Mortgages

Switch current accounts to get the best mortgage deal

Mark Whelan

Mark Whelan

Former Head of Communications & Events

Most of Ireland’s leading banks reserve their best mortgage offers for their current account customers, leaving many borrowers paying more than they have to.

Do you remember how you chose your current account?

Chances are you signed up during the heady days of your college Fresher’s Week, as you bounced from stall to stall, seeing who was offering the best freebies.

And who could blame you? Those freebies can seem pretty great.

In the past we’ve seen free flights, generous transport vouchers and cold hard cash handed out by the banks in exchange for wide-eyed students’ loyalty.

Call me a cynic, but the banks don’t make offers like these out of the goodness of their hearts. They do it because they know that, someday, students are going to graduate, get jobs and eventually want a mortgage.

And they know that only a tiny number of people ever bother switching current accounts.

“Give them a current account now, sell them a mortgage later”. That’s the thinking.

The cost of loyalty

What if I told you that the free €100 flight voucher that sounded like an irresistible offer when you were a student could end up costing you tens of thousands of euro in the long run?

You see, most of Ireland’s banks reserve their best mortgage offers for their current account holders, which can lead to many borrowers unwittingly missing out on the best rates.

But by switching current accounts, you can get access to the very best mortgage deals on offer across the entire market.

Let’s take a look at which banks are reserving attractive mortgage sweeteners for current account holders at the moment.

AIB

If you have a current account with AIB and take out a mortgage with the bank, your day-to-day maintenance and transaction fees will be waived.

Considering that the bank charges 35 cent for every ATM withdrawal, 20 cent for every chip-and-pin transaction and €18 in annual maintenance fees, this bonus could save you a decent amount over the lifetime of your mortgage.

Another way to get around those fees, however, is to keep €2,500 on deposit at all times.

As things stand, AIB is offering a variable rate of 3.15% to first-time buyers with an LTV of 90%, which is one of the most competitive rates going.

Bank of Ireland

Bank of Ireland’s sweetener for its current account holders is a little different.

The bank is offering 2% cashback to all new mortgage customers, but if you have a current account, you can get 3% back after five years of mortgage repayments.

So, on a €300,000 mortgage, that’s a total of €9,000 cash, €3,000 of which is only available to current account customers.

Bank of Ireland’s best variable rate for a first-time buyer with an LTV of 90% taking a mortgage of €300,000 over 30 years is 4.50%.

KBC

KBC offers a no-nonsense 0.20% mortgage rate discount if you have a current account with the bank.

While that may not sound like much in isolation, it can add up to pretty big savings over the lifetime of a loan.

KBC’s leading variable rate for first-time buyers with an LTV of 90% who don’t have a current account is 3.50%. At this rate, you’ll start off with a repayment amount of around €1,212 a month on a €300,000 mortgage over 30 years.

But if you switch your current account to KBC - a task which can be completed on your phone - you’ll get a rate of 3.30%, which will mean a saving of about €30 a month.

And you want to know what a saving of €30 a month, every month for 30 years, adds up to?

€10,800!

Amazingly, a simple current account switch could potentially save you in excess of €10,000 over the lifetime of your mortgage.

And with Ulster Bank, the savings can be even more significant.

Ulster Bank

With Ulster Bank, non-current account holders taking out a €300,000 mortgage can get a rate of 4.30%.

But if you have a current account with the bank and are borrowing over €200,000, you’ll get a rate of 3.60%. That’s a discount of 0.7%, just for having a current account.

That 0.7% discount means that a current account holder will pay about €108 less every month than a non-current account holder.

And over the course of 30 years, that could add up to an eye-watering €38,880 or so in savings.

Switch current accounts to save

If you’re a first-time buyer about to embark on your mortgage journey, you might have thought that booking a chat with the bank that provides your current account is the best place to start.

Well, as you can see, it often isn’t.

You’ll be in a better position to make the right decision, if you begin by comparing the entire mortgage market to see which bank is offering the best rates, including the discounts and incentives on offer to current account holders.

Once you’ve identified the best deal for you, switch your current account to that bank to take advantage of the sweetener on offer.

Re-thinking current accounts

There is potentially tens of thousands of euro to be saved on your mortgage by switching current accounts to access special deals. But, as a nation, we seem to still take the view that our current accounts are for life. And it's costing us.

Just 0.06% of people switch current accounts, despite the fact that the Central Bank has established a dedicated switching code to help customers change banks.

With Irish mortgage rates still much higher than the European average, most borrowers can’t afford to pay any more than they absolutely have to.

Your current account doesn’t have to be for life. You have the freedom, power and right to jump ship to a bank that best suits your situation.

We are on hand to help you make the switch when the time comes and, thanks to recent efforts from the Central Bank of Ireland, the process is getting easier and easier every year.

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