When is the best time to switch your mortgage?
Sarah Rigney
Staff Writer

There are savings to be had by those willing to take the time to switch mortgage. This financially savvy move could save mortgage holders tens of thousands in the long run. So, when is the right time to switch?

Here at bonkers.ie we’d recommend that homeowners consider switching their mortgage at least once over the course of their loan term. 

In recent years it has become a lot easier to switch your mortgage, thanks to new measures implemented by the Central Bank of Ireland in 2019. 

Are you interested in switching your mortgage? In this guide, we take a look at when the best time to switch mortgage is for those who are eligible.

Why should I switch? 

As of January 2024, the average interest rate on a new mortgage in Ireland is 4.25%. However many people on trackers or variable rates are paying rates in excess of this. 

As a general rule of thumb, if you're paying a rate of 4.50% or more, you should consider switching mortgage providers as rates as low as 3.65% are still available. 

According to the Central Bank, out of the 728,000 mortgages ongoing in Ireland, around 182,000 of them are eligible to switch, so it is probable that you could fall into this category.

Who can switch?

Many mortgage holders in Ireland are under the impression that they are not able to switch because they are on a fixed rate rather than a variable one.

People on a variable rate can switch mortgages at any time, therefore making the transition easier. You can still switch if you are on a fixed mortgage, however, you’ll be subject to a penalty fee if you leave your contract early, which can vary from bank to bank.

This fee, also known as a redemption charge, should be weighed against potential savings that could be made by switching to determine whether switching is worthwhile. In some instances, there is no fee to exit a fixed rate early, or it may be minimal, so it can be worth your while calling your lender to check.

However we usually recommend waiting until you have finished your fixed-rate period to switch mortgages. Under new regulations implemented in January 2019, lenders must tell you about cheaper options 60 days before your fixed-rate mortgage period ends, so you’ll have time to shop around for better rates.

There are other costs involved in switching mortgages, such as legal fees. Take a look at this article to review the switching costs and see what lenders will pay them for you

Am I eligible to switch mortgage?

To switch mortgage you must meet certain criteria. This will differ depending on what bank you choose to switch to, and your financial situation. 

Remember it must be worthwhile financially for the lender to accept your mortgage application. This is why banks prefer switchers who:

  • Have a good credit rating 
  • Have a balance of €40,000 to €50,000 remaining on their mortgage
  • Are not in negative equity 
  • Have at least five years left on their mortgage
  • Have at least 20% equity in their home

When should you look into switching if you have a fixed rate?

If you’re on a fixed rate, we’d recommend having a look at the rates available on the market when you have around three months left on your current fixed rate. This will allow you time to talk to a mortgage advisor regarding your current situation and see if there is anything that may have a negative impact on your new mortgage application to avoid any delays.

Preparing your documents can take a few days and the process takes several weeks. It’s best to prepare in advance so that you don’t automatically roll onto an expensive variable rate with your existing provider. This is what usually happens if you don’t review your mortgage before a fixed rate ends.

Lenders must give you a decision within ten business days of receiving a completed mortgage application.

Approval in principle

It’s important to keep in mind that Approval in Principles and Loan Offers are valid for six months. This means that you can technically have your mortgage switch arranged before your current rate ends. 

Once your current rate is up the drawdown process for the switch will be more smooth and easy, so it pays to be prepared.

Is there a best time of year to switch?

There’s no specific time that’s best to switch your mortgage. If your mortgage amount is more than four times your salary you will need a Central Bank exception. In this case, earlier in the year is better as there will be more exemptions available.

Some months of the year are likely to be busier than others when looking to switch, which can slow the process down. For example, due to December being at the end of the year, most banks and companies will operate on reduced working hours. Similarly, during the back to school period and January, there are usually lots of new applications. 

If you apply at a time when many applications are being processed, there will be extended waiting times for approval. 

So, how long does it take to switch mortgages?

The mortgage switching process typically takes between six to eight weeks. It’s important to keep this in mind as you approach the end of your fixed term if you don’t want to roll onto a variable rate. 

How long do you have to be with your original lender before you can switch?

This differs from lender to lender, but in general you’ll need to have a mortgage in place for at least 12 months before you can switch to a new lender. This is to show that you have the capacity to make repayments on time and in full.

Having said that, you can often start an application process in advance of 12 months and then draw down the mortgage once you have hit the 12-month mark.

Get your mortgage with bonkers.ie

Are you interested in switching mortgages? You can easily find the best mortgage rates with our mortgage tool.  

Our mortgage calculator lets you quickly compare interest rates, offers and cashback incentives from all of Ireland’s mortgage lenders. It will show you what your new monthly repayments would be, and how much you could save by switching.

If you find a rate you like, you can request a callback from our mortgage broker service. One of our expert financial advisors will give you a call and help you get your application started! 

You won’t need to take out a new mortgage protection policy, provided the amount you borrow and the term of your mortgage stay the same. All you need to do is contact your current insurance provider and ask them for an updated letter confirming your current cover, and to reassign your existing policy to your new lender. 

However, this may be a good time to look into getting cheaper mortgage protection as well. You can compare mortgage protection options right here on bonkers.ie.

Similarly, switching mortgages could also be a great opportunity to look for cheaper home insurance, which you need to draw down a mortgage. Head to our home insurance page to see what you could save. 

Did you know you can also find deals for energy, broadband, and other banking and insurance products on bonkers.ie? Take control of your bills today!

Get in touch

Do you have any questions about switching mortgages? We’d be happy to help! Get in touch with us on Facebook, Twitter and Instagram.