Mortgages Week: Should you switch mortgages?
Robyn Hamilton
Staff Writer

It’s Mortgages Week here at and we’re taking a close look at the entire mortgage process in Ireland and answering your questions. So far this week we’ve looked at the beginnings of the mortgage process, but what if you’ve already established yourself with a lender but want a better deal? Could you save money by switching?

Taking out a mortgage can be a stressful and nerve-wracking time. From trying to get your head around a whole new set of terminology; to finding a broker and the right lender; to deciding on what kind of mortgage rate is most suitable for your financial situation… the list goes on. It’s no wonder that we’re reluctant to revisit our mortgage repayment situation once everything has been settled and put into place.

Though it might seem like an unappealing prospect, now is the perfect time to look into switching mortgage providers. Rates are finally starting to fall and switching could end up saving you a lot of money in the long run.

According to The Central Bank, in the first three months of the year, the average standard variable rate on outstanding Primary Dwelling House mortgages stood at 3.75%, which is down from 3.94% on last year.

The average standard variable rate available to first-time buyers has fallen in the same period, as well. In the first quarter of 2017, that average rate has fallen from 3.63% to 3.38% on the same period in 2016.

Fixed rates are also going down - four of Ireland’s major banks have cut their fixed rates this year.

So, apart from falling rates (which is incentive enough alone for many) why else should you consider switching mortgage lenders?

Reasons to switch mortgage lenders

It’s easier than you think

The thought of switching mortgages might seem daunting but according to Dave Curry of the Irish Mortgage Corporation, “switching has never been easier”. Currently, switching rates are quite low, and according to The Central Bank’s switching report which came out earlier this year, 44% of those surveyed reported that they haven’t switched because they think it would be too complex.

However, of those consumers who did switch mortgages, a huge percentage reported that it was a “positive experience”.  

In fact, 81% of those surveyed who have gone through the switching process report that they fully understood each and every step of the process.

Switchers are offered substantial cashback incentives

The number of borrowers switching mortgage has been increasing and this could be partly due to the various cashback incentives offered by many mortgage lenders.

AIB is currently offering €2,000 in cash to anyone who switches their mortgage to the bank.

KBC is offering €3,000 towards legal fees, and Ulster Bank is offering €1,500.

Permanent TSB is offering 2% of the full mortgage amount in cash to switchers, and Bank of Ireland is offering 3% (but you must be a current account holder to take full advantage of this offer).

So, what do these incentives translate to? Let’s take a look at an example using Bank of Ireland’s incentive:

A borrower with €200,000 outstanding on their mortgage will get a €6,000 in cash from the bank for switching. And a borrower with €300,000 outstanding will get €9,000. The cash is paid in two chunks; the first 2% at the time of switching and the remaining 1% after five years.

How to switch mortgages:

The next big question is, how do you switch mortgages? What is the process?

The first thing you should do to get the ball rolling is to check if switching is actually going to save you any money. If you’re on a tracker rate, for example, there would be little point in switching.  

The best and easiest way to check if you would save money is to visit our Compare Mortgages page. Once you’ve done that and identified the lender that you want to switch to, follow these seven steps:

  1. Make sure you're switching to a lender that offers you better long term value. Some of the cheapest rates out there are available to people borrowing less than between 60% and 80% of the value of their home. It may be the case that when you decide to switch your home could be worth more than when you first took out the mortgage, which means you could qualify for cheaper rates. Don’t forget, if you're on a fixed rate mortgage, you could be hit with penalty fees if you switch lender before the fixed term is up.

  2. Make sure that you are eligible to switch to your chosen bank. They are unlikely to take you on if you are in mortgage arrears or negative equity. Like with any loan, you need to be able to prove that you can repay the money you owe.

  3. Prepare all of the relevant documentation. You’ll need pay slips, P60, six months up-to-date current account statements, 12 months up-to-date mortgage account statements, and proof of address and ID.

  4. Fill out the mortgage switcher application form from the bank you want to move to.

  5. Find a solicitor to take care of the legal work involved.

  6. Have your home valued - the bank you are moving to will require an up to date valuation of your property.

  7. Ensure that your home insurance and mortgage protection insurance are in order for your new loan.

Looking for more information on mortgages? Come to our workshop

As part of Mortgages Week, we’re hosting a First-Time Buyers Mortgage workshop this Thursday (June 29th) at 6pm to explain the mortgage process to prospective property purchasers in a relaxed, friendly setting.

The event will take place at The Dean Hotel in Dublin and is completely free to attend. 

At the event will be our good selves, a qualified financial advisor and a mortgages protection insurance expert.

Facebook Q&A, Friday at 1pm

Mortgages Week will culminate in a live Q&A session on our Facebook page at 1pm on Friday.

During the Q&A, we’ll answer the questions you send us over the course of the week, share our top mortgage tips and reply to your comments and questions there and then!

We look forward to hearing from you this Mortgages Week and hope that you take the opportunity to ask the questions you’ve always wanted to ask.