Personal Finance

Barry McCall gives us some tips on shopping around for the best value mortgage deal and a look at how to apply online for loans from St. Patrick’s Credit Union.

Managing your mortgage

For most of us, the monthly mortgage payment is simply a fact of life. We have budgeted for it, it gets taken out of our bank account each month, and we forget about it. Or if we don’t quite forget about it, we certainly don’t give it sufficient thought.

Few people ever stop to think about how much they will repay during the life of their mortgage. For example, at present a €250,000 mortgage over 25 years at a fairly typical interest rate of 4.1% will cost €1,323.74 in monthly repayments. That works out at a total of €397,122 over the full 25 years.

On the other hand, if you could afford to you could shorten the term to 20 years. This would increase the monthly payment to €1,518.91 but would mean that the total repayment would fall to €364,538.40. That’s a saving of almost €33,000.

For those of us lucky enough to already be on the property ladder, there are savings to be made as well. Take the example of a mortgage with €100,000 outstanding and 15 years left to run. At the same 4.1% rate, a loan of this size over that term would cost €741.19 per month or €133,414.20 in total. However, shortening it to 10 years would increase it to €1,013.88 per month but lower the total pay back to €121,665.60 – a saving of almost €12,000.

These are considerable savings and are fairly simple to make. They don’t require you to take out a new mortgage or switch to another institution. You can usually lower the term just by dropping into your lending institution and asking for it to be done.

But there can be even greater savings to be made by shopping around and switching your mortgage. For example, in the case of the €250,000 loan mentioned earlier, if that borrower shopped around and chose a tracker mortgage at a rate of 3.7% the monthly repayments over 25 years and 20 years would be €1,265.00 and €1,462.77 respectively.

This option delivers monthly savings of almost €60 per month in both cases. Even more impressive are the long-term savings. The 25-year product entails a total payback of €379,500 with the 20-year loan coming in at €351,064. In the case of a person who switched their 25-year 4.1% standard variable rate loan to a 20-year 3.7% tracker, this would deliver total savings of €46,000.

Put it another way. This is the same as saving €2,300 per year for the 20-year life of the mortgage. Much better in your pocket than in the profits of a bank.

And switching your mortgage is no longer a daunting proposition. Many of the institutions have special deals on offer for customers wishing to switch to them with many of the fees and costs being paid by the institution.

Finally, when shopping around for the best value mortgage that suits you, check out your credit union. Many credit unions are now offering mortgages at very competitive rates and you get the added advantage of getting a truly personal service.

Mortgage amount	Rate	Term	Monthly Repayment	Total Repayment
€250,000	4.1%	25 years	€1,323.74	€397,122
€250,000	4.1%	20 years	€1,518.91	€364,538.40
€250,000	3.7%	25 years	€1,265	€379,500
€250,000	3.7%	20 years	€1,462.77	€351,064.80
€100,000	4.1%	15 years	€741.19	€133,414.20
€100,000	4.1%	10 years	€1,013.88	€121,665.60
€100,000	3.8%	15 years	€699.75	€125,955
€100,000	3.8%	10 years	€974.40	€116,928

St. Patrick's Credit Union (ESB Staff) Ltd.)

Loans online

Members of St. Patrick’s Credit Union can now apply for loans using the online facility on the website www.stpatrickscu.ie.

This online facility is in the Member’s Area and can be accessed by members using their secure PIN. The main advantages for applying online are that it does away with having to locate and post in a paper application form, and also speeds up the application process, thereby resulting in members receiving their loan cheques quicker.

The online application has the same details and questions to be completed as the paper application forms, and can be filled in and submitted to the Credit Union within a couple of minutes. If a member has a Credit Union Agent in their workplace_ see list of Agents on the website under “Choose a Section” in the “About Us” page--it is possible to receive the loan cheque the day after the online application has been submitted. The member has to agree that all necessary documentation and cheque be forwarded to their Agent – this is a fantastic service unequalled by any Bank or Building Society.

So start pressing those buttons now and get the application process started. Don’t forget that loan applications are judged on the repayment capacity of the individual member, and not on the amount of shares; and that current loan balances do not have to be cleared before a member can apply for another loan. Also, remember that the current lending rate in St. Patrick’s Credit Union is only 6.5%, which is the lowest rate offered by any financial institution in Ireland for personal loans.