Banks and building societies are marketing flexible remortgaging packages to attract a growing number of customers, writes Laura Slattery

Getting a mortgage is traditionally a painful experience. Nervous applicants, weighed down by the sheer size of the six-figure sum, chase bank statements, pay solicitors' fees and triple-check small print for the catch that explains why maybe it would be better to rent for a few more years. If nobody actually enjoys the whole messy process, why would anyone want to do it twice on the same property?

A decade ago, not that many people did want to do it a second time. According to IIB Homeloans, remortgaging barely existed as a product in Ireland in the early 1990s, but now the bank's research estimates that it accounts for 24 per cent of the total mortgage market here and will grow to 32 per cent by 2006.

"It's still a young marketplace," notes Mr Brian MacManus, chief executive of IIB Homeloans, at least compared to the US and the UK, where remortgaging products account for more than 50 per cent of the mortgage market.

But banks and building societies are playing catch-up in the refinancing game with more enthusiasm now than ever.

Some are actively marketing flexible remortgaging packages to attract new customers and other refinancing products, such as top-up mortgages and equity-release loans, to retain existing customers.

EBS, for example, is currently engaged in a high-visibility advertising campaign for its Next Step product, targeting second-time buyers. First Active's debt consolidation package, Utopia, was re-launched in April to include a split-term option (where elements of the loan can be paid off at different times); Bank of Ireland launched its equity-release product in February; and IIB Homeloans has just introduced a fast-track remortgage service called Express Cheque.

Each product is designed to convince consumers that using your family home as security for additional borrowing is as simple as possible. Consumers can release untapped equity in their homes, roll their debts into one under the home loan rate, switch lender to benefit from lower interest, or all three.

"People have traditionally used a mortgage for one express purpose - to buy a house," says Mr Pat Farrell, head of marketing at EBS. But, in the future, mortgages will be "much more multifunctional", he argues.

So where is that catch? Well, consumers who switch lender will first have to calculate whether or not the monthly savings from a lower interest rate will exceed the cost of switching. "You are taking out a new mortgage, basically. That could cost €600 or €700 in legal fees plus VAT. Once you include land registry fees and other costs, you are easily looking at €1,000 to €1,500," says Mr Michael Dowling, president of the Irish Mortgage Advisers Federation.

Consumers should ideally be motivated by more than just a desire to find the cheapest rate, Mr Dowling believes. A lower rate of even half a percentage point can result in a significant saving, but that rate could always go up the day after you sign across the dotted line, cancelling out any savings and leaving you saddled with unnecessary fees and paperwork.

Clearing short-term debts such as car loans or credit card bills or releasing equity from the market value of the property both have the same result: the size of your mortgage increases.

Likewise, requesting a mortgage top-up sounds almost casual - like topping up a mobile phone or a cup of tea - but will ultimately mean either higher monthly repayments or an extended mortgage term.

"The trick is to set the mortgage repayment at a level you are comfortable with. Don't get caught in a spiralling situation," advises Mr Dowling.

"If you are going to consolidate your loans, make sure you only do it once. If you need to do it more than once, then you haven't cured the problem of not being able to afford the monthly repayment."

Research by IIB Homeloans indicates that consolidating debts is the primary motivator for 48 per cent of people opting to remortgage at IIB, which has a 10 per cent share of the mortgage market.

Remortgaging, or refinancing as IIB prefers to term it, should not be seen as the last resort it once was, says Mr MacManus.

"There was an element of 'Christ, I'm in difficulty, I have to remortgage the house' about it. Whereas now, it's a case of 'I'm a sophisticated punter. I'm going to make a conscious decision to refinance'," he says.

However, the remortgage process will have to be streamlined before consumers embrace it to the extent they have in the US and Britain, according to Mr Dowling.

Brokers cite a system called title insurance as one way that will help cut through the legal delays. This is the system that enables IIB to issue 65 per cent of applicants with their cheque within 10 working days for a fee of €499.

"Certainly, more competition would drive prices down," says Mr Alan Dooley, a researcher with the Consumers' Association of Ireland. The association has repeatedly warned consumers that not all brokers are as independent as they claim and that consumers should think long and hard before switching lender.

Refinancing products give consumers more choice about how to manage one of the most important investments they will ever make.

Fast approval times, flexible payment options and friendly smiles from the bank manager or broker may help make the process seem stress-free, but it is never risk-free.