Personal finance Q&A with David Kerr - Newstalk
There has been a lot going on in the personal finance world over the last couple of months, from changes in banking fees to increasing energy prices.
However, consumers have a choice when it comes to rising bills and that's switching suppliers to help offset any rise in your monthly bills.
CEO of bonkers.ie, David Kerr spoke with Pat Kenny on Newstalk to answer a number of listener's personal finance questions across topics such as mortgages, energy and banking.
Here’s an outline of the main points discussed by David in the interview.
Do I need to take out my mortgage protection insurance with the same financial institution I got my mortgage from?
You don’t have to take out your mortgage protection policy from your bank, no. There are significant savings to be made if you shop around and purchase it directly from the insurer or through a broker.
The bank makes quite a bit of revenue from the life event of taking out a mortgage. They know you’ve got a lot of forms to fill out and things to sign. They just put one more piece of paper in front of you and you’ll happily sign it to get that box ticked.
It is a requirement that you have a mortgage protection policy in place for drawing down your mortgage. It’s a handy thing to get both together at once, but you can shop around at any time.
It’s very simple to switch mortgage protection policies. We offer a service that allows you to get a range of different policy quotes and we can issue the policy for you.
If switching, one thing about your mortgage protection policy is that your lender will be noted as the beneficiary of the policy. So you have to cancel the previous policy in order for the payments every month to stop going out.
The house I’m looking to purchase will need some renovations. Can I get a mortgage for more than the house is worth so that I can afford to do renovations?
Banks will understand that you’re going to be adding value to your house. So if you went in for €350,000 on a house that costs €250,000, the bank will release that mortgage drawdown in two tranches.
The first being to purchase it, and the final tranche will be released when the work has been completed and they have a valuer go out and confirm the value is what you thought it would be.
One point to make is that because of Covid, banks are a lot more strict on the eligibility rules.
If you have any kind of Pandemic Unemployment Payment on your payslip, or if you’re in an industry that’s prone to pandemic payments, they might take a closer look at you.
I’m considering switching my mortgage. I haven’t looked at the value for money in 10 years. Will I save money by switching?
If you haven’t looked at switching your mortgage in about 10 years, you’re likely paying more in your interest rate than you could get right now, especially if the value of the house has gone up.
If you were a first-time buyer 10 years ago and had a loan to value ratio of 90%, now that may be around 65%-70% of the value of the home. The interest rate you’d pay would be naturally less because there’s more equity in the home.
Also, the rates themselves have dropped considerably versus ten years ago.
It’s worthwhile looking into switching mortgages and it’s just a matter of paperwork. Talk to your bank or mortgage broker and see how much you could save in this blog.
I have been on a tracker mortgage since 2007. Is it worthwhile looking at moving the tracker anywhere else?
If you have a tracker mortgage, hold onto it for dear life.
Your life stage may be different, so you may need to move home or do renovations. Banks will look at a tracker and typically what they do is add 1% to the tracker rate you’re on and will offer you the balance of what you’re taking on their normal rates.
You can move the tracker element to a new bank and they may look at that favourably.
If you’re looking to just save money and you don’t need more money for an extension or anything, our advice is to hold onto the tracker mortgage.
Should I use a mortgage broker or a site like bonkers.ie to apply for a mortgage?
You can use bonkers.ie for your mortgage search and we actually have a panel of brokers that will help get your mortgage drawdown.
The advantage of a broker is that they understand the appetite of all the individual banks and lenders for your exact case, even before they put your case to them.
Your broker will know which bank is the most likely to accept your case. After that, you can look at whether or not you want to get cashback, etc.
Can I switch to another electricity provider after being with one for three years?
When you switch electricity, it’s really just changing the company that issues the bill. It’s the exact same electricity over the exact same wires.
You get to choose who your supplier is based on a number of factors. Ask yourself the following questions:
- Do you want to pay by direct debit?
- Do you want to get your bill in the post or as a PDF by email every month?
- Are you happy to sign up for a longer-term contract than the standard term, which would be twelve months?
- Are you happy to sign up for a two or three-year contract?
If you’re renting accommodation, you may need permission or to notify the landlord if you’re changing the supplier.
Have a look at our guide for more information on switching energy suppliers as a tenant.
Are there any suppliers out there that will give you a better deal for using electricity to be more environmentally friendly?
Not specifically, no. There are NightSaver Meter tariffs though. A NightSaver Meter records daytime and nighttime electricity consumption separately, allowing customers to avail of reduced price electricity at night.
If you have a device that runs constantly, you should possibly look at putting in a NightSaver meter. In general, the appliances used don’t factor into the tariff offered.
If I’m switching energy suppliers, is it instantaneous or is there a contract period that I have to see out first?
The contract has likely expired in this case. Most expire after 12 months, but there is one company that offers a three-year contract.
If you’re outside the contract, there is no penalty to pay. You can just shop around and switch. If you’re inside a contract, you can still switch but there may be an early exit fee of around €50.
You can easily compare energy deals from a broad range of suppliers on bonkers.ie. Find the cheapest energy deal on the market and save money with our easy-to-use energy comparison tool.
Is there any facility for retaining your landline number while suspending service temporarily from providers?
The short answer is that your number will be released to the pool.
However if you have broadband usually the landline is bundled in with it for a very little extra.
Get a broadband-only plan with a landline and you won’t really pay any extra for keeping your number.
You can compare a range of broadband plans in your area here to find the one that best suits your needs.
What should I do if my WiFi doesn’t reach my whole house?
There’s a simple solution called a WiFi extender.
There are a number available on the market and a good one is the BT extender. You can get this in Currys PC World and it plugs into your electrical system at home. It uses those wires to help boost the signal.
Always shop around
Don’t forget how important it is to shop around.
You can use a range of different comparison services on bonkers.ie to find the best value deals to suit your needs.