How to switch to a better mortgage deal

Switching your mortgage could save you thousands of euro in interest, or help you reduce your loan term. Here’s how to find the best switcher mortgage.

Why switch your mortgage?

The main reason for switching is to save money. For example, if you’ve been on a fixed rate mortgage when the term ends you’ll switch over to the lender’s standard variable rate, which is very expensive.

The benefits of switching your mortgage will vary depending on your circumstances and goals, it could help you to:

  • Reduce your repayments
  • Save thousands of euro in interest
  • Enjoy set repayments or increased flexibility
  • Reduce your mortgage term
  • Overpay your mortgage
  • Redeem your mortgage quicker
  • Release equity in your home e.g. for home improvements or debt consolidation

When should you switch?

This depends on a few things including:

  • What type of mortgage you currently have e.g. fixed or variable rate
  • Whether you’re eligible to switch
  • Whether it’s worth switching

Check your current mortgage type

Fixed rate mortgage

With a fixed rate mortgage, you’ll need to wait until the term ends to avoid an early redemption charge, which could cost thousands of euro.

Your lender must let you know if they have any cheaper options 60 days before your fixed term ends. You can look for remortgage deals with other lenders too and compare the savings you’ll make.

Variable rate mortgage

If you’re on a variable rate, you can usually switch penalty free at any time, but there are still fees involved in switching e.g. valuation fee and legal costs.

Your lender should tell you if they have cheaper options available based on your loan to value (LTV). You’ll need to get a valuation done to know your up to date LTV.

Comparing options across all lenders using our remortgages comparison will help you find the best deal.

Check if you’re eligible

Switching to another lender involves applying for a new mortgage and meeting their lending criteria. Your eligibility depends on things like:

How much could you save?

It’s only worth switching if you’ll save money after any fees you have to pay. To check that the timing is right:

  • Ask your current lender if they will charge any exit fees
  • Compare mortgages you’re eligible for and check that their interest rates are lower
  • Check what your new repayments will be and how much you could save over the remaining term
  • Factor in any fees involved in switching

How much does it cost to switch?

Fees vary depending on the lender and solicitor you use, here are some of the costs involved:

  • Valuation fee: It usually costs around €150 to get a property valued.
  • Legal costs: These usually amount to between €1,000 and €1,500.
  • Arrangement fee: Not all lenders charge this but if they do, it’s usually a small percentage of the mortgage value.
  • Early repayment charge: This is applied if you end your fixed rate term early. Avoid paying if at all possible, by transferring your mortgage over or waiting until your term has ended.
  • Mortgage broker (mortgage credit intermediary) fee: You don’t have to use a broker but if you choose to, they may charge a fee.

If you’re switching mortgages due to moving home, there will be additional costs including:

You could get up to €3,000 cashback from your new lender as a switching incentive, which may be used to cover the fees when you switch.

Check that their deal is cheaper overall though, by comparing the interest you’ll save.

How to choose the best switcher mortgage

Here are some things you can do to help you find the best deal:

  • Get a valuation of your property so you can work out your equity and loan to value (LTV).
  • Find out how much you can borrow by using a broker, lender, or a lender’s calculator tool.
  • Compare mortgages with the right LTV using our remortgages or home mover comparison.
  • Choose a low interest rate mortgage that’s either a fixed rate or variable rate, depending on whether you need stability or flexibility.
  • Check for incentives like cashback which could cover legal fees, but make sure you’re saving the most interest overall.
  • Compare the total savings over your remaining term, after fees and incentives, to help you pick the right deal.
  • Consider using a mortgage broker (mortgage credit intermediary) if your circumstances require some expert advice, but check any fees out first.

How to switch to a new mortgage deal

Once you’ve chosen the right deal, you can apply to the lender for a mortgage approval in principle. Here’s how to prepare for a mortgage application.

If your application is approved, you can progress to a formal offer letter by producing any ID and documents the lender requires e.g. bank statements and payslips.

You’ll need to appoint a solicitor for the legal work, and make sure you have mortgage protection insurance and buildings insurance.

Once everything is in place, your solicitor will arrange for the transfer of funds between lenders, and ensure your new mortgage is ready for you to draw down.

Compare mortgage rates & deals

Find the best first time buyer and home mover mortgage deals in Ireland using our comparison.

Switching mortgages FAQs

How long does it take to switch my mortgage?

It varies depending on the lender and your individual circumstances, but you should allow around four to five weeks for the switching process.

Should I overpay my mortgage before switching?

Overpaying a large sum before you switch could positively affect the deals you can switch to as it will reduce your loan to value (LTV). If you opt to do this, make sure you look at deals with your new LTV.

If you’re switching to a variable rate mortgage, overpaying is very flexible so you can continue to overpay as and when you like.

With a fixed rate deal, you’re usually restricted to overpaying 10% of your balance a year penalty free, so overpaying before you switch is more important.

To find out more about overpaying and whether it’s right for you, read our guide: Should you overpay your mortgage?

Should I switch my tracker mortgage?

A tracker is a variable rate mortgage that tracks the European Central Bank (ECB) rate at a set percentage above or below.

Trackers aren’t available as new products but if you already have one, it’s likely to offer you the best rate available.

Some lenders offer a follow on tracker mortgage if you’re moving home and need to switch your mortgage over. This would allow you to keep very similar terms to your current mortgage.

You should discuss your options with your lender or broker to help you make the right decision.

What must lenders do to help me switch?

Lenders have to follow the Central Bank of Ireland mortgage measures which require them to:

  • Let you know about cheaper options 60 days before your fixed rate mortgage ends
  • Inform you if you can switch to a cheaper mortgage based on your loan to value (LTV) and how much equity you have
  • Explain clearly the pros and cons of mortgage incentives e.g. cashback offers
  • Show you how much your mortgage costs compared to other options they offer if requested
  • Give you all the information you need to switch, including how long it will take
  • Let you know their decision within 10 business days of receiving your completed mortgage application

When can I switch my fixed rate mortgage?

With a fixed rate mortgage, it’s best to wait until the end of your fixed period before switching. Otherwise, you’ll have to pay an early redemption charge which can cost thousands of euro.

At the end of the fixed period, you’ll switch over to the lender’s standard variable rate which is expensive, but you can do the following penalty free:

Warning: If you do not keep up your repayments you may lose your home. Warning: The cost of your monthly repayments may increase. Warning: You may have to pay charges if you pay off a fixed rate loan early. Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future. Warning: The entire amount that you have borrowed will still be outstanding at the end of the interest-only period. The payment rates on this housing loan may be adjusted by the lender from time to time. (applies to variable rate loans only) Information provided and Interest rates quoted valid at 12/01/2022