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In this episode of the bonkers.ie podcast Daragh chats with Rebecca Wylie, Product Manager of Financial Services at An Post Money to discuss the recent launch of its new app for current account customers as well as its plans for the future. We also chat to our very own Group CEO and founder of bonkers.ie, David Kerr, about the launch of our new, fully online and paper-free mortgage broker service. So whether you're a first-time buyer or mover looking for the perfect home or a switcher looking to save on your bills, listen in to see how we can help. Here’s an outline of what was discussed by both Rebecca and David in the podcast. Tell us a bit about your role at An Post I’m the product manager for the An Post Money current account. I’ve been in An Post for about 2 and a half years and I work on a small product management team. What I really like about my role is that I get to work on a wide range of current account products and I get really involved in product development and product cycle management. What services does An Post offer now? An Post has undergone a massive transformation, moving from the world of letters and cash payments to the digital world of e-commerce, parcels and financial services. Our range of products has hugely increased. It now encompasses the An Post Money current account and mobile app, Money Mate, perosnal loans, credit cards, FX multi-currency cards, cash, money transfers, An Post mobile and An Post insurance. We also now have the Green Hub which offers green loans and a one-stop shop to support home retrofits for better energy efficiency, as well as electric vehicle purchases. Have parcel volumes changed due to Covid? Definitely. We’re now handling parcel volumes that were only forecast for 2024 pre-Covid. It’s a massive change in circumstances. We were managing Christmas volumes for most of 2020. The postal service went above and beyond for the local community and people during the pandemic. There were initiatives with delivering and collecting mail, newspaper deliveries and just generally checking on people in the community. Tell us about the new An Post Money app The new An Post Money app makes it really easy for customers to manage their money, control their spending and stay on top of their finances. We’ve taken functionality that was previously only available through online banking and we’ve made it available on the An Post Money app. With the An Post Money current account, you get everything you’d expect from a current account. This includes a contactless debit card, the ability to pay direct debits and schedule recurring payments. It offers device pay such as Apple, Google and Fitbit pay, and you can temporarily freeze your card in the app if you misplaced it. Round Up and Jars There are new features customers can benefit from, such as Round Up. This takes the change from your card transactions and puts it into a nominated jar. For example, if you buy a coffee for €2.90, you can round this up to the nearest euro so that the leftover 10 cents goes into the jar. There’s also a multiply feature, so you can multiply that change between up to ten times the amount. These small amounts build up over time. You can have up to ten Jars. These can help with putting money away for saving, but they can also be used for managing your money. You can set up a direct debit to come out of a Jar and scheduled payments. In theory, you get the main current account where you can carry out day-to-day spending, but you can also transfer money into a bills jar, a jar for your next trip away, a jar for saving for Christmas, etc. The fact you can make payments directly from Jars makes the feature a bit different to that of competitors offerings. Does the app offer up to the minute analytics? At the moment, no but this is something that’s coming later in the year. What is An Post Money Mate? This is a current account for children, aged 7-15. It’s set up through the An Post Money app and is available to both An Post Money current account holders and to those who have current accounts elsewhere. The parent applies through the app and the account is controlled by the parent. The child gets access to their Money Mate version of the app straight away and the account is opened instantly. They just have to wait for their shiny, iridescent debit card to arrive in the post. If you’re a parent and have a current account with another bank, you can download the An Post Money app and have a Money Mate account for your child. Is it similar to Revolut Junior? Some of the features are similar to Revolut Junior but the difference is a lot of items that are paid features in the Reolut Junior offering are included in the Money Mate package. Is there a top-up limit each month? There is an annual turnover limit and some monthly limits as well, but pocket money of €50-100 is well within those ranges. Can parents see where money is being spent? Absolutely. From an overhead perspective, any of the merchant category codes related to gambling, alcohol or other adult industries would be blocked outright from the start. There are also additional features we’ve put in. The parents have complete control over how much the child can spend. For example, you might decide you don’t want your child using an ATM, or you only want them to withdraw a set amount, you can control this in the parent app. You can turn off the ability for contactless payments if you don’t want your child mindlessly tapping. Parents are also notified when there’s a transaction carried out. What’s the Jobs section of the app? Parents can set up a Jobs section in the app. For example, you might set up a Job for your child to set the table for dinner every day for a week. You might then give them five euros for doing that. It can encourage them to help more around the house. At the end of the week, the child can make a note in the app that they did complete the task. The parent can select whether the child actually did or didn’t complete the Job. If the parent signs off on it, the child gets paid on a Sunday. Is the child’s app the same as the parent’s? The app is a child’s version of the An Post Money app but we’ve rebranded it to make it more child-friendly. Children can see on the app what they could potentially earn if they completed their Jobs, see how much they have available to spend and can access Jars for savings. If they want to withdraw from the Jar, they have to have the parent’s permission. If a child receives cash as a birthday present, for example, they can still lodge this in the post office for free into their account. It’s a modern version of the post office savings books. The freeze card feature is also available through the parent’s app for the children’s card. What are the fees and charges? The An Post Money current account has a monthly maintenance fee of €5 and that covers all debit card transactions, contactless transactions, domestic euro transactions, direct debits and any scheduled or recurring payments. We do have some transaction fees for withdrawing cash at an ATM. This costs 60 cents. Lodgments through a branch or quick lodge cost 50 cents. However, you do get one free cash withdrawal in a post office per week. Is An Post Money Mate included in that? We have a dual fee structure for Money Mate. For customers who hold an An Post Money current account, the fee for the child’s account is €2 per month. This is charged to the parent, on top of the €5 per month. For customers who don’t have a current account with An Post Money, the fee for Money Mate is €4 per month. Is An Post Money a worthy alternative to banks? With the withdrawal of KBC and Ulster Bank, An Post Money is a strong alternative for customers who may be affected or for anyone just looking to move banks. While they’re exiting the market, we’re actively growing and promoting An Post Money. An Post Money is tied to every city, town and village in Ireland and is at the centre of the community, with over 900 post offices nationwide. Our current account has lots of great features and it’s good value. Is a branch network a key thing for An Post? The branch network with An Post is one of the strongest selling points for the An Post Money current accounts because we are still in the small towns and villages where other banks have cut back. An Post has gone on a bit of a journey in co-locating some branches. We’ve moved into some supermarkets and convenience stores, which has helped to increase accessibility to the post office and allows for more parking. Having 900 plus post offices means that customers can come into a branch if they need to. You can still lodge cash and cheques, which are things you can’t do with online banks. Cash is still being used and cheques are still being used, years after they were supposed to have ceased. With online banks if you have a problem, lose your debit card, need to lodge cash or just need to speak to a person, it can be very difficult. That’s where our ‘human about money’ brand comes in and you can walk into the post office and talk to someone. Can you get an overdraft with An Post Money? At the moment An Post Money doesn’t offer overdrafts, but there is potential in the future. What are the future plans for An Post Money? We’re currently in negotiation with a potential mortgage partner and we’re looking to offer something that will be very competitive for the mortgage consumer in 2022. After speaking to Rebecca from An Post Money, we spoke to our own CEO and founder of bonkers.ie, David Kerr, about our new mortgage broker service. Why did you find bonkers.ie? It was really to scratch my own itch. I was at a life stage where I had to look after my own bills and money was tight. I wanted to make sure I wasn’t overpaying on my bills. The company was founded in 2010 but I was thinking about it all through 2009. Before the financial crash in 2008, Ireland wasn’t ready for saving on energy bills and consumers weren’t particularly interested. Once the crash hit hard, we were being taxed more and the USC was introduced. People were losing their jobs and for those lucky enough to keep their jobs, salaries were often reduced. For a family or any kind of household, the income was probably reduced. I was working with a company that was doing a similar thing in Great Britain. I started bonkers.ie to create a branded, consumer-facing website with the goal being to help people lower the everyday cost of living. We launched first with no money and just three lads in a basement in town - myself, co-founder Simon and a designer. We sat for 6 months and bashed out the first version of bonkers.ie and we had five products - electricity, current accounts, savings accounts, personal loans and credit cards. Why should someone use a mortgage broker service? We don’t really call ourselves a broker, even though that’s what we are because we introduce customers to lenders. You’d use a broker to hide the warts and polish the good stuff, but it’s also to answer all the basic questions. You might be buying a house for the first time. The average age is around 36 now but when bonkers.ie started in 2010, 29 was the average first-time buyer age. When you want to get a mortgage, it’s all-consuming and you want to know everything. However, you might not know the difference between fixed and variable rate mortgages, and what term length to go for. What a company like bonkers.ie can do is answer all of those generic, broad questions for you without necessarily addressing any of the lenders in the marketplace. Assessing the mortgage market Now we have lenders like Finance Ireland and Avant Money who have fixed rates for 30 years. People want to know the advantages and disadvantages of opting for these rates. There are also other market offers out there, like free legal cover. Some banks will contribute up to €1,500 towards your legal fees. Getting the money to purchase your home is only one part of the puzzle, you need a lot of other things too to get the key. Banks also offer cashback offers. Some banks will offer 3% cashback, but you’ll have to keep your mortgage with that bank for five years to get it. They may give you 2% when the mortgage is drawn down and then another 1% after 5 years. Typically rates with cashback mortgages are slightly higher, so people want to know should they go for these. Advice on spending habits There’s also the point around where you spend your money before applying for a mortgage. People are unsure if they can have a betting account or how much they can spend on gambling. Different banks and lenders have different lending rules. Looking at where money is spent can help a bank determine what kind of spender you are and whether you’re cautious. It gives a bank a picture of your spending habits and attitude towards money. We can advise on this. An independent, impartial helper is what we are. We’ll answer the generic questions and tell you how to become ready. Mortgage readiness is very important because it’s an involved enough process to go to a bank and ask for a large amount of money. No one can see into the future and banks are very cautious about long term lending. As a mortgage broker, we can tell you who offers exemptions. There are two types - one on the deposit you’ve got and another on the amount of money you can borrow. What are the main advantages of using a broker when applying for a mortgage? There are three main advantages: A full overview of the market: bonkers.ie will be able to tell you what all the lenders in the marketplace have on offer. You’ll see all the mortgages out there, whereas if you deal with an individual lender, you’ll only see their own offerings. Convenience: It can be onerous to fill out forms with each bank or lender. With us, there’s only one form. We’ll help you get ‘mortgage ready’: We’ll tell you if you’re not ‘mortgage ready’ and advise you on what you need to do to become ready. We can also tell you which bank is most likely to say yes. What is the new mortgage service from bonkers.ie? We’re a fintech. We use technology to make things easier for the consumer. The first thing we need is to know who you are, but we don’t want you to fill out any paper forms. Covid is still ongoing and people don’t want to go to offices to physically sign things. All of this can be handled using technology. We ask you to identify yourself by downloading an app and taking a selfie. People are used to this, we’ve all done it before. We then send you some documents to sign electronically, so that you know who we are and so you know who you’re dealing with. We’re called Bonkers Money Limited and we’re regulated by the Central Bank of Ireland. After that, we need to determine your income. We send you a salary certificate and your employer fills it out and sends it back to us. This is carried out on an online platform. You get a username and a password. This is the platform we use to guide you through the whole process. You then need to tell us about your current account, so you can upload your current account statements from the last six months. Make sure they’re numbered sequentially, no pages are missing, etc. We’ll check this and then move on. You might have some savings, so you’ll upload a statement for your savings account. You then might have to upload a statement for a car loan you might have. If you’re applying for a mortgage through us, you don’t even have to leave the comfort of your own home or see us, but we will speak with you. Why should you choose bonkers.ie as your broker? Going through the mortgage process is intrusive and involves so much paper. We’ve made it as convenient as possible and everything is all online. It’s quicker than it’s ever been before. The portal also gives live updates. If you’ve uploaded a savings account statement, you’ll know whether or not we’ve seen it and whether we’ve reviewed it. We’ll leave a note if something is missing. There’s a chat function and an email option. When you’re in the portal, you have all the benefits of sitting beside a broker, without actually sitting beside anyone. It’s great for seeing where you are in the process. It’s all split into different sections too. There’s a section on you, your savings, your current accounts, your loans, etc. Customer service Sometimes you hear horror stories associated with online services. We’re very much a concierge service if you like because you can always reach us by phone and talk to a human if you want to. If you don’t want to though, you can still get everything done at your own speed. How much does the service cost? The mortgage broker service is free. Everything we’ve done over the last 11 years has been a free service. It’s really difficult to do, but we get paid by the supplier or company that you choose for the service we provide them, which is presenting you as a customer. We can provide this for free as we try to make everything as efficient as possible with technology. The only catch is that we can only help customers who are looking to borrow €200,00 or more. Who can use the service? The mortgage broker service can be used by first time buyers, movers and switchers What else do you need when applying for a mortgage? You’ll need mortgage protection insurance, which will pay the bank the remaining amount left on the mortgage should you, unfortunately, pass away during the mortgage term. We offer the best life insurance and mortgage protection insurance rates in the country. It’s less expensive to purchase mortgage protection from a company like us than directly from your bank, so do shop around. You’ll also need home insurance or buildings insurance. The bank will help survey the house for this. You can apply for home insurance right here on bonkers.ie. You’ll also need a solicitor, which we don’t currently help with. Maybe your estate agent can help with this. Compare banking products on bonkers.ie You can easily compare a range of different banking products on bonkers.ie. Whether you’re seeking the current account that best suits your needs, a savings account, or looking to start your mortgage journey, we’re here to help! Take a look at this blog to learn more about our new mortgage broker service. Don’t forget you can stay up to date on all the latest banking,personal finance and mortgage news and top saving tips with our blogs and guides pages. Get in touch If you have any questions about what was discussed in today’s podcast, we’d be happy to help! We’re on Facebook, Twitter and Instagram.
N26 vs Revolut: How do they compare?
With Ulster Bank and KBC planning to exit the Irish market soon, many of you might be on the lookout for a new current account. Or maybe you're simply fed up with your current provider’s service and their fees and charges and are looking for something better? In our latest episode of the bonkers.ie podcast we take an in-depth look at both Revolut and N26, the fintechs who have been dominating the banking space here for some time. We'll cover off the basics from fees and charges to rewards and extras, as well as all the other essential things that you need to be aware of before signing up. Here’s an outline of what was discussed in the podcast. What is Revolut? Digital bank Revolut has around 1.5 million customers in Ireland. Revolut’s headquarters is in the UK and it operates in Ireland under what’s called an e-money licence. This licence is actually from its Lithuanian business, which is why all Revolut customers have a Lithuanian IBAN at the moment. Revolut is sometimes referred to as a bank as it does a lot of things you’d expect from a bank. It feels like a normal current account, but technically it’s not a bank. The company is looking at taking out a banking licence in Ireland, which would change things. You can learn more about Revolut’s status as an e-money licence here. What is N26? N26 is a similar fintech but is technically a bank. It’s online-only and has a banking licence from the German Central Bank. This is the main difference between the two fintechs. How can N26 use their banking licence in Ireland? If regulated by the Central Bank, all financial institutions in the EU can passport over that licence to another country relatively easily. That’s what N26 has done. This also means that N26 users are covered under the Deposit Guarantee Scheme by the German Central bank. This covers deposits of up to €100,000 per institution. How are these fintechs different from traditional banks? N26 and Revolut are online-only. There are no physical branches and they’re cashless. You can take out cash with your card, but you can’t lodge cash or cheques. For some, that’s not an issue and many people don’t go into banks anymore. Older people might like the personal touch of a bricks and mortar bank. Technology is really at the heart of N26 and Revolut. They’re digitally native. Traditional banks are behind the times with their digital technology. They have old IT systems, which can be difficult to update. Revolut and N26 have really strong IT foundations and they’re always bringing out new features, products and services. In fairness to AIB, Bank of Ireland and Permanent TSB, they're doing their best and trying to innovate where they can, but it’s a lot slower for them. What are Revolut and N26’s current account offerings? We’re going to look at the basic account. Both have premium accounts, but we’re just going to focus on the free version. With both fintechs, pretty much all of your day-to-day banking is free. There’s no charge with N26 or Revolut for direct debits, standing orders, chip and pin, contactless transactions, topping up your account, receiving money, etc. There’s no monthly account maintenance fee either. There is a €6 charge to set up a Revolut account initially, which includes the cost of the physical card you get sent out. With N26, it costs €10 to get a physical card sent out. It’s free if you don’t want a physical card and just pay with your phone. Pretty much all of your day to day banking is free after this, so they’re really competitive when you compare them to other current account providers in Ireland. Cash withdrawals When it comes to cash, they’re both a little different. With N26, you’re allowed 3 fee-free ATM withdrawals a month. After that, there’s a pretty hefty €2 charge for each withdrawal. With Revolut, you’re allowed to withdraw €200 a month fee-free or this has to be done within 5 ATM withdrawals. Once you hit either limit, there’s a €1 charge or 2% of the amount withdrawn, whichever is higher. Revolut and N26 want to discourage people from withdrawing cash because they get charged when customers withdraw cash from other banks’ ATMs. Every time you take out money, the banks usually charge each other. With the main banks, it’s usually fine because they all have enough customers and machines so that they recoup the money back. Foreign exchange fees The lack of foreign exchange fees is one of the reasons why both of these fintechs became so popular. This is a key feature and selling point for both of them. Foreign exchange fees add up when travelling abroad or making purchases online. With Euro, they’re not so big but if you’re going to the US or the UK, the fees can add up. Foreign exchange fees can be as high as 3% with some banks. When you make a payment with your card with N26, you don’t get charged a foreign exchange fee. If you like travelling a lot the N26 account can be brilliant. With Revolut there are no foreign exchange fees on card purchases up to €1,000 a month. It used to be unlimited, like N26, but now there’s a limit on it. Still €1,000 is very generous. Withdrawing cash abroad With N26 if you withdraw cash outside of the Eurozone, you’re just charged 1.7%. With Revolut, you can withdraw the equivalent of €200 fee-free and after that there’s a 2% fee. Both accounts are brilliant for making payments and withdrawing cash in a non-Eurozone country. They both have Apple pay and Google pay. These are fee-free as well as they’re considered contactless transactions. Spending analytics Both N26 and Revolut can provide up-to-the-minute details on your spending. Revolut’s app in particular is a bit more fun and engaging in this way than N26’s. Revolut has lots of graphs, charts and information to show you how and when you’re spending your money. Security settings You can really easily toggle on and off security settings in both apps. If you want to limit online transactions you can turn off online transactions. You can also turn off ATM withdrawals, disable contactless, etc. You can also block and unblock your card. Saving options One key feature that Revolut has is called Vaults. It’s a really handy feature that allows you to round up any purchases you make and then deposit the remaining amount to the nearest euro to the Vault. For example, if you buy a coffee for €2.80, it will round this up to €3.00 and put €0.20 in the Vault for you. With N26, you can do the same with a feature called Round-Ups. These then go into the Spaces of your choice. With N26, you have to have a paid subscription to access Round-Ups, it’s not available on the Standard account. Vaults is available for free on the Revolut app. What is Revolut Junior? Revolut Junior is a great feature for families, parents or guardians. There are currently over 100,000 Revolut Junior customers in Ireland. It was launched in July last year and is an account for children aged between 7-17. It was designed by Revolut to promote financial literacy in kids from an early age. A parent can set up an account for their child from their own Revolut app. The child will then get a card of their own and can download the Revolut app. The parent will be in complete control of the account and the security features. When Revolut Junior launched, it had a top-up limit of €40 a month, so technically you could only give a child €10 a week in pocket money. In June however, Revolut removed this feature so it’s now limitless. Disposable virtual cards With Revolut the disposable card feature allows you to create a new card for a one-off payment online. Once you carry out your purchase, the card number gets destroyed. If you’re on a website that seems a bit suspicious, you can use this card and you can be certain it won’t be linked to your original card. However, if you need to return the purchase you made with the disposable card, it will come back to your original Revolut account. N26 doesn’t have a feature like this at the moment. Cryptocurrency and commodities In the Revolut app, you can invest in cryptocurrency, such as Bitcoin, and buy commodities. If you do invest, cryptocurrencies can be stored in your Vault. You can invest in stocks and shares too. You can even access the likes of Apple and Facebook through Revolut too. N26 does not offer this feature at the moment either. Do these digital banks offer traditional banking services, such as loans? No, they don't, which is a slight impediment as some people like to do all their banking with one provider. N26 does offer overdrafts in some other markets and it has plans to offer loans. It doesn’t offer overdrafts in Ireland at the moment, but there are plans to bring this feature here, likely within the next 12-18 months. If N26 did start offering these other banking products, it would help people to perceive them as a bank, as opposed to just as an app or money management tool. Mortgages are probably a good bit down the line as it’s more risky. Revolut is an e-money licence business, so it doesn’t offer overdrafts, loans or mortgages here. The company has said it intends to apply for a banking licence in Ireland soon. Revolut has also applied for an e-money licence in Ireland, so it wouldn’t use the Lithuanian one here anymore. This would mean that Irish customers would have an Irish IBAN. Are these digital banks safe? As N26 has a full banking licence, you’re covered by the Deposit Guarantee Scheme for up to €100,000. With Revolut, you’re not technically covered. It ring-fences your money, so technically Revolut can’t access your money. If you have money in your Revolut account, that money gets ring-fenced into a client account from JP Morgan. Theoretically, if anything happened to Revolut and it became insolvent, while you wouldn’t be covered under the Deposit Guarantee Scheme, your money wouldn’t be with Revolut and you’d be first in line to get access to the money. Technically, there is slightly more risk with Revolut. Both N26 and Revolut have really good fraud monitoring tools. You can get up-to-date push notifications on your spending, so if someone manages to steal your card and buy something, you’ll get a notification immediately to let you know about the purchase. If Revolut thinks a transaction may be suspicious, it can ask you to verify it with a security code. Customer service Customer service with both of these is lacking somewhat. The customer service in traditional banks is quite good. There’s always a person to talk to and doesn’t take too long to get through. With the free accounts from Revolut and N26, you end up chatting with a Robot and it’s all done online, which can be frustrating. This may be off-putting for older customers, who like the personal touch of in-person banks. Which digital bank is best for travelling? If you do travel a lot, then N26 is probably the better option. There’s no limit with N26 for foreign exchange fees, whereas Revolut has a €1,000 limit. Having said that, Revolut recently launched a new service called Stays which allows customers to book accommodation for their latest holiday and get up to 10% instant cashback. It’s planning to also offer flight booking and car hire soon. If you travel a lot, it may be worthwhile investing in a paid account for the added benefits. With premium accounts, both Revolut and N26 offer travel insurance, winter sports cover and compensation for delays or lost luggage. IBAN discrimination With N26 there’s a German IBAN and with Revolut, customers will have a Lithuanian IBAN. In theory, it shouldn’t make a difference what IBAN you have in the EU since we’re all part of SEPA, but sometimes you do hear of IBAN discrimination. This occurs when employers or utility providers have outdated payroll systems or payment systems that don’t recognise foreign IBANs. This is improving, but it is still an issue. If you’re thinking of moving to a digital bank, make sure you check and see if your employer can pay your salary into one of these accounts. What are the main differences between N26 and Revolut? To summarise, here are the main differences between the two digital banks: Revolut has disposable virtual cards, which N26 doesn’t offer. Revolut has Revolut Junior to help parents manage their children’s money. N26 doesn’t offer a similar feature. The Vaults feature in Revolut is great. To access N26’s similar Round-Ups feature you need to be on a paid subscription. Revolut is an e-money licence business, whereas N26 is an actual bank that can affect the protection of your money. Revolut offers access to cryptocurrency, stocks and commodities. You can’t access these with N26. Both treat cash withdrawals differently, with Revolut having a €200 limit. Revolut has a limit on foreign exchange purchases of up to €1,000 per month, whereas N26 doesn’t. Revolut’s app is more fun, colourful and engaging. Revolut now offers an accommodation booking service, Stays, offering customers up to 10% instant cashback. N26 doesn’t have this feature. Who wins? At the moment, it seems like Revolut has more of an edge over N26. If N26 starts to offer loans and overdrafts, this could change things. Having said that, if Revolut obtains its banking licence, this could help shift the favour back. It depends on what people value. They’re worthy banking alternatives and people should check out one of them if they haven’t already. Compare banking products on bonkers.ie You can easily compare a variety of banking products at bonkers.ie using our range of comparison tools. If you’re interested in signing up for a digital bank, head over to our prepaid credit card comparison page, where you can review fees, charges and card features across a range of providers. If you’re looking for a more traditional current account, we can also help! Our current account comparison tool will quickly show you what options are available from Ireland’s main current account providers. You can stay up to date with all the latest banking and personal finance news with our blogs and guides. Get in touch! Have you tried Revolut, N26 or both digital banks? Which do you prefer and why? We’d love to hear from you! Comment below or reach out to us on Facebook, Twitter and Instagram.
Everything you need to know about retrofitting your home
Last month Electric Ireland and retrofit experts Tipperary Energy Agency announced a new joint venture called Electric Ireland SuperHomes, which aims to deliver up to 35,000 home retrofits over the coming years. Home retrofits have become increasingly popular as homeowners look to lower their energy bills as well as their carbon footprint. While certain retrofit measures are more costly than others in the short term, a wide range of grants and services are available for those homeowners looking to make green improvements, whether that's improving your home's insulation or upgrading your heating system. In this episode we chat to David Flannery from Electric Ireland SuperHomes to discuss the new joint venture as well everything you need to know about retrofitting your home. What exactly is retrofitting? Retrofitting is when a substantial upgrade of a home is carried out through a combination of measures. It might mean an overhaul of an energy system that is inefficient and transforming it into a system that works. We don’t often think about a home as being a system, but that’s precisely what it is. We generate heat in a home, we try to keep it in the house as much as possible and we have ventilation as well, which a house needs so it can breathe. A retrofit design combines these elements and takes them into account to provide an energy system that works together. The non-energy benefits of a retrofit include warmth, comfort and healthy airflow throughout the house. What’s the difference between a shallow and deep retrofit? We’re more familiar with shallow retrofits in Ireland. Historically a shallow retrofit has been the predominant energy upgrade route that people have chosen. Examples of this would include pumped cavity wall insulation, upgrading your attic insulation from 100mm to 300 mm, upgrading your oil or gas boiler, or adding heating control so that you can heat water upstairs and downstairs separately. A deep retrofit goes further. We’re not talking about incremental improvements, we’re talking about dramatic improvements in terms of house performance, bills and carbon production. Deep retrofits are entirely different and would be a once in a generation change. It’s about getting everything right at the same time, thinking about how things work together and designing your energy system for the house and how you use it. Electric Ireland SuperHomes Electric Ireland SuperHomes kicked off in 2017, even though it’s been around since 2015. Focusing on bespoke, tailored designs for each house, SuperHomes has pioneered the retrofit model and refined it into something that works. Each house has different needs. Even houses in a housing estate that were once the same would all be different now. Some will have extensions, converted attics, new boilers or new windows, and some won’t have upgraded at all. You’d need a separate retrofit design for each of those homes. Are Irish homes poorly insulated? Irish homes are quite poorly insulated and even when we started insulating in the mid-1990s, insulation was treated with a little bit of suspicion. We have a different climate from other countries and other countries have a history of insulation that is far more advanced than Ireland’s. Ireland has improved a lot in terms of the shallow retrofit over the last number of years. There are now grants available from the SEAI, so there have been a lot of upgrades and the standard of new homes has improved considerably over the last number of years. Take a look at this blog to see what energy efficiency grants the SEAI offers. How can people tell if their home needs a retrofit? Homeowners will know their home inside out, so usually they can tell you what part of the house is cold, what the bills are like, or if it’s draughty. They can talk to a retrofit expert to pinpoint exact problems. Sometimes it can be difficult to find the cause of problems. An example of this is with box bedrooms. Many households say that the box bedroom is the coldest part of the house, no matter what they do. The box bedroom tends to be right over the hallway and usually has no insulation underneath. In many cases, the bedroom door is old and has gaps at the edges, allowing a breeze to enter from the hallway. Most of the time the radiator in the box bedroom is the smallest in the house. This is where the fix comes in. If you get good and impartial advice that considers the features of the house, you should get a retrofit plan that’s cost-effective, sensible and addresses the issues in the house. Solar photovoltaic (PV) panels There are two solar panel options for people, which are solar thermal or solar photovoltaic. The most compatible with a heat pump would be solar voltaic. Rather than the sunlight producing hot water, it’s producing electricity and feeds into your meter box. You can use that for anything and save you money. For photovoltaic, you can put in a battery, which will store the excess that you’re not using if you’re not in the house. An element will spill onto the grid if it’s not being captured. There’s no fee or payment for that at the moment but in time the plan is to be paid for this excess. Solar thermal panels Solar thermal is going to provide you with lots of cheap hot water. There will be more hot water produced at certain times of the year than others for obvious reasons and you have to be able to use that water. Your return on investment will depend on how you use that water. For example, if you don’t use the hot water produced, because you keep your electric shower, you’re kind of doubling up on your costs and not availing of the savings you would get. You need a bigger cylinder and need all the showers to run from it and it’s going to suit larger families, as they’ll save on the production of hot water. How much are solar panels? The cost of the solar thermal or photovoltaic could range from €2,500 - 5,000 depending on size. The return on investment will depend on the extent of using the hot water for solar thermal. For photovoltaic, you’re talking €200-250 euro per year in savings. This means it’ll take around 12 years to earn back what you paid for the solar panels. Does the panel always have to go on the roof of the house? You can choose where you put it, but the more you do it in line with convention, the cheaper it’s going to be. The obvious place is the roof if you have a good aspect. The southern aspect is going to be the best, but you could still do it on an East or West axis and split the panels in two to get morning and evening sun. You can have panels on top of your shed. There aren't any significant planning issues, but there’d be more pipework, travel and distribution losses that way. What is a heat pump? With a heat pump you’re trying to extract as much free energy from the air as possible. A conventional gas boiler would have an efficiency of around 90% or thereabouts, which sounds great if you think about it out of 100. However, a heat pump will have a performance that’s about 300-350% efficient. For every unit of energy that you use, you’re producing something called three comparable units in heating terms. A heat pump will keep the air in the house at a nice even temperature. At its most efficient, it will be around 21 degrees, it can go up to higher temperatures than that but it would be working hard and using more electricity. Once you agree within your house on the temperature you like, you don’t really touch the thermostat after that and the temperature stays at this optimum level. If the house is well insulated, the heat pump will work very well. Getting heat pump ready The key thing to remember is that the home needs to be heat pump ready and there are strict criteria in place now for assessing whether a house is heat pump ready. Essentially it looks at every fabric aspect of the home, such as windows and doors, walls of the attic, flooring, etc. There’s a value associated with each factor and when you put this through a heat loss indicator, you’ll come out with an overall figure. The overall figure has to be below a certain amount and each element of your building fabric needs to perform to a minimum standard. Once you achieve that, you know your house is heat pump ready and that the heat pump will work efficiently. People can find out how efficient a heat pump would be in their own home by getting a heat pump technical assessment carried out. That will provide you with a pathway and will help you get to a standard you need to have a heat pump. What is the cost of a heat pump? The cost associated with a heat pump is also the cost associated with getting the home heat pump ready. If you look at a home built in 2010, it might not need much. It might need some insulation upgrades or wall cavity pumped. If you’re talking about a unit cost for the heat pump, it might be €10-13,000. There are grants available. It’s more complicated for an older home or for homes that have extensions or attic conversions. You could be looking at anywhere between €40-70,000 for a house like that. What are the savings with a heat pump? The savings could be anywhere between 30-50%. There is funding there to help. The SEAI is incentivising plans to take a shallow retrofit to a deep retrofit. Insulation The right insulation depends on what your wall type is. When you have a floor that’s concrete or a suspended floor, it’s not really something you’d want to insulate. You lose around 14% of your heat through the floor. You should start focusing on the place that makes the most sense, which is the attic. When you assess the wall, you’ll see there are different wall types so there are different solutions. You’ll have a hollow block or a solid wall. You’ll have to go internal or external. If you’re fortunate enough to have a cavity wall insulation with enough of a gap then pumping that is the most cost-effective way. There are grants for insulation available of up to €6,000 for detached houses and €2,500 for internal insulation for smaller houses. There’s also grants or attic insulation as well. Boilers We’re making a transfer over to renewable sources and soon there won’t be any gas boilers put into new houses. There are improvements moving from a boiler to a condensing boiler. If it’s an old boiler, you might get 20-30% savings on that. For budget, this is what people may need to look at sometimes. There are no grants for upgrading your boiler anymore, so it’s not incentivised. This is why people should perhaps consider a deep retrofit instead. Airtightness and ventilation Airtightness is crucial. If you insulate your home and there’s a draught going through, it will undo much of the positive work carried out. We can measure this through an airtightness test, and that will vary from 7 or 8 air changes per hour to 13 or 14. Tackling that is important. Bringing this to 5 air changes per hour is comparable to a new home. The last part is a ventilation system. You’ll have an active ventilation system that regulates the airflow through the house. It reacts to moisture and when moisture builds up, it switches on. It’s an intelligent ventilation system. This will minimise mould and odours in the home. Those three essential elements - fabric, airtightness and ventilation - are the fundamentals of the SuperHomes package. The process of a retrofit A retrofit advisor, such as David, would be the first point of contact for anyone looking to retrofit their home. The advisor will give some general advice and look at the suitability of the person’s home to see if they’re eligible for the scheme. You should receive a ballpark figure of what the costs could be. Electric Ireland SuperHomes tries to create a process for people that shortens the retrofit journey, improves it and provides solutions and puts together a coherent, effective plan. Customers should be able to choose the type of measures they would like to implement. If everything is satisfactory initially, you move onto a survey before bringing in a contractor and putting together a report with all the recommended measures, the grants available and the costs. That report will essentially contain a retrofit offer. In general, how much is a deep retrofit? While it does depend on the house, a typical house will cost around €50,000. There is around €15-17,000 available in grants, so it brings the net cost down to somewhere in the region of €35,000. That can vary and it can be less for a newer house. For an older or bigger house, it can be more than that. Finance options Retrofitting costs a lot of money and not everyone will have access to the funds right away. This is changing in Ireland and there’s a realisation there will need to be grant and financial support in place for people to avail of retrofitting. You now can get a range of green loans for home improvements from banks and credit unions. You can put the savings you’re making on energy towards paying back these loans. You can learn more about the various finance options available here and see what home improvement loans are available with our easy-to-use comparison tool. If budgets are tight what can people do? It’s always fabric first, so insulating the attic is a good step for those with a tight budget. A good way to approach it is by looking at the pathway to a heat pump and the elements you have to tackle to put a heat pump in ten years down the road. How can someone contact Electric Ireland SuperHomes? The website, superhomes.ie, contains a lot of information and explains more about the retrofit process. There’s good general information on heat pumps and other technology and there’s an expertise section there where you can find out more. Lower your energy bills with bonkers.ie Over time retrofitting your home will help lower household energy bills. However there are ways to immediately start saving today. With energy prices increasing, there’s never been a better time to consider switching energy supplier. For those willing to switch, it’s possible to save up to 40% off standard rates for the first 12 months with some energy deals. Here at bonkers.ie, you can use our energy comparison tool to compare the best deals today across all 14 energy suppliers nationwide. Switching takes just a few minutes and you only need the following on hand to switch: A GPRN number if switching gas and an MPRN number if switching electricity A recent meter reading A good estimate of how much energy you use Some personal details Read our helpful guide on what you need to switch suppliers for further information. If you have any questions about retrofitting, let us know and we’d be happy to help! You can contact us on Facebook, Twitter and Instagram.
Current accounts: a deep dive
With Ulster Bank and KBC both announcing plans to exit the Irish banking market, many of you will be looking for a new home for your current account. And while options for switching may be looking more limited, there is still good value and choice on offer from the remaining players who still offer current account services in Ireland. In this podcast we take a deep dive into current accounts to see which provider is offering the best value. Here are the main questions answered and points discussed by Daragh and Rob in the podcast. Why are current account switching levels so low in Ireland? There are a few reasons why people don’t switch current accounts more frequently. It tends to be a mix of inertia, as people don’t want to take the time and effort to switch, fear of something going wrong during the process, and also mindset. People feel like there isn’t money to be saved or they feel like all the banks are the same, but you can still save money. How to switch current accounts There are two ways to switch current accounts. 1. The Central Bank’s Switching Code The Central Bank brought in a switching code of conduct a few years ago, due to the low switching rates. The code is to make it easier for people to switch. If you’re looking to switch from one bank to another, you can fill out a switching pack and choose a date for the switch to begin. Your new account needs to be up and running within ten days of that switching date. The bank will also help you to transfer things over like direct debits, and standing orders. It’s best to switch when there’s the least activity on your account. Usually, people pick a switching date in the middle of the month. 2. Open a new bank account Another option for people is to open up a new bank account, keep their existing account and then gradually transfer things over, once they’ve gotten used to the new account. Then they can close their existing account. With this option, you’re not going to have the hand-holding that the bank provides. Even if you use the switching code there’s probably room for improvement. Not enough people are using it due to people opening up new accounts, then not closing their old one. What are key considerations when choosing a current account? There are several key questions to think about when choosing a new current account. Do you need an overdraft? Not all providers offer this. Are mobile payments important to you? Not all providers offer Apple, Google or FitBit Pay, although most now offer at least one. Is a branch network essential to you? If you have a small business or you need to lodge cash and cheques this may be something to consider. Do you travel much? Foreign exchange fees charged on card payments might be something to think about. How do you use your money? If you withdraw and use a lot of cash you should know that some providers have quite high fees for withdrawals. How much can people save by switching? Banking is more personal than other products and services. Obviously with energy, it will depend as well on how much you’re using, but with a current account, it’s more complicated. On bonkers.ie you can use our comparison tool to select how many contactless payments you make or how many chip and pin or cash withdrawals you make to see the best value account for you. You could save €6-12 a month by moving to a cheaper option, as all the direct debits, standing orders, chip and pin transactions and cash withdrawals add up. It mightn’t necessarily seem like a huge amount, but that’s over €100 potentially a year. The main current account providers There are three pillar banks left in Ireland: AIB, Bank of Ireland and Permanent TSB. AIB AIB is the biggest and most well-known bank in Ireland, however, the current account on offer here is particularly poor value. Pros: AIB has a large branch network. It offers both Google Pay and Apple Pay. It has a great, user-friendly app that has a block/unblock card security feature. AIB offers an overdraft. Cons: There is still the dreaded card reader that’s still needed to carry out various transactions. There’s a €4.50 quarterly maintenance fee, a €0.35 fee for every ATM withdrawal and a €0.20 charge for every chip and pin transaction, self-service lodgement, online transaction, direct debit and standing order. Every time you use your account, except for contactless payment, you’re being charged. Bank of Ireland Bank of Ireland (BOI) is probably the next most well-known bank in Ireland. Pros: BOI has a large branch network. It offers both Google Pay and Apple Pay. It offers an overdraft. All day-to-day banking is included in the monthly maintenance fee, e.g. chip and pin, cash withdrawals, lodgements, etc. BOI doesn’t charge for referral fees, which is a fee charged when a cheque bounces or a direct debit gets presented and there isn’t enough money in your account. Sometimes this costs €10-15 with other banks. Cons: The quality of its mobile app and online banking services lag behind AIB's. BOI has an expensive flat rate monthly account fee of €6, regardless of usage. Permanent TSB Permanent TSB is a good option depending on how you use the account. Pros: Like BOI, all day-to-day banking is included in the monthly maintenance fee. Every time you use your debit card to pay for something, the bank will pay you back €0.10. You can earn up to €5 per month through this feature alone, which means you could offset most of the maintenance fee each month. If you're a customer of SSE Airtricity or Sky you can get up to 5% cashback on your bills when you pay them by direct debit from the account. If you have a mortgage with PTSB and you pay it back from the Explore Account, you’ll receive 2% cashback on your monthly mortgage repayments. Cons: PTSB’s Explore Account has a fairly hefty €6 monthly fee. Its mobile app is quite poor. It lacks basic features, such as fingerprint or face login. It doesn’t yet offer Google Pay, but this is planned to launch at some point this year. What are other banking alternatives? There are three options out there. There’s the An Post Money account, the Credit Union Account and then there’s the EBS MoneyManager account. An Post Pros: You get one fee-free withdrawal a week at an An Post ATM. An Post offers Apple, Google and Fitbit Pay. An Post has a good mobile app on offer. Cons: The An Post current account is quite expensive. It had a €5 monthly fee and a €0.60 ATM withdrawal fee. This may not be the account for you if you like using cash. You'll also be charged €0.50 for any cash or cheque lodgements at your Post Office. Other than that, all your day-to-day banking is free. There’s no overdraft on this account. Credit Union Some of the largest Credit Unions in Ireland have come together under the currentaccount.ie brand for Credit Union members. Pros: Current account holders get five free ATM withdrawals a month. There is an overdraft available with the account. After the monthly maintenance fee, all day-to-day banking is free. Cons: There’s a €4 per month fee. There’s a €0.50 charge for every ATM withdrawal after customers avail of the five free ones. If you’re a big fan of using cash, this may not be the account for you. The Credit Union’s online banking is not quite as advanced as other providers, but it’s improving all the time. EBS If you’re happy with the absolute most simple services, without all the bells and whistles, then EBS is potentially an account to consider and it’ll cost you almost nothing to run. Pros: There are no real fees and charges with this account. There’s no monthly fee, there’s no lodgement fee, no ATM withdrawal fee and there’s no contactless charge. Cons: There’s no overdraft with this account. There’s no Apple Pay or Google Pay on offer. There’s also no mobile app, but there is online banking so you can log on and access yourself. You can’t lodge foreign currency to the account either, it’s a Euro account only. For some that mightn’t be an issue. Revolut and N26 The fintechs are dominating the space at the moment. N26 has around 200,000 customers in Ireland at the moment, whereas Revolut boasts that it has around 1.2 million customers. Both of the accounts are quite similar and they have the same pros and cons. N26 is actually a bank. It has a German banking licence and is licenced by the German Central bank. Your money is as safe in N26, as it is with any other bank. Revolut technically holds an e-money licence though, so there is a slight difference. Pros: For both accounts, there’s no monthly maintenance fee and all of your day-to-day banking is free. They have amazing mobile apps, with up-to-the-minute push notifications and analytics on your spending. The apps allow you to toggle on and off many security features. For example, you can turn off contactless payment and both apps have a block/unblock card feature. They both have in-app reward schemes. Both apps offer Apple Pay and Google Pay. You can send money quickly and easily to other people. There are no foreign exchange fees on card purchases outside the Eurozone. So with N26 it’s unlimited for now, and with Revolut it’s up to €1,000 a month. On Revolut you can access bitcoin and other cryptocurrencies. Cons: These are online-only banks, so if you want to lodge cash, you’ll find yourself stuck. With N26 you get three fee-free ATM withdrawals each month. After that, there’s a fairly hefty €2 charge per withdrawal. Revolut allows you to make five withdrawals a month, and there's a withdrawal limit of €200. After that, there’s either a €1 charge or 2% of the amount withdrawn, whichever is higher. With both of these, you do not get an overdraft. Despite their cons, these fintechs are two of the best when it comes to digital offerings. You can take a look at our in-depth review of N26 versus Revolut in this blog, or listen to our podcast episode on both. How do these fintechs make money? Both apps are businesses, they’re not charities. They have had hundreds of millions in investment and Revolut hasn’t even made a profit yet. Eventually, there will have to be some sort of charges brought in. You can get premium accounts with these providers, which is where they make money. The apps are also branching into the insurance world, where they’re acting as a broker. It’s also likely that they’re taking a bit of a cut with their reward schemes. One place they might make more money is with credit services. Even though N26 is a bank and it does offer overdrafts in other countries, it doesn’t offer an overdraft in Ireland. IBAN discrimination Many wonder if it’s possible to get your salary paid into a Revolut or N26 account, as people want to use them as their day-to-day regular account. Unfortunately, there’s something called IBAN discrimination that still happens in Ireland. When you take out an N26 account, you’ll be given a German IBAN and when you take out a Revolut account, you’ll be given a Lithuanian IBAN. Some payroll systems are so old that they don’t recognise these foreign IBANs and sometimes utility companies have problems taking direct debits from these so-called “foreign accounts”, even though it’s illegal under SEPA. We’re supposed to have a single market for banking services. Is there any point in switching your current account to Ulster Bank or KBC, even if they’re leaving? If it was a mortgage, then yes, as Ulster Bank offers a great mortgage and people can still take out their mortgage with them. Even if it gets sold on, your terms and conditions need to stay the same in general. When it comes to a current account, there’s not any point in switching. It’s not something that people are going to want to do once or twice in the space of a year. The final say There’s no one-size-fits-all or one current account provider that ticks all the boxes. Revolut and N26 come close to being the perfect offering. If N26 decides to offer an overdraft, and if the IBAN discrimination issue is fixed, it will be offering a great account. Permanent TSB is probably the safest bet overall. The account has good cashback offers, there’s a strong branch network, and it accepts cash. It’s more competitive from a fee point of view than BOI and AIB. The only negative is its online offering. Switch and save today Are you considering switching your current account? What do you think of the fintechs dominating the market at the moment? We’d love to know in the comments. At bonkers.ie, we offer a range of banking comparison services that will help you lower your banking costs. Take a look at our guide on how to switch current accounts for more information on what was discussed in the podcast. We also recently made a video to evaluate the best value current accounts in 2021, which may be of interest to switchers. If you have any questions about what was discussed in today’s podcast, we’d be happy to help! We’re on Facebook, Twitter and Instagram.
There's been lots of movement in the mortgage market recently with Finance Ireland and Avant Money both launching new products, including the country's first ever 20-year fixed-rate mortgage from Finance Ireland. In this episode we discuss the rates on offer as well as the pros and cons of choosing a fixed rate. We also discuss recent price increases from three energy suppliers, why energy prices are on the rise, as well as the acceleration of rural broadband provider Imagine's 5G wireless service to customers nationwide. Here are the main points discussed by Daragh and Rob in this month’s podcast. Who is Finance Ireland? Finance Ireland is a non-bank lender that has been in operation for a few years. The company is managed by the former banker, Billy Kane, who used to be the CEO of Permanent TSB, so he has a fair amount of experience. Finance Ireland has just launched Ireland’s first 15 and 20-year fixed-rate mortgages, which will add more competition and choice to the market. What’s the difference between a fixed and variable rate mortgage? A fixed-rate quite simply doesn’t change with the length of the term. You can get a fixed rate for 3 years, 5 years, and 10 years at the moment. However, in a lot of other European countries, fixed rates of 20-30 years are quite common. With a fixed-rate mortgage, the interest rate and your repayment are guaranteed not to change for that period. A variable rate is the opposite. It can change and go up or down. Previously in Ireland, fixed rates weren’t common at all. Back in 2010-2012 about 90% of people would have been on some type of variable rate, which includes tracker rates. Now over 80% of mortgages taken out are fixed rates. Read our guide to learn more about the pros and cons of variable and fixed rates. What’s the significance of Finance Ireland’s 15 and 20-year rates? There has never been a fixed-rate mortgage on offer here for that length of time before. Usually, fixed rates are between 3-5 years. Gradually over the past few years, some of the banks have started to offer 10-year fixed rates. What kind of terms and rates does Finance Ireland offer? Finance Ireland offers 3 and 5 year fixed rates that are common in Ireland for first-time buyers. Now they’ve introduced new rates of 15 and 20 years. If you’re taking out a mortgage, it’s always based on how much equity you have on your home, so this is the home to value ratio. Usually the longer the fixed rate, the higher it is Let’s say you were buying a property for €100,000 and you wanted a mortgage for €90,000, it would mean that you’d have 10% equity. The more equity you have, the lower the rate. Looking at Finance Ireland’s 20-year rates, if you have 10% equity, so a loan-to-value of 90%, you can get a rate of 2.99%. If you’re lucky enough to have a 20% deposit, you can get a 20-year rate of 2.9% and if you have a 40% deposit, you can get a rate as low as 2.6%. So they’re quite competitive. Looking at the 15 year fixed rates, they go from 2.5% to 2.95% depending on how much equity you have. Then their 10-year rates go from 2.4% to 2.85%. Who is Finance Ireland targeting? They seem to be targeting everyone. They’re on offer for first-time buyers, movers and switchers in both rural and urban areas. If applying for a mortgage, you should check them out. Often in Ireland, people go with big bank names, such as AIB and BOI, instead of lesser-known lenders. What is Avant Money offering? Avant Money lowered some of its rates and introduced its first 10-year fixed rate. Their 10-year fixed rate goes from 2.1% to 2.65% depending on how much equity you have in the home, which is very competitive. What are the pros and cons of longer-term mortgages? The main pro is that the rate is not going to change. It adds peace of mind and certainty. The biggest con is that you really need to lock into it. If you want to overpay or pay it off early, there will usually be a charge. Similarly, there would be a charge for switching your mortgage to another bank. These breakage fees can be quite high. Some banks are giving a little bit of flexibility, where they will allow you to pay off a certain amount extra each year. With Finance Ireland, you can overpay on its 15 and 20-year mortgages by 10% without being charged extra. Avant Money doesn’t offer that added flexibility right now, but there are rumours that they’re looking into it and that in the coming months they’ll allow you to overpay as well. Can mortgage holders avail of lower rates overtime when the loan to value rate decreases? With Finance Ireland, as you progress through your mortgage and as you pay it off year on year, it puts you onto lower rates. This is automatic. Some other banks, maybe once throughout the term of your mortgage they will write out to you and offer you a slightly reduced rate. Will mortgage rates go down in the future? It's tough to know, as both KBC and Ulster Bank have announced their planned exits. So in the medium term, this will put upward pressure on prices, but it’s good to see some competition. Even though we see rates going down slightly, it never seems to feed through into the official average rate because there are so many terms and conditions attached to some of the lower rates. For example, sometimes you have to buy an A-rated home. Avant Money has the lowest rate in the market at the moment of 1.95% which was launched just over a year ago. This is low in an Irish context, but that compares to an average interest rate of 1.33% in the Eurozone and rates as low as 0.7% and 0.8% in countries such as Portugal and Finland. What if your mortgage gets sold on in the future? KBC and Ulster Bank customers will have their mortgages sold on, even though their terms and conditions stay the same. If you sign up to a 20-year fixed rate with Finance Ireland and 5 years later they leave, it doesn’t matter who gets that mortgage, your repayment terms will not change and you’ll still have 15 years remaining at what you agreed to pay. Is competition the only thing that will put downward pressure on prices? Yes, but stronger competition is better than more competition. Even though the consolidation we’re seeing in the Irish banking sector is unfortunate, if it means that Permanent TSB could come out as a stronger and bigger bank, maybe it might not be as bad as we thought. We’re seeing a spate of energy price increases lately. Why are prices on the rise? There are a few reasons why energy prices are increasing again. A lot of our electricity still gets generated from the burning of fossil fuels. The price of coal, oil and gas has unfortunately skyrocketed on international wholesale markets in the last few months. This is due to supply and demand as the world economy has started to open back up. Unfortunately, that’s feeding through to higher prices. There’s been a few power plants that are out of action for maintenance reasons. We’ve seen a greater number than usual out of action, which hasn’t helped things either. Over the past few weeks, the level of wind output has been a lot lower than what we would have usually expected, which impacted renewable energy production. Another reason being cited for the increases are network charges. What are those? The electricity grid in Ireland is managed by EirGrid and the gas network is managed by Gas Networks Ireland. They charge suppliers fees and tariffs for the maintenance of the networks. For example, for the gas pipes, the pylons, the electrical wires, etc. The maintenance charges in Ireland are the third highest in Europe. These fees have been increased by the regulator in recent months and they’re being passed onto consumers. In Ireland, we have a target to generate 70% of our electricity from renewable energy by 2030. There's a huge investment needed in the electrical grid to make that a reality. Renewable energy and fossil fuel energy don’t tend to mix very well together, so it takes a lot of work and investment to change the grid. It’s been suggested that anywhere between €2-2.5 billion is needed by the Irish government into the electrical grid to handle all of this solar and wind energy. We’ve only been investing in renewable energy for the past ten years or so. This move over to renewable energy is likely going to cost consumers money for the next 15-20 years. Read our recent blog to learn more about why energy prices are increasing. What exactly is an energy bill made up of? An energy bill can be broken down into four parts: Around 20% of an energy bill goes to government compensation. This includes VAT and the PSO levy or carbon tax. Around 40-45% is the cost of the actual fuel. Around 30% goes towards the distribution or network transmission tariffs that all the suppliers ultimately get charged for the upkeep of the grid. The rest, around 10%, goes to the supplier. Imagine has announced the accelerated rollout of its 5G wireless broadband. Who is Imagine? Imagine Communications is an Irish owned communications company that provides broadband services to customers around the country. Imagine focuses on bringing high-speed broadband to underserved rural areas and to people who aren’t covered by high-speed providers. Imagine is widely recognised as an innovator in wireless broadband. The company is accelerating the rollout of its 5G wireless broadband services at the moment. What exactly is 5G wireless broadband? When we usually refer to broadband, more often than not we mean fixed-line broadband. 5G wireless broadband is broadband delivered to your home wirelessly through a signal that’s broadcast from pylons in towers and similar infrastructure that’s located in your locality. For it to be effective, you have to be within 15-20 kilometres of one of these towers. If you want this installed in your home, Imagine will come out and will install an outdoor antenna that will feed the signal into your wireless WiFi router, which will then disperse the signal to your connected devices. What speed will you get with Imagine? Imagine offers one deal at the moment for this and the speeds available are up to 150Mbps. This is a lot faster than what a lot of people would get in urban areas. It costs €59.99 per month on a 12-month contract, but it does offer a great option for those in rural areas. Imagine are increasing their investment in the network due to increased demand for improved services as a result of the ongoing pandemic. The National Broadband Plan is only in its infancy and Imagine is prioritising customers who can’t get good broadband. It currently has 268 masts in Ireland but is significantly rolling out more infrastructure around the country. What are the pros and cons of 5G? The main pro is that it’s given people a minimum speed of 150Mbps. It isn’t the fastest achievable broadband or download speed, but it’s more than enough for people who want to stream, game online or work from home. The main con is that it’s expensive. There are much better options available, but maybe not to people in rural areas though. The set-up cost is quite expensive with Imagine too, at €150. You can pay €50 initially and then pay the remaining €100 off in your first and second bill. What’s the quality of the 5G signal like? With 5G, the signal is harder to transmit. The frequency waves are shorter, so it’s obstructed by objects in its way, e.g. trees, buildings, and even weather. Capacity impacts the signal, too. If there are a lot of people in your area signing up for this deal who are streaming and gaming, then it can affect the speed. Save money with bonkers.ie On our website, you can easily compare mortgage rates, energy prices and broadband offers in your area to ensure that you’re not overpaying on your monthly bills! Are you trying to get on the property ladder? It’s best to minimise mistakes in the run-up to applying for a mortgage. Here’s a list of 9 common mistakes to avoid when applying. If you’re looking to combat the rising costs of energy, switching is a great option. Take a look at our guide on how to compare gas and electricity prices or check out the commonly asked questions about switching energy suppliers. We talked a lot about 5G broadband in today’s podcast. If this is something that appeals to you and you’re looking to switch broadband providers, here are 7 key things to consider before making your decision. What do you think of Finance Ireland’s new long-term fixed rates? We’d love to know your thoughts! You can reach out to us on Facebook, Twitter and Instagram.
Goodbye KBC, Hello Avant Money
In this episode we discuss everything from KBC's planned exit from the market and what this means for customers and competition, to research we conducted with RED C which reveals some interesting insights into how people feel about those in long-term mortgage arrears. We also discuss Avant Money's expansion into the Irish mortgage market and whether this spells good news for mortgage holders, as well as discussing why electricity prices in Ireland are so high and what consumers can do about it. Here are the main points discussed by Daragh and Rob in the podcast. What’s happening in the banking industry? There’s been plenty happening in the energy, broadband, banking and personal finance markets over the last few weeks. The biggest news story to come out was that KBC will be closing up soon, only weeks after Ulster Bank announces its departure. To lose one bank seems unfortunate, to lose two seems careless. With Ulster Bank, people seemed to have been expecting it. The Irish Times had picked up on it six months before it was announced. However with KBC, it was quite sudden. These banks leaving will have a huge impact on competition and many will be worried about their current accounts, mortgages and loans. Why is KBC leaving? KBC has said that banking here is challenging. It’s more expensive doing business here than in other countries. In Ireland, if you take out a mortgage, it’s supposed to be secured. If you get a loan of €300 - 400 thousand and you stop paying that mortgage, the bank or lender is supposed to have recourse to that asset. In Ireland, home repossessions don't really happen, even though we might hear big stories in the news. This makes lending in Ireland more risky and means that Irish banks need to hold more capital. Having all that money tied up means that there’s less money for Irish banks to lend further, make more profit, invest in things like technology. This is one of the reasons why banks have said interest rates are so high and why they say they can’t reduce interest rates. Return on capital For most banks, the mortgage is where they make the most amount of money, but banks also have a return on capital, where shareholders demand a particular return. This is what we saw with Ulster Bank. It wasn't making a big enough return on its mortgage book. There were billions resting in capital. It had to have that money there against the mortgages it was lending out. By leaving the Irish market, Ulster Bank can then give this capital to shareholders. It would be something similar with KBC, although KBC has lost a lot of money here. KBC is ultimately a Dutch and Belgian unit and likely do things a lot differently over there. They probably think it's too risky in Ireland. Who will get KBC’s loan book? The rumour is that Bank of Ireland reached out to KBC, they weren’t officially up for sale. KBC’s performing loan book, which includes mortgages and personal loans that aren’t in arrears, will likely be sold to BOI over the next few months. Things like current accounts won’t be sold, and this is where people are going to be stuck. How much of the market do KBC and Ulster Bank have? KBC and Ulster Bank both had about 12-15% of the market each. So that’s about 30% of the market now potentially all going back into the remaining players. What can people do if they’re a mortgage customer? There are existing customers and customers who are in the mortgage process. If you’re an existing customer, you need to know that your terms and conditions are not going to change. If you’re on a 5 year fixed rate with KBC that isn't going to change. KBC is still open for business and has a good mortgage offering, so it would be the same for someone considering applying with KBC. It gets a bit complicated at the end of the fixed rate. Usually, you roll over onto that bank’s variable rate. Ulster Bank and KBC had among the best variable rates in the country. They didn’t really discriminate between new and existing customers. It’s important to be aware of who buys the loan book because you’ll be stuck with that lender unless you want to switch. With Ulster bank, it could take a good few years for them to finally go. If KBC does sell its book to BOI, it could happen a lot quicker than we think. It could be this time next year. For current account customers, is there any point in changing to KBC? Probably not, and if you are an existing KBC customer, you’ll have to look at where you want to move your business. A lot of people switched their current accounts to KBC when Ulster Bank announced it’s leaving, so they’ll have to switch again. Under the rules at the moment, you do need to be given two months notice. Are there any other signs of banks coming into the Irish market? Not really. There is maybe Sterling Bank but that hasn’t happened yet. There were rumours that An Post was going to team up with a provider to start launching mortgages, but that seems to have gone by the wayside. RED C and bonkers.ie research As mentioned before, lending here is deemed more risky and banks here have to hold more capital. One of the reasons is because it‘s deemed very difficult to take back ownership of a property or to enforce security when it’s not being paid. The Banking & Payments Federation Ireland (BPFI) recently did some research which showed that in Ireland, on average when a bank goes to repossess a home as a last resort, they’re only successful 11% of the time. This compares to an average of 46% in the EU and up to 80-90% in the Netherlands. We did some research with RED C and we asked people: If it was slightly easier to repossess homes and it meant you could get slightly cheaper mortgage rates, would you be happy with that? 45% strongly agreed that they wanted to see banks taking a tougher approach. Around 22% of people were somewhat in agreement. The results were somewhat skewed more towards Dublin people and more towards men. Those aged 55+ were less likely to agree with this. People in their 50s and 60s aren’t affected by high interest rates because they have their mortgages paid off. Whereas it's the first-time buyers in their 20s and 30s that are struggling to get on the property ladder and are faced with higher rates that higher rates are having an impact upon. When home repossession cases are in the media, it gets emotive. The media thinks that no one should be kicked out no matter what, but the public is fed up paying high interest rates. Why is home repossession so difficult in Ireland? It’s a social and cultural thing and there are political impediments. In Ireland, we love the personal story. If someone has something that’s badly affected them, they’ll go onto Joe Duffy, and complain. It doesn't matter if 10,000 people can benefit from something, if one person is impacted, that’s often what we tend to focus on. Obviously it's upsetting to see people being asked to leave their homes, but equally it's unfair on the tens of thousands of Irish people who are stuck paying these high mortgage rates. The average mortgage rate in Ireland is around €185 more a month than other countries in the EU. In the EU, the average is around 1.3%. In Ireland, the average is around 2.7-2.8%. Avant Money has announced its officially expanding its low-cost mortgages to a range of new locations this month. Who exactly is Avant Money? Avant Money has been providing personal loans and credit cards in Ireland under the Avant Card brand. It is now owned by the Spanish banking group Bankinter. Avant Money started offering mortgages here around 8 or 9 months ago and came in with a competitive mortgage rate of 1.95%, which severely undercut the competition. Having said that, with this rate you do need to have a deposit of 40% or if you’re a switcher, you need to have equity in your house of 40%. Avant Money does have more widely available rates between 2.2-2.4% for people who don’t have deposits or equity that’s quite as big. Changes to lending Avant Money has been quite picky about who it lends to and was only lending to those in urban areas in Dublin, Cork, Galway and Limerick. While it might seem strange that they won’t lend for a house in more rural areas, you have to remember that when you apply for a mortgage the bank underwrites twice. They underwrite your finances, but then they also underwrite the house as well. Sometimes if a bank doesn’t like the house that you’ve bought or the location, they can say no. Thankfully Avant Money has expanded the range of locations where it is lending. It is now also in Wexford, Kilkenny, Dundalk, Athlone and Carlow. Avant is saying that 80% of the population lives in these areas. Targeting mortgage switchers Recent figures from the BPFI found that Avant had captured about 15% of all mortgage switchers last month, which is really good. It’s good to see them loosen the lending strings a little bit. If you’re interested in switching mortgages, see exactly how much you could save by switching, check out our handy mortgage calculator and take a look at our guide on how to switch your mortgage. You can take a look at all mortgage offerings from Avant Money here. Onto electricity. Recent figures from Eurostat show that electricity prices here are the fourth most expensive in the EU. We have the fourth most expensive electricity in the EU, but gas is a lot closer to the EU average. Prices here for electricity are about 23% above the EU average and if you take into account the average usage of electricity in Irish households, it means we’re paying about an extra €202 each year for our electricity. Germany, Belgium and Denmark are the only countries that are more expensive than us for electricity but that’s only because they tax electricity more than us. The tax on energy in Ireland is below the EU average. How expensive is electricity here? Electricity in Ireland is about €0.26c per kilowatt-hour, according to Eurostat. That includes taxes, levies and charges. This compares to an EU average of around €0.21c. If you switch, you can get far cheaper prices. All the energy suppliers offer great deals for people who are prepared to switch. These deals only last around one year, in which case we’d recommend you to switch again. If someone switched on our site, you could get electricity for about €0.14c per kilowatt-hour, which is a big jump down. Why is it so expensive? Firstly, we are an island location and we still import a lot of fossil fuels to generate electricity. Our island location means there’s an extra plane journey or ship, or a pipe the fuel needs to get to. Secondly, prices of fossil fuels fluctuate depending on the day or month. Thirdly, renewable energy isn’t free. It requires money and investment in the grid to turn the wind into energy. In Ireland, we have a grid that has been set up for supporting fossil fuel energy, it’s not been set up to support renewable energy. Those two types of energy don’t mix well, so a huge investment is needed in the grid to help us meet our climate change target goal of 70% renewable energy by 2030. We’re now at around 30-35% renewable energy. It’s being suggested that we still need an investment of €2-2.5 billion in the electricity network in order to do that. This money will have to come from somewhere and unfortunately, we’ll have to pay. When you look at an electricity bill, around 30% is for distribution and transmission charges. These are the charges for the upkeep of the electrical grid. For more information, read our blog on why energy prices are increasing. Switch energy supplier For those willing to switch energy suppliers, you can up to 40% off standard rates for the first 12 months with certain deals. This means the average household could save over €400 annually on their energy bills. At bonkers.ie our easy-to-use comparison tool allows you to compare deals from a range of 13 energy suppliers. Before switching, you may want to take a look at some of the following: Learn about what you need to switch energy suppliers in this guide. Here is a list of some of the most frequently asked questions about the energy switching process. Have a read of our guide on 7 things to consider when switching energy supplier to know what to look out for when switching. If you have any questions regarding what was discussed in today’s podcast, we’d be happy to help. You can reach out to us on social media. We’re on Facebook, Twitter and Instagram.
bonkers.ie Looks Closer: The best SIM-only deals on the market
In this episode of the bonkers.ie Looks Closer podcast series we're joined by Daragh Cassidy, Head of Communications at bonkers.ie to discuss SIM-only deals. The new style of mobile plan, made popular in recent years by the likes of GoMo, can be one of the most cost-effective ways to save money on your mobile bills, and all without having to sacrifice any calls, texts or data. In this podcast we take a look at SIM-only plans in detail and where consumers can find the best value. Here are the main points discussed by Daragh and Rob in this episode. What does SIM stand for? SIM stands for ‘subscriber identity module’ and was invented in 1991. Most listeners will know it as that tiny card that you insert into your phone that enables you to make calls and texts. What are SIM-only plans? A SIM-only deal is where you’re paying for just the SIM card, and that card gives you access to a certain number of calls, texts and data. Up until three or four years ago, most people would be more used to billpay or pay as you go phones. Particularly with billpay phones, where you’d pay €40-80 a month for a certain amount of calls and texts, but you’d get a phone with it. One of the reasons the package would be so expensive is because you’re paying for the phone, too. We’re trying to keep phones longer, as they’ve become more expensive. Some of the telecommunications companies now provide packages where all you get is a SIM card. They assume you have the phone and you just buy the SIM by itself. While the advertising can be quite youth-oriented, these SIM-only plans are open to everyone, no matter what age. What’s SIM-free then? SIM-free is where you have the phone, but the phone is unlocked and it can accept any SIM card. They’re not tied to any network. You can put in any SIM card, as long as it’s the right size. Nowadays, SIM cards come in many sizes. There’s standard, micro, nano, etc. Who offers SIM-only plans? One that would be familiar to a lot of listeners is GoMo. GoMo shook up the market when it launched in Ireland around 2 years ago. It’s a subsidiary of Eir, although it’s trying to differentiate itself slightly from Eir by having a different price point, different customer service channels. When GoMo first came in, it had a deal of €9.99 per month for life. GoMo has increased the price twice since then. Firstly to €12.99 a month and then more recently to €14.99 a month, but it’s still excellent value. For this price, you can get unlimited calls, texts and data. If you’re on a billpay phone, you could be paying a lot more per month, or if you’re topping up your phone on pay as you go. Usually with billpay deals, the contract can last for 2 years and it can be quite expensive because you’re paying off the subsidised phone. But when you get to the end of that 2-year contract, you’re crazy to still be spending the same amount per month. You could switch to a SIM-only plan easily. With GoMo is there a cap on the services? On most SIM-only plans there is a cap. When telecommunications companies use the word ‘unlimited’, it can be quite misleading. They shouldn’t really use it unless it genuinely is unlimited, but companies can get away with it. ComReg seems to have no issue with it, but usually unlimited deals come with some sort of fair usage package. With GoMo, you get 120GB of data per month, 45,000 minutes of calls and 10,000 texts. You’re unlikely to go over the calls and texts limit, but some people might go over the data. If you go over the 120GB of data, GoMo reserves the right to slow down your connection but you won’t actually be charged, which is good. You could end up getting 3G speeds, instead of 4G speeds. Who has the cheapest SIM-only deal? 48’s price point is quite competitive at the moment. 48 was launched a good few years ago and was very much a youth-focused brand, but it kind of disappeared for a while. After GoMo shook up the market, Three relaunched 48 to everyone. 48 is offering 10,000 calls, 10,000 texts and 100GB of data for €10.99 a month. This is a very competitive offer. Again, like Virgin Mobile, 48 reserves the right to charge you. With 48, when you sign up you get a free 1GB of data to test out before committing to the plan, which is different and 48 should be commended for this. It’s a good way of trying without commitment. Try before you buy. What other SIM-only plans are out there? Another popular one is from Virgin Mobile. Virgin has lots of different deals, but there’s a €15 a month deal for a trial period and then it reverts to the normal price of €25 a month. At the moment, it’s €15 a month for 12 months but sometimes Virgin Mobile will come out with a new deal. There are 10,000 minutes of calls, 10,000 texts and 80GB of data. With Virgin, if you go over the data limit you can be charged. If you’re using your phone for hotspot, you could go over the data limits easily, so keep this in mind. Another company offering SIM-only is Clear Mobile. This is a subsidiary of Vodafone. Clear Mobile has done something similar to GoMo. Vodafone is positioning Clear Mobile as a separate entity. Clear Mobile’s deal is €12.99 a month, but this deal isn’t for life. It could go up or down. There is no cap at all on the data with Clear Mobile, but there is a cap on the speed of 5MG. 5MG isn’t that fast and is closer to 3G speeds. Vodafone has its own SIM-only plans, which are a lot more expensive, at around €35-45 a month. People on these plans can avail of 5G. What’s an MVNO? MVNO stands for Mobile Virtual Network Operator. It’s basically where a business just piggybacks off another network operator. We have three main network operators in Ireland, which are Three, Vodafone and Eir. They built their own infrastructure and their masts, but sometimes they’ll do deals with other companies. Virgin Mobile and 48 use the Three network, GoMo uses the Eir network, and Clear Mobile uses Vodafone’s network. It’s important when you’re signing up for a mobile phone deal, to find out what the network is. In the Dublin region, all the networks are pretty similar, but if you’re living somewhere more rural, the signal might be patchy with certain networks. Can the main providers make speeds for MVNOs slower? It’s controversial. Some people think that the Three network can suffer because Three has several providers using its network. Tesco mobile also uses the Three network. Other people think that the MVNOs don’t get the best bandwidth and that Three will reserve the best signal for Three’s primary customers. ComReg has its own coverage maps as well, which can show you what providers have good coverage in your area. Certainly with 3G and 4G signals, they’re all pretty equal, but in more rural areas, one provider may have better coverage than others. EU roaming data allowances Unfortunately not many of us are travelling at the moment but not so long ago, the EU brought in new rules to get rid of roaming charges. Basically you have to be able to use your phone in other EU countries the same way you can use it in Ireland. For various reasons though, it doesn’t quite apply to data as of yet. All of the minutes of the calls and texts can be used in Ireland or roaming in Europe, but when it comes to data, it’s not quite the same. With most providers, you’ll get a limit of maybe 10-13GB of data that you can use roaming each month. The thing to highlight is that this data is not in addition to the data you get in Ireland, it’s actually part of it. Do SIM-only plans allow for international calls? Some do, but the cheaper ones don’t. Tesco Mobile offers this in their €20 a month SIM-only deal. Although Tesco Mobile only offers 60GB of data, so a lot less than the others. It also offers 10,000 minutes of calls and 10,000 texts. You can use 10.8GB in the EU. This package does come with 300 international minutes, which is good. What about 5G? With Tesco Mobile, Virgin Mobile, Clear Mobile, GoMo and 48, it’s just 4G speeds. If you have a 5G capable phone, you won’t get the 5G speeds with these providers. Vodafone’s SIM-only deal which starts at €35 and goes up to €45 does give 5G speeds, provided you’re in an area with 5G coverage and you have a 5G handset. Eir also has a deal where customers can avail of 5G. It’s €19.99 a month for 12 months, and then rises to €34.99. This also includes unlimited calls and texts, and 200 international minutes. Eir has a slightly cheaper package of €14.99 a month for 12 months, but that only gets you 4G and no international minutes. The difference we’ll see between 5G and 4G won’t be as big of a difference as we saw with 2G moving to 3G, and 3G moving to 4G. The speeds will be faster, but it’s unlikely to be life-changing. People using 5G will see a difference in latency. For example, if you’re using Google Maps, your location will be updated much quicker. 5G will also help with the advent of automated cars. When should people use a SIM-only plan? Usually when people sign up for a billpay plan, it’s a 24-month contract. When you’re out of contract and you’ve paid off the handset if you don’t need or want a brand new phone consider a SIM-only plan. You should be able to get three years out of your smartphone, maybe even a little bit more. You could make significant savings. If you don’t need the latest phone and you’re willing to buy a cheaper smartphone, you could buy one outright and then sign up for a SIM-only plan. With billpay, the more money you can pay upfront for the phone itself, the better. Sometimes if you want to move to a SIM-only plan, you might not have to move network. You could be with Eir on billpay and then move to Eir’s SIM-only plan for €14.99 a month. Can you keep your number if you change to SIM-only? You can. The switching process is actually quite simple. ComReg brought out a facility called Mobile Number Portability that allows you to retain your mobile number when moving between mobile networks. If you’re changing to a SIM-only plan, you can always keep your phone number. Usually, the whole switch can only take an hour. If you’re signing up for a SIM-only deal, you need to make sure that your phone can accept the SIM. If you have come to the end of a billpay contract, you should be given an unlocking code, as the phone is yours at that stage. Are there any sign-up incentives? GoMo did offer a second SIM card for free and Virgin Mobile has a similar deal where you can add a few SIM cards to the same account. In general though, the frills and extra benefits don’t tend to be so great because it’s cheap. Online customer service With 48, GoMo and Clear Mobile customer service is online. You won’t be serviced if you go into a Vodafone, Eir or Three stores. They’re being managed as separate entities, so you’ll have to go online or through Twitter. This might not be everyone’s cup of tea and might not suit you. In general, some of the telecommunications providers haven’t been great from a customer service point of view. There are a lot of complaints about them, but the feedback so far about GoMo and 48 has been pretty positive. Contract lengths with SIM-only plans Tesco Mobile, GoMo, Virgin Mobile, Clear Mobile and 48 are all on a 30-day rolling contract. You can cancel at any time. There’s a lot of flexibility and if you don’t like it, you can switch. Not all SIM-only deals are like this. Vodafone’s SIM-only plans for example would be year-long contracts and Eir is similar. If you leave these early, you could be charged an early exit fee. Key considerations when choosing a SIM-only plan To summarise, here’s what you should consider when choosing a SIM-only plan: Price will be the major one. 48 seems to have the best price at the moment, at €10.99 per month. The next biggest consideration would be data. If you’re going to use your phone for hot-spotting or tethering, you’ll want a plan that offers more data. Network and speed are also important to consider. If you want 5G, you’ll have to opt for a more expensive SIM-only plan, not to mention have a 5G compatible handset. The contract length is also something to consider. Most SIM-only plans work on a 30-day rolling contract basis, but some are 12-month contracts. This is something to be mindful of. If you do a lot of travelling, you might want to keep in mind how much roaming data you can get. Explore all of your options There are plenty of options out there for people who are looking for new phone plans, so make sure you evaluate all choices. To ensure that you’re fully informed before deciding on a new phone plan, check out the following: If you’re looking for a SIM-only plan, we’ve got you covered. Check out our blog post which compares the current SIM-only offerings from all providers, or listen to our recent bonkers.ie podcast episode during which we discuss the best SIM-only deals on the market. Here are 10 important factors to keep in mind when making your mobile phone plan choice. Take a look at this guide to learn all about 5G, or read all about what 5G plans are currently on offer in Ireland here. Use our free comparison tool to compare mobile phone, broadband and TV deals in your local area to find a deal that best suits your needs. If you have any questions about SIM-only phone plans, let us know. You can contact us on Facebook, Twitter or Instagram.
bonkers.ie Looks Closer: Alternative savings options
In this episode of the bonkers.ie Looks Closer podcast series we chat to Daragh Cassidy, Head of Communications at bonkers.ie, to discuss some alternative savings options. With a record €127bn on deposit in banks and financial institutions, many people are looking for a home for their savings. However, with interest rates at an all time low, the traditional savings environment now offers little to no reward. So, what other options are there for your hard-earned cash? We take a look. Here are the main points outlined by Daragh and Rob in the podcast. Should people consider opening a savings account? It depends what your objective is, but certainly the rate of interest that you’re going to get on a regular savings account is absolute pittance at the moment. Interest rates for savings accounts are at an all-time low. You might get 0.5%, which is really nothing. If you’re looking for your money to work a little bit harder and you have a savings goal, you really do want that money to grow. Having said that though, people should still be saving. Usually, experts say that you should have savings of about 3-6 months of your net disposable income. For example, your monthly income is €3,000, you should have about €10,000 in the bank at a minimum that you can access easily to save for an emergency or rainy day. That should be everyone’s first financial goal and priority. Once you’ve gone beyond that amount, then maybe look for other ways to save and invest. Should people consider hiring a financial planner? Financial advice is always really important, particularly if you have a lot of money that you want to save. You work hard for your money and get taxed on a lot of it, so when you have it, you want it to work as hard for you. If you have €10,000-30,000 that you’ve saved up over the past few years, then it makes sense to get good financial advice so that you don’t lose that money. Even if you’re taking out a normal regular savings account product, where you’re just putting in €100-200 a month, it does pay to get good advice. This can be advice from a bank, or from doing your own research. Sometimes you do have to pay for it, although Irish people sometimes seem to have an aversion to paying for financial advice. What would interest rates have to be in order to see a worthwhile return on savings? There are a few things to consider here. We talk about the gross return and the net return, but we also need to take into account inflation, which people often forget. At the moment in Ireland, inflation has been quite muted. While recording this, inflation is at around 0% but usually, inflation in Ireland is at 1-2%. You want your savings account to be matching inflation so the real return isn’t going into zero. You also need to remember that you’ll be charged DIRT tax. This is Deposit Interest Retention Tax, which is currently 33% on any gains that you make. When you take DIRT into account, inflation could also be eating into it. Really you’d want your savings account to be returning 2-3% a year for it to actually be growing in real terms. What does the future look like for savings accounts? Interest rates likely won’t go up for a long time. We’re really in a low-inflation environment and low-interest rate environment. It’s not a good market for savers. It could be years or decades before we see interest rates go up. Should you pay off any outstanding debts before trying to make money on savings? It’s advisable to look at your debt and see if you can use your savings to pay it off. It’s a mistake that a lot of Irish people make. They have debt on a credit card, maybe €2,000-3,000, which is costing them 20% interest and yet they have €5,000-10,000 in savings that isn’t earning them anything. If you have any excess savings, definitely consider paying off your debt, particularly high-interest rate debt. For example, things like overdrafts, credit cards, hire purchase agreements, personal loans, etc. What exactly are managed funds? It’s basically a policy that’s sold by life insurance companies, such as Aviva, Irish Life, Zurich, etc. It’s a policy that will invest in a mix of assets, such as stocks and shares, bonds, and commodities, such as coal, oil and gas. Because you’re exposed to financial markets, there’s a far higher potential to earn bigger returns. Of course, what goes up must come down. The stock market can fluctuate on a regular basis. If you have a long term savings goal in mind, investing in a managed fund will give you the potential for far higher returns. It’s important to note that managed funds can be for 5-10 years, so would be suitable for long-term saving. What is the tax on a managed fund? Make sure you get good financial advice so that you don’t end up investing in a product or fund that’s too risky for your needs. Be mindful that taxes, charges and fees can really eat into the investment. With a regular savings account, the tax is DIRT and with a managed fund, you’re charged exit tax, which is 41%. This is only charged once every eight years, so your investment will grow. Sometimes with these funds, you could be penalised or charged if you try to access your money within 5 years, so if you're looking for short term access to your money, this might not be the fund for you. A financial advisor will go through all of this with you. They’ll do a fact find and a suitability statement. They’ll see what your goals are and will then recommend a product to you. Exposure to more Managed funds means that everyone is investing together and they give you exposure to things such as property. For example if you’re interested in the growth of commercial property, managed funds can give you exposure and access to that. With these managed funds, there’s an app you can download and you can see on a regular basis how your fund is doing. If you want to switch funds, you can action that request through the app. Or if you want to access some of your money, you can start that online. State savings products With state savings products, you don’t pay DIRT. That’s what really sets these apart. DIRT is quite high at the moment, but the rates on offer with a state savings product are still pretty measly unfortunately. No one is going to get rich quickly by investing in one of these. With VAT, this reduces even further, so don’t expect a windfall. The 10 year national solidarity bond offers a return of just under 1% interest a year, or 10% in total over the whole term. Meanwhile if you place your money in a five year savings certificate, you’d get 0.6% a year. It’s almost risk free but the interest rates are low. You can access your money at any time, but obviously you’d miss out on future growth. Cryptocurrency The greater the risk you’re willing to put in, the higher the return on investment. This is why people often need to have a good think about what their objective is. Cryptocurrencies are really risky. This can’t be overemphasised enough, but if you have a few thousand euro spare and you’re willing to risk it, you could look into it. Bitcoin is one of the most famous ones but there are about half a dozen other popular cryptocurrencies at the moment too. The price of these has gone crazy in the past few years and some people have made an absolute fortune by investing in these. Some have lost an absolute fortune by investing in these as well. Also at the moment with cryptocurrencies, you can’t really buy a lot of goods and services with them. You’re making money by buying at one price and selling at another. Cryptocurrencies are easily accessible A lot of younger professional, single people who would have savings are seen investing in cryptocurrency. Especially because they’re so accessible now on trading platforms like Revolut. Make sure you do research and establish how quickly you can access this money. The price of Bitcoin is notoriously volatile. It hit a high in mid-December of 2017 of $20,000 but fell to below $12,000. That’s an $8,000 drop within a few days. It’s been unpredictable ever since. Saving for your pension In retirement you’ll have a lot of rainy days and people will spend a lot in retirement. Putting money towards your pension is definitely something to consider. At the moment, the State Pension age is 66, although that’s likely going to increase over the coming years to 68. If you take the average life expectancy now to be 85-90 we could spend close to a third of our years in retirement, so saving for retirement is really important. Of course there’s no guarantee that the state pension is even going to be around in a few years or decades. Pensions in Ireland are chronically underfunded. A state pension is around €13,000 a year and the average full time wage in Ireland is around €50,000. So to go from the average wage to €13,000 is a huge drop. The reason you’ll want to set up a pension fund as opposed to a regular savings account is because it’s so much more tax efficient. There’s tax-free growth in a pension. With a pension you might not be taxed anything for however long you have the pension going. You also get tax relief on contributions, which means you don’t get taxed on any income you then put into the pension. Learn more about pensions in this guide. What’s the process for topping up a pension? The main thing is to chat to your employer. Every employer has to give you access to a pension scheme. Employers don’t have to contribute to your pension but most will have their own group pension scheme, so chat to HR. If they don’t have a scheme in place, they need to give you access to a Personal Retirement Savings Account, which is a pension product that allows you to move from job to job. If you’re self-employed, get some financial advice or talk to Irish Life, Zurich, Aviva, etc. They all provide pension products and can give you some good advice. If you wanted to top your pension up with a lump sum, would it be better to top it up in instalments or at once? A pension top up is sometimes called Additional Voluntary Contributions, or AVC. At the end of a tax year, you can make a lump sum contribution into a pension fund if you want. You’ll also get tax relief on it, so you’ll get a little bit back. There are limits to how much you can invest in a pension and still get tax relief. The vast majority of people do not reach those limits. We are underfunding our pensions, not overfunding them but keep in mind there’s a limit each year, depending on your age as to how much you can invest. Adding regularly is probably the best thing you can do. Retrofitting and going green for homeowners There’s a lot of talk around climate change and we all know that we need to be doing our bit for the environment. Houses in Ireland don’t tend to be the most energy efficient. One good way to use your savings is to look at making energy efficiency improvements around the home because it’s a win-win situation. Not only will you reduce your carbon footprint, you’ll also help lower your heating bills. As we all know, heating is expensive in Ireland with our cold, damp climate. People are probably familiar with BER ratings, which can go from A to G. Newer homes now have to have an energy rating of B3 or higher. Most people will be living in homes that are C, D, E or F. Some retrofits don’t come cheap, but the Sustainable Energy Authority of Ireland (SEAI) does have grants available for putting in solar panels, heat pumps, etc. Lots of the banks now also have ‘green loans’, which have reduced interest rates for people looking to make energy efficiency improvements. Even if you only have a few thousand in savings, you could still make the improvements with the grants available or a personal loan. The objective of retrofitting is to use less energy, save money on your bills and contribute to helping the environment, but retrofitting is also about making your home more comfortable. Check out this blog which outlines finance options available for retrofitting to learn more or listen to our recent bonkers.ie podcast episode on everything you need to know about retrofitting your home. You could also consider buying an electric car. They don’t come cheap and you’re looking at around 20-25k to buy one. You can really save on petrol and diesel overtime. Specialised savings products Unfortunately there aren’t quite so many specialised savings products. These are for when you have a specific savings goal in mind. The main one is for children’s savings accounts. For example, AIB has a junior savings account, which is aimed at kids aged 7-11. This offers 1% interest. It’s not a huge amount but it’s better than half a percent. EBS also has a children’s savings account, which offers 1%. The amount that you can invest in these is sometimes capped at €1,000-5,000 because it’s supposed to be aimed at savers. A lot of people save for their children’s education. You could open one of these for your child and earn some money on the savings. You could always open one EBS one and an AIB one and add money to both. If you’re looking to save for a house deposit, Bank of Ireland has a Mortgagesaver Account. This offers €2,000 bonus savings on your interest if you go on to draw down a Bank of Ireland mortgage. Ulster bank has one as well, which is similar. It gives you a €2,000 bonus interest. Despite announcing its exit from the Irish market, Ulster Bank is still technically open to customers. What would you consider to be the least risky alternative to a savings account? The managed funds option is probably the safest alternative. Usually there’s a whole host of funds you can invest in. A low-risk managed fund that has potential for a little bit of growth is a good idea. However they’re not good for those who are looking for short term access to money. There can be penalties for trying to access money within the first five years or so. Digital banks Another point to make is people use N26 and Revolut a lot. These are great apps, but it’s important to remember that they offer no interest whatsoever on savings. They offer some cool ways to save, such as Revolut’s vault feature, like an online coin jar. If you have accumulated money in these apps, you should consider putting it somewhere else and earn at least half a percent. Compare saving options You can easily compare savings accounts and other banking products on bonkers.ie. Use our savings account comparison service today to quickly compare the different account features and interest rates from all of Ireland’s providers. You could find the best return for your savings in just a few clicks! You can also learn more about alternative savings options here in this blog post. If you’re looking for a new current account option, our current account comparison service easily compares different current account features and charges from all of Ireland’s main banks. Before making the switch, you might want to consult our guide on how to switch current accounts or take a look at the recent piece we wrote on who is offering the best value current accounts in 2021. If you have any questions about any of the alternative saving options discussed in today’s podcast, feel free to get in touch with us on Facebook, Twitter or Instagram.
bonkers.ie Looks Closer: 6 tips to help you get your mortgage deposit together
Getting on the property ladder is a struggle for many first-time buyers as they grapple with high rents while also trying to save for a mortgage deposit. And unless you're hoping to come into an inheritance (and have some very old and sick relatives!) then hard choices lie ahead. However, there are a few things you can do and should know about to try make it easier, which we discuss in this podcast with our Head of Communications, and recent home buyer, Daragh Cassidy. Here’s a breakdown of what was discussed by Daragh and Rob in this episode. What can first-time buyers do that will help them save for a deposit? It’s always been tough to save for a deposit, but since the new Central Bank mortgage lending rules came in to require borrowers to have a 10% deposit, it’s become more difficult for most people. Of course there’s also the issue around rent. It’s more expensive to rent than it is to buy in many cases, so people are trying to grapple with really high rents while trying to save for a deposit. There are some supports along the way and some government help. Here are 6 tips to help you get your mortgage deposit together. 1. The Help to Buy Scheme The Help to Buy Scheme is a tax rebate scheme designed to help first-time buyers get the deposit needed to buy a newly built home. To avail of the Help to Buy Scheme, you have to have paid a certain amount of tax. The Government will give you a maximum 10% of the value of the property or €30,000 - whichever is lower. The scheme used to be a maximum of €20,000 but it was recently changed by the new Government. In order to claim, you must have paid the equivalent amount of income tax and/or Deposit Interest Retention Tax (DIRT) in the preceding four years. Any PRSI or USC wouldn’t be included. Most people who have lived and worked in Ireland over the past four years will not have paid enough tax, unfortunately, to qualify. Theoretically, if you had your eye on a home for €300,000 you would need a €30,000 deposit. Technically you could get the deposit through the scheme. It’s been a bit controversial as some people don’t think it’s helped to put the right money into the right people’s hands and that it’s actually pushed prices up. The higher rate of €30,000 has been extended until December 2021. How can I apply? You can apply for the Help to Buy Scheme online through Revenue’s MyAccount service. Can people reapply under the new scheme? If you have yet to sign a contract for your new home or if you have a self-build mortgage and have yet to draw down the first tranche of your mortgage, you are able to apply under the higher rate. You can reapply for the higher rate through Revenue. 2. Mortgage exemptions The Central Bank lending rules state that you can only borrow 3.5 times your salary and you have to have a 10% deposit. However there are exceptions to those rules. A huge amount of the media focus tends to focus on the loan to income exemption. In any one year at the moment, a bank is allowed to give out up to 20% of mortgages for first-time buyers above the 3.5 times limit. Some can get up to 4.5 times their income. Another exemption that many don’t realise that banks can give is an exemption to the deposit limit. In many cases, people struggle to save the deposit amount while paying rent. In any one year, 5% of mortgages to first-time buyers can have a deposit of below 10%, provided you meet other lending criteria. You can’t get both exemptions though. It’s usually one or the other. Chat to your bank or mortgage advisor or broker to learn more about mortgage exemption rules. 3. Mortgage cashback deals Cashback deals can be a little bit controversial for some people as people think they’ll lead to higher rates. A lot of banks, such as Permanent TSB, Bank of Ireland and EBS, will give you cashback on your mortgage of up to 3% in some cases. They’ve become very popular and it’s very much an Irish thing, you don’t see it elsewhere really. PTSB will give borrowers up to 2% cashback upfront. BOI will give 2% cashback upfront and another 1% after 5 years if borrowers choose to pay their mortgage from a BOI current account. EBS will give 2% and another 1% after 5 years, but there’s no requirement to pay your mortgage from an EBS current account. While the rates on these cashback deals tend to be higher over the long term, there’s a lot to be said as a first-time buyer getting a cashback lump sum to help with the costs of solicitor fees, stamp duty, etc. Anecdotally some people go to the bank of Mam and Dad for a lend of €5,000 to help with the house deposit. Quite often they pay back their parents when they get the cashback offer. You can use our mortgage calculator to review available mortgage offers from Ireland’s main providers. You can also switch your mortgage down the line. You could avail of a cashback offer from a bank and then switch after a few years. You don’t need to pay back the cashback received from the original bank. People often don’t review their mortgage, despite the fact they could save a significant amount in the long run. 4. Avail of a tax refund According to one of the main independent providers of tax refund services, the average refund for anyone who looks into their tax affairs is in the region of €900-1,100. It won’t get you a deposit overnight, but it’s extra money that some people don’t know about. It’s quick and easy to apply for a tax refund on Revenue online. You can also use a tax refund service, but they will take a percentage as a fee. It’s just as easy to do it yourself. You can only claim for four years in arrears, so make sure you keep receipts. It’s best to submit the tax return yearly in early January. You can learn more about availing of a tax refund in this guide here. 5. Save Even putting away €50 a week would add up to around €2,600 at the end of one year. If you’re in a couple, that’s over €5,000 and that’s before any interest rates. You need to demonstrate some element of saving when applying for a mortgage. Even if you’re gifted your deposit, a bank wants to see that you can save and manage money effectively. The bank wants evidence of regular saving habits. If you’re saving a certain amount, you should have a standing order that goes into a savings account or a credit union account. Head over to our savings comparison page to check out all the savings options available right now. However with interest rates on savings accounts being at an all-time low, you may be looking for other, less traditional ways to save, so check out our bonkers.ie podcast episode on alternative savings options. 6.Get more money savvy You want your money to work as hard for you as you work for it. People need to micromanage their finances and spending. Once you get a mortgage and are a homeowner, you will need to budget anyway, so get into the habit as early as possible. Start by reviewing your bills. The easiest way to start saving is by switching gas and electricity. Someone could save between €400-500 a year by switching energy suppliers. If you’re still in contract and don’t feel like switching energy supplier but would still like to save on your bills, check out these 15 ways to use less electricity and save money. You could also review your broadband plan, banking fees and insurance cover to ensure that you’re getting the best value. If you have friends who are in the same situation, consider going into a bubble and doing the same things together. You may have friends who already have a mortgage and are financially comfortable who want to go out all the time while you’re scrimping and saving. Review your everyday spending habits. For example, do you buy a coffee each morning when it could be more economically feasible to buy a coffee machine? Everyone has to make sacrifices in the run-up to buying a home. Take a look at our mortgage guides The mortgage journey can be long and complicated, so we want to make it easier. We’ve compiled a list of helpful articles and guides that may be of benefit to you: If you’re considering applying for a mortgage and are confused about mortgage rates, have a look at our explainer on mortgage interest rates. Once you’re familiar with mortgage interest rates, you can discover the pros and cons of variable and fixed rates here, so you can decide what rate best suits your needs. When applying for a mortgage, you’ll want to minimise mistakes. Here’s a list of 9 mistakes to avoid when applying for a mortgage. You may have noticed that green mortgages are rising in popularity. Here’s a breakdown of what exactly a green mortgage is. And when it’s time to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started. Our mortgage service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too! To find out more about our mortgage broker service, see here. Are you feeling overwhelmed about saving for a mortgage deposit? If you have any questions, we’d be happy to help answer them. You can contact us on Facebook, Twitter and Instagram.
bonkers.ie Looks Closer: The Irish Mortgage Market
In this episode of the bonkers.ie Looks Closer podcast series we chat to Gerry Hiney, Managing Director of Park Financial Planning and switchmymortgage.ie, to talk about the Irish mortgage market, how Covid-19 is affecting things, and whether Avant Money’s entry into the mortgage market is going to shake things up and lead to lower rates for consumers. Tell us a bit about yourself, Gerry Park Financial Planning is a mortgage broker that was established 20 years ago. We do buy-to-let mortgages, commercial mortgages, but we mainly focus on residential mortgages. This includes first-time buyers, movers, switchers and we also provide a service for people who would have difficulty with mortgages. Prior to setting up the company, I worked in Permanent TSB where I was a manager in their head office on O’Connell Street for a long time which is where I gained a lot of my knowledge and experience of the mortgage market. Why are mortgage rates in Ireland so high? There are valid reasons why mortgage rates are quite high at the moment. We have some very good rates now compared to historic rates. The main reason rates here are so high is because of the difficulty banks have in enforcing security. Unlike other countries, it takes an age for a bank to repossess a property and make provisions for losses in Ireland. In other countries, properties can be repossessed within three to six months. After the last crisis, there was a considerable amount of customers who had to default on their mortgages. Banks suffered losses and they have to make provisions for those losses. Going forward, they have to continue to do that. There is scope for rates to decrease. The interesting thing is that one lender, Ulster Bank, decreased its rate to 2.2% on a five year fixed rate approximately two or three months ago and none of the other lenders reacted to that. Take a look at this blog to learn more about why mortgage rates are so high in Ireland. Why did the market not react? The market is so diverse. You have first-time buyers, movers, etc. What a lot of lenders do is instead of attracting customers by having a low rate, they create niche features with their products. Their main objective is to generate as much profit as possible. There are restrictions, particularly around the enforcement issue. The banks probably wanted to see what impact their not reacting would have on the market. It hasn’t had much impact and Ulster Bank doesn’t have a huge section of the market because of that product. Maybe the banks are willing to suffer short term loss of business on a minor scale. What are average rates? The average mortgage rate in the Eurozone is around 1.4%. The variable rates at the moment are exceptionally high. The cheapest variable rate, depending on your loan to value ratio, would be in the region of about 2.75%. Other lenders have more attractive 3-year fixed rates of 2.3-2.5% rates. The difference between the variable and the fixed rate means that people will go for the cheaper option with the stability of repayments. Knowing the repayment isn’t going to change is obviously a major factor in why people would go for those rates. Should people consider fixed rates over variable rates? Yes. In the past, you’d pay a premium to go on a fixed rate as it would’ve been around 0.5% more expensive than the variable. However because ECB is at zero, there’s very little scope for variable rates to go down further. It’s just competition that will bring variable rates down. If a customer can get an average variable rate of 2.95-3% or a fixed rate of 2.2%, they will always choose the fixed rate. It’s much cheaper and allows customers to budget for that period of time, knowing that under no circumstances will the repayment change. Due to the competition that’s coming in, those fixed rates will likely drop further. Take a look at our guide on the pros and cons of variable and fixed-rate mortgages to learn more about both. What is Avant Money offering? Avant Money is a subsidiary of AvantCard. The company is owned by a Spanish bank called Bankinter. AvantCard has decided to enter the mortgage market, trading as Avant Money. Avant Money’s objective is to develop a niche product. If they don’t, they won’t be able to compete with the big lenders. Avant Money will be the first lender to have a rate below 2% in the Irish market and will undercut competitors. There’ll be no-frills, it will simply be that they have the lowest rate. It will be interesting to see how the banks react to this. When will Avant Money enter the market? The launch is expected in mid-September and Avant Money has chosen a panel of 20 brokers to lead it. It will then gauge how that goes and increase the broker market. Avant Money will probably have a long-term objective of being able to sell mortgages themselves. Avant Money will focus initially on the main markets in urban areas, such as Dublin, Cork, Limerick and Waterford. The lender will likely be fairly particular about requirements and underwriting at first. It seems as though if someone wants to take out a mortgage for 90% of the value of the property, they will need to put up the 10% themselves. At least 6 in every 10 first-time buyer applicants had some form of a parental gift. Without those parental gifts, they wouldn’t have been able to buy the properties. However, Avant Money’s policy will be that the deposit will have to come from the buyer’s savings themselves. There will likely be some sort of tiering of rates in place too, which may be a barrier for some. Will other banks react? It’s likely that other lenders will react. One of the biggest markets at the moment is the switcher market, as there aren’t enough properties at the moment. Banks will be concentrating on high-quality applicants and brokers will refer clients to those who have the best rates. It will be difficult to match the rate that Avant Money comes out with though, as Avant Money won’t have the same overhead as lenders here. Other lenders may lower their prices, but it’s unlikely that they will match Avant Money’s rate. They may also offer different features to their products to try and balance it out. By going through the broker channel, Avant Money is keeping its overhead as low as possible. The lower the overhead, the better the deal they can offer the customer. The switcher market In the past, the only time people changed their mortgage was when they moved property. We’re noticing that people who have existing mortgages and unblemished records with existing lenders don’t qualify for the mortgage they already have when they come to refinance. We didn’t expect to see this. Now even at the application stage and people are buying their first property, they want to know what will happen after they come out of their fixed-rate and what rates will then be available. People will switch if their lender isn’t going to be competitive in three or five years time. If you’re thinking of switching mortgages, see how much you could save here and take a look at the legal fees involved here. Cashback mortgages Cashback mortgages are a little bit controversial. These cashback mortgages though can be very valuable for first-time buyers who’ve barely got enough money to pay the deposit. In some cases, if people borrow €300,000, they’ll get cashback of €6,000 and that will pay their stamp duty or their solicitor fees, or help furnish their new house. You might not be able to switch at the end of your fixed-term mortgage, so make sure you consider this when looking at cashback offers. An Post Money Nothing’s been mentioned about An Post Money entering the mortgage market in the last few months, but there were rumours it was looking to enter with a partner lender. If An Post comes in, it will have to be a similar product or a product with a unique feature so that it can compete with Avant Money. Small lenders have developed niches in their products that make them different to the bigger lenders. What are smaller lenders offering? With ICS Mortgages, if you opt for a fixed rate you’ll be allowed to pay an extra 20% off every year over the course of that fixed rate. This means that there’s no penalty for those who want to pay off a lump sum and reduce their mortgage. If you’re a public servant, they’ll base your salary on an increment that’s two tiers up from what you’re on at the moment. That could make a difference of €15-20,000. It takes into account future earnings in the application stage. Finance Ireland is particularly strong for self-employed people. It takes into account depreciation, profits, pensions, etc. What do you think of the Central Bank mortgage lending rules? With the Central Bank’s mortgage lending rules you can only borrow up to 3.5 times your income, you need to have a 10% deposit. I think they’re working well. In the last three or four years, we’ve seen the stabilisation of the market and there’s now more responsible lending. Lenders will tell you that their loan books in recent years are of the highest quality and arrears are at record low levels. I think that the rules are unfair on second-time buyers, as they’re restricted to qualifying for 80% of the purchase price. They need a 20% deposit instead of a 10% deposit unless they can get an exemption. At the moment 1 in every 5 customers can get a Central Bank exception, but I think that should be increased to every 2 in 5 because the majority of people looking for the exemptions are first-time buyers and they really need them. I think that the Central Bank should also allow the lenders to roll on their exemptions to the next year. The lenders are really cautious about not exceeding their limit and as a result, they come short every year. They’d prefer to lend less rather than overshoot. How has Covid impacted business? It’s had a terrible impact on the market. There’s a lot of people who have signed contracts and got loan approval for new developments. If you’re at the approval in principle stage, this is where the lender tells you how much they’re going to give you, if you’re on the Pandemic Unemployment Payment, they won’t bring you to the loan approval stage. The banks have ceased giving exemptions altogether. Over the past few months, with the exception of AIB, no bank has given an exemption. This has a major impact on the market. If one bank starts to offer exemption again, other banks will likely follow suit. Do you think this impacts property prices? Prior to the lockdown, properties were coming close to their guide price but might have been 5% off. We’ve seen cases where properties were guiding €450,000 and sold for €420,000. Now we’re seeing cases of those properties selling in excess of their guides. There’s a massive number of people with approvals, who don’t need any exemptions and are bidding on properties. Due to demand and people saving during the crisis, prices are going up. Are there any innovations you’d like to see in the mortgage market here? In the past, lenders offered offset mortgages. This is where people would have a substantial deposit and decide they want to take a mortgage out, but not want to touch all of their deposit. If they placed that deposit with the bank, the bank would offset that against their mortgage amount and the client would only be paying interest on the remaining balance. ICS had a facility where you could pay your mortgage twice a month. By offering a bimonthly facility, it meant that the principle was going down quicker every time you made a payment. You’d end up paying less interest over the course of the mortgage. Repayment holidays would also be an attractive incentive. Lenders could take a three-month break from paying their mortgage every five years or so. It would be invaluable for people at times when they need more money. Covid payment breaks The interest that you should have paid during the 3-month break is added to your principle. You’re then paying interest on your interest over the remaining term. Once they’re seen to be fair and transparent, it’s reasonable. Start your mortgage journey on bonkers.ie Whether you’re a first-time buyer, home mover or switcher, you can easily compare interest rates, offers and cashback incentives from all of Ireland's lenders using our mortgage calculator. And when it’s time to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started. You’ll be happy to hear that our mortgage broker service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too! To learn about how your mortgage application will be assessed, take a look at this guide. Get in touch If you have any questions for us about applying for a mortgage, don’t hesitate to get in touch. You can contact us on Facebook, Twitter and Instagram.
bonkers.ie Looks Closer: So you're approaching retirement age? Here's what you need to know.
A person who’s approaching retirement today, could, theoretically, spend almost as much time in retirement as they did while working. Which means retirement planning is something that needs to be taken seriously and considered carefully. So, in this episode of our Looks Closer series, we chat with Moneycube Co-Founder and Chief Financial Advisor to get the lowdown on what you need to know as you approach your golden years. What is Moneycube? MoneyCube is a Central Bank regulated advisory business. We operate an online platform that provides advice to companies and individuals on pensions and investments. It’s well known that there’s a lot of frustration in the Irish market on the types of returns people have seen for a long time on their bank deposits. What makes us different is we like to think we’re good at speaking English about financial services. We spend a lot of time communicating about pensions and investments and showing that this stuff is simpler than you might think once you get to grips with it. There’s a lot of smoke and mirrors in the financial industry and we pare all that back. What exactly is retirement planning? Retirement planning is different for everyone but essential for most of us aiming to hang up our boots in some form and have some years in retirement. That means not working that 9-5 grind in the same way. Retirement in Ireland has changed a lot over the last 10-15 years. People are living longer and people want to work later into their careers, so working patterns are more flexible. There’s a statistic now that the average person entering the workforce now will have 15 jobs throughout their career. When should people start thinking about their retirement? There are different phases to the planning process. If you’re just entering the workforce, it’s very different from being mid-career. Typically by late 30s to early 40s is when people’s earnings will have gone up a bit. Maybe some financial pressures around childcare, house deposits, etc. have reduced a bit. This is peak time for planning around funding your pension. There’s a second key period, which is in the 5-10 years before you’re planning to retire where you make decisions while you still have some power to change things. What should people five years from retirement be looking at doing? The first step is to look at what you’ve got and observe what will fund your income in retirement. Your income in retirement can come from lots of different sources - you might have a rental property, you might rent a room in your house, you might have a lump sum due to you on retirement, you might have some investments you want to structure in the right way so that they’re delivering an income in the right way. There are a number of different strands, but the first step is to make a list of all of these elements. You’ll want to add everything up and see what that looks like. After you observe what you have to date, then you should start thinking about what you want to change to help improve your situation. What if someone doesn't have a lot saved for retirement? What can they do? There’s a lot you can do at a late stage to boost your retirement income. The Government really wants us to start saving for our pensions and they give some generous tax relief for doing that, particularly as you approach retirement. Additional Voluntary Contribution - how does someone put in a lump sum? For many people, adding a lump sum through their employer is the most convenient way. This can be done through payroll and can then go into your existing pot. It’s always worth looking around, particularly if you’re putting a significant sum into your pension. There are ways to do it so that it’s tax-efficient, low cost and invested in a suitable way for you. If someone has built up €100,000-200,000, that’s not an insignificant sum so it also deserves full consideration. There’s a lot you can do with that amount. What are the fees associated with pensions? If the fees don’t stack up or you’re not being told what they are, then that’s a bit suspicious. I’d encourage people to ask questions and press about issues so that they feel they’re getting value for their money. You might want your pension invested in a property, which will cost more than a vanilla investment fund. That’s because someone is doing a lot of work to drive returns and try to grow that property fund. I’d recommend people look at two things: Firstly is the annual management change. 3% is an eye-watering amount. You want to be at 1.5% or lower. Pensions are moveable things, so just because you’re in one now at a certain cost doesn’t mean you’re required to stay there. The allocation rate is also worth paying attention to. This is the percentage of the money that you pay in that’s actually landing in your pension account. An allocation rate of 87% may have represented good value 10-15 years ago, but it doesn’t represent good value today. Should someone in their thirties be investing in different things than those in their fifties? There’s a norm that you trend into lower-risk assets as you approach retirement. Maybe when you’re thirty you’re focused on equity and company shares. Maybe you don’t mind on a one-year view if your pension drops 20% because it might grow 30% the next year. In the industry, people tend to move into lower-risk assets such as bonds from companies or governments as they approach the age of 65. People should consider if they should take a bit more risk with their retirement money because it’s actually a longer-term investment than they might expect. How does the State pension fall into all this? The State pension is relatively generous in comparison to other countries. It’s there to provide a basic level of income in retirement, it’s only about €240 a week. What it does do is provide a floor on your income, so you could review your own personal pension and see if you could take more risk because you have the safety of the State pension. It’s also changing though. It’s expensive for taxpayers to fund so the Government has made the age at which you can access the State pension later and later. It’s one of the oldest in Europe. From 2028 you won’t receive it until you’re 68. So while this might be a core part of your income in retirement, you need to think about how you’ll fund the three or so years that you won’t have the state pension. State pension entitlement It’s a dangerous assumption for people to think they’ll receive the state pension in full. Without wanting to scare people, it’s well worth checking out with the Department of Social Protection. They’ll tell you quickly what your entitlement is. A lot of Irish people have spent time working and paying into the UK state system. It’s easy to check out online what your entitlement is there and you might be pleasantly surprised. If you decide that you want to continue working after age 65, can you still contribute and save into a pension? Absolutely, you can and it’s worthwhile doing. If you retire and then decide to take on a new job, you can be drawing down your pension from your old job and paying into your pension from your new job and saving income tax along the way. How can people manage multiple pensions? Keep a list of the pensions you have so that someone else can find them too. Pensions aren’t attached to companies the same way as they used to be. There is also a service for tracking down pensions. There are arguments for consolidating pensions. Sometimes it’s the right thing to do and other times it reduces your options. What are the main considerations for those approaching retirement? The main watch out is to review your pension situation now and act on it. Don’t be put off by the nonsense language and ensure everything is made clear for you. Pensions are now about putting the user in charge of their own pension. There’s good and bad to that. You have a huge amount of control and a huge amount of possibilities and options open to you. On the flip side, you have to grab the opportunity with both hands and maximise it. What options are available when people reach retirement age? Every case is different. The system is designed to be able to take a quarter of your pension pot as a lump sum on retirement. The first €200,000 is not taxed and the next €300,000 is taxed at the standard rate, which is 20%. An overall cap exists for pensions at €2 million. People use this to pay off their mortgage and to make plans post-retirement. You can purchase an income for life from an insurance company, or more recently, everyone has the option of an approved retirement fund. This is essentially a tax-protected savings account for your money. You can choose how you can invest that, you can define the charges on it by selecting who you use to manage it for you and you can draw it down at a certain rate. What do people tend to do? People tend to avoid the income for life due to the wider economic situation around interest rates and bond rates. The amount of money you need to pay in order to get an acceptable amount of income out of an annuity is quite high. They represent poor value for most people. The vast majority of people tend to go down the approved retirement fund route, where you can put it into higher risk and higher growth assets and generate a return off that. Ideally, you’re taking 4-5% per year, which is being replaced through the growth you’re receiving in your fund. The thing to think about is do you really want to be doing that when you’re 80? You might decide at 80 that you now want an income for life and at that point, you’ll get a more attractive income for life offer from a financial institution because based on life expectancy they don’t expect to be paying it out for long. What income should people be aiming for in retirement? Most people will want to have about 50-65% of the income they’re used to but it does vary. Do you have any final words of advice for those approaching retirement? Act now, the sooner the better. There’s almost always something you can do today to improve your pension and wealth position. You can do a lot to optimise your pension position. It’s a journey too, so none of this gets sorted overnight. You need to give it time to build up your assets, monitor them and invest in them. Take a look at our helpful guides If you’re looking for more information, you can learn more about pensions in this helpful guide. We have a variety of different personal finance guides available that will help you in making other informed financial decisions. On bonkers.ie we also have a range of comparison tools readily available to help you start saving money today. You can review bills and compare available deals for services such as gas and electricity, broadband, insurance and banking products to see how much you could save! Get in touch If you have any questions about what was discussed in today’s podcast or about pensions in general, let us know and we’d be happy to help! You can contact us on Facebook, Twitter and Instagram.
bonkers.ie Guide to Adulting: So you want to save and retire?
In the fourth episode in our Guide to Adulting podcast series we caught up with Greg Dixon, a fellow of the Irish Institute of Pensions Management, who is currently the regional sales manager at New Ireland, one of Ireland's leading life and pensions companies. Greg talks to us about savings tips, pensions in general and why it's so important for younger people to think about retirement planning.