Switching mortgage could make you an instant profit

KBC has a new offer of €2,000 towards the cost of switching mortgages. Is it possible to make a profit and keep the money if you do switch? And how does it compare with Bank of Ireland's "cashback' offer of 2% of the mortgage? - Bill Tyson

A. Yes, you can make a profit on switching with KBC and some other lenders, including Bank of Ireland. Firstly, the costs of switching are not that onerous: a valuation fee of €130 and legal fees of about €1,000.

Now here are the four switching offers:

  • Ulster C1,500
  • PTSB C1,000
  • KBC C2,000
  • Bank of Ireland 2% of mortgage

Bank of Ireland's offer is the most generous. It would amount to €3,200 for a €160,000 home loan.

But BoI has one of the dearest variable rates at 4.2%. So you'd pay up to around €50 a month more on this rate than with KBC's variable rate (3.6% including a 0.2% discount for opening a current account with KBC; but the KBC variable rate is lower than BoI's anyway at 3.8%).

The difference adds up in the long term. It would tot up to nearly €16000 over 25 years on a loan of €160k. If you go for a one year rate, KBC's rate is even cheaper. And you can also get 50% off your home insurance for a year with KBC.

If you go for a three-year fixed rate, KBC is only very slightly cheaper than BoI. But that still adds up to around €1,300 over 25 years. So you would win out with BoI's offer in the long run only if your mortgage is higher than around €165k. Having said that, it's always nicer to have the money up front than spread over 25 years!

With PSTB's switching offer, you must open a current account and lodge at least €1,500.

Switching is easy:

1. Find out the best deal for you by going to a mortgage broker or looking it up online with websites such as bonkers.ie.

2. Apply for a loan with your new lender of choice.

3. When it's approved, pick a valuer from the bank's approved list and get your solicitor on the case. Simple.

Q. I am on the VHI One Plan Access (public hospitals only) and am anxious to switch to the One Plan250 (as recommended by you last week). This covers public and private hospitals and I’d like to switch as soon as possible. But apparently VHI is the only health insurer that doesn't allow switching mid-contract even within their own suite of products. Is there any way to get around this?

A. You can switch within VHI’s range in very limited circumstances, mainly redundancy, moving abroad and changing jobs (with a companypaid scheme).

Otherwise, you'll have to wait until your contract expires. When you do, remember you don't have to have the same policy for everyone in the family. You can also save a lot by having different family members on different policies, according to their needs. You can compare plans on hia.ie and totalhealthcoverie.

I asked the VHI why it doesn't allow switching to another of its plans mid-contract for everyone.

A spokeswoman says it may not be possible to cover its claims costsina given year 'if the terms of cover on policies were constantly changing outside the agreed contract period’. Does this mean that the VHI, with the oldest policies, has many customers who stand to gain from switching to newer and generally better-value policies?

Q. I am thinking of buying a house in a local holiday village as my main home. If I rent it for some weeks in the summer, how will this affect my capital gains tax exemption if I ever sell the property?

A. It's worked out pro-rata.if it were rented out for a total of one month, you would lose one twelfth of one year's CGT exemption. But watch out for planning rules that prevent living permanently in holiday villages.

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