growing up you can always reduce the term again.

So, if you are feeling the pinch from increased mortgage payments there is something you can do about it that doesn’t necessarily involve painful belt tightening.

St. Patricks Credit Union - New account number/member number for pensioners

The account number/member number for all of our members who are pensioners has changed since Friday the 1st June. This has taken place due to administrative reasons within the Credit Union; and accordingly please be assured that it in no way affects the way your account is treated or operated in the Credit Union.

For pensioners who are ex-staff
the number has changed from a five-digit number (i.e. your old ESB staff number) to an eight-digit number. Your new account number will be the numbers 900 (i.e. nine, zero, zero) followed by your old fivedigit number.
Example 1.
Old account number: 00123
New account number: 90000123

Example 2.
Old account number: 12345
New account number: 90012345

For pensioners who are widows/widowers of ex-staff
your new number will be the numbers 980 (i.e. nine, eight, zero) followed by your old five-digit number.
Example 3.
Old account number: 00678
New account number: 98000678

Example 4.
Old account number: 67890
New account number: 98067890

We apologise for any inconvenience this may cause, and if you have any questions please give Simon Dunne a call on 01-6325100 or email info@stpatrickscu.ie.

www.stpatrickscu.ie.