Many 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.
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, 2o cent for every online payment and €4.50 per quarter in account maintenance fees, this bonus could save you a decent amount over the lifetime of your mortgage.
As things stand, AIB is offering rates as low as 2.10%, among the best in the market.
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 an additional 1% 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 rates tend to be a little higher than some of its competitors though so make sure you do your sums.
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 €1,347 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 €34 a month.
And you want to know what a saving of €34 a month, every month for 30 years, adds up to? €12,240!
Amazingly, a simple current account switch could potentially save you in excess of €12,000 over the lifetime of your mortgage.
PTSB does something different again.
At the moment if you have a mortgage with the bank and pay this from its Explore current account, you'll receive 2% cashback on your monthly mortgage repayments until 2027.
So let's say your mortgage repayment is €1,00 a month - PTSB will give you back €20 a month or €240 a year.
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.
Before making the switch, you might want to consult our guide on how to switch current accounts or take a look at another recent piece we wrote on who is offering the best value current accounts in 2021.
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.
Start your mortgage journey with bonkers.ie
Once it’s time to finally 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!
Get in touch
Would you consider switching current accounts to get the best mortgage deal? Let us know below in the comments section.