You could save a lot of money by moving your mortgage to a different bank. That’s why it is always a good idea to keep your mortgage under review to see if you are still on the best deal.
The Story
In March 2024 I was approached by a couple that needed to review their mortgage. They wanted to check if there is an option to reduce their mortgage monthly payment.
The clients took out a mortgage in February 2021 at Millennium Bank. They had 10% down payment. The apartment was under construction.
Initially the interest rate was variable: fixed margin at 2.7% + WIBOR 3M. Later they decided to switch to 5-year fixed rate at 8.49%
So at the time they contacted me it looked like that:
The Solution
The clients contacted Millennium Bank earlier and the bank didn’t agree to lower the interest rate and didn’t propose any alternative to decrease their monthly payment.
Therefore the only sensible solution was to consider switching the mortgage to a different bank (remortgaging).
We had two possible banks with better offer than the current one. Look at the table below.
Finally we applied to ING bank and we got the final approval after 2 months. At that time ING was very popular and application process took longer than usually (normaly it takes around 1 month).
As the table above shows, the clients reduced their monthly payments by around 500 PLN. They will also save around 165,000 PLN in the total cost of interest.
How much does it cost to remortgage?
These are the cost of leaving your old mortgage and taking up your new one:
The total cost of remortgage was 800 PLN vs. around 500 PLN lower monthly payment and potentially 165,000 PLN lower cost of interest. Thus, it was worth to do it.