How to switch to a better mortgage deal
Switching your mortgage to a better interest rate could save you thousands of euro or help you pay your home loan faster. Here’s how to find the best switcher mortgage.
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As interest rates continue to rise, there’s been a fall in the number of homeowners switching their mortgage to lock in lower fixed rates.
But with such a big difference between the lowest and highest fixed rate on the market, you could still save thousands of euros if you switch once your fixed rate term ends.
Why switch your mortgage?
The main reason for switching is to get a better interest rate and save money. If you’re on a fixed rate mortgage you’ll switch over to the lender’s standard variable rate when the term ends, which is more expensive.
The benefits of switching your mortgage will vary depending on your circumstances and goals, but remortgaging can help you:
When should you switch?
It’s worth thinking about remortgaging when you’re reaching the end of your fixed rate deal or if you’ve been on a variable rate for some time.
There are lots of things that affect when you should switch, but these are the main three factors.
- What type of mortgage you have e.g. fixed or variable rate
- Whether you’re eligible to switch
- How much you’ll save
Should you switch your tracker mortgage?
Tracker mortgages aren’t available as new products but if you already have one, some lenders offer a follow on tracker mortgage if you’re moving home.
Historically, trackers offered the best rates available but as the European Central Bank (ECB) hikes interest rates, customers are paying more.
If you’re considering switching your tracker mortgage:
- get financial advice and discuss all your options
- compare your current rate with the ECB rate
- compare mortgage rates online to see how much you’ll save
- remember once you leave your tracker, you can’t go back
What’s your mortgage rate type?
The timing and benefits of switching will depend on whether you’re on a fixed or variable rate mortgage.
Here’s how the type of mortgage rate you’re on affects your switch.
Fixed rate
With a fixed rate mortgage, you may need to wait until the term ends to avoid an early redemption charge (ERC), which could outweigh any savings.
Your lender must let you know if they have any cheaper options 60 days before your fixed term ends.
Variable rate
If you’re on a variable rate, you can usually switch penalty free at any time, but there could still be fees involved in switching e.g. valuation fees.
Your lender should tell you if they have cheaper options available based on your loan to value (LTV).
Are you eligible to switch?
Switching to another lender involves applying for a new mortgage and meeting their lending criteria. Your eligibility depends on things like:
- Your credit history
- Your loan to value (LTV)
- Your affordability, based on your income and outgoings
- How much you want to borrow
- The lender’s minimum loan amount and loan term
If you are unsure whether you’re eligible to switch talk to a broker or potential lender before you apply for your mortgage approval in principle.
How much could you save?
You could save thousands of euros if you switch to a cheaper mortgage.
You’ll have to pay legal and valuation fees, but if you choose a cashback deal, this could offset those costs. However, cashback deals may not always offer the cheapest interest rates.
To work out how much you’ll save take these steps:
- Find out from your current lender if there’s an early exit charge
- Compare mortgages and look for the lowest interest rates
- Check your new monthly repayment and how much you could save in total
- Find out the legal and valuation costs, plus any other fees to pay
- Deduct any charges or fees from the saving you’ll make over the term
Example savings
The value of your property is €300,000 and the remaining balance is €150,000 (50% LTV). You have 15 years of your mortgage term remaining and are currently paying an interest rate of 3.75%.
If you were to switch to a better mortgage deal at 2.9% with an APRC (Annual Percentage Rate of Charge) from 3.8%, you could make a potential saving of €746 per year and monthly savings of around €62.
Can I still claim mortgage interest relief if I switch?
Yes. The temporary, one-year mortgage relief announced as part of Budget 2024 only covers increased interest paid in 2023 compared to 2022, up to a maximum of €1,250.
- It applies to homeowners who had an outstanding mortgage balance between €80,000 and €500,000 at the end of 2022.
- You can apply via Revenue.ie and you’ll need mortgage statements for 2022 and 2023 at hand.
For example, if your mortgage repayments totalled €13,000 in 2022 and increased to €16,800 in 2023, you can claim 20% tax relief on the €3,800 difference. That would mean a tax credit of €720.
What does it cost to switch?
Fees vary depending on the lender and solicitor you use and if you stay with the same lender costs will be much lower.
Several Irish lenders offer cashback as an incentive to switch, which in most cases, could help cover legal costs and any extra fees.
Here are some of the costs you may have to pay
- Valuation fees: It usually costs around €150 to get a property valued.
- Legal costs: These usually amount to between €1,000 and €1,500.
- Early repayment charge: An ERC may be applied if you end your fixed-rate term early.
- Mortgage broker fees: Using a broker is optional, but if you do, they may charge.
Some lenders may charge an arrangement fee or other specific fees for buy to let or high-value transactions. This is also known as a booking fee or product fee.
Find Ireland’s best switcher deals and get a better rate.
What if I’m moving home and switching?
If you’re switching mortgages due to moving home, there will be additional costs including:
- Estate agent fees
- Stamp duty
- Survey fees
Do lenders cover legal fees if you switch?
Several lenders offer cashback for switching which can be used to cover legal fees.
Typically, you’ll get the cash paid into the account you use to pay your mortgage within 2 months.
Here’s what Irish lenders are offering at the moment:
| Mortgage lender | Switcher incentive |
|---|---|
| AIB | Get €2,000 cashback |
| Bank of Ireland | Up to 3% cashback |
| EBS | Up to 3% cashback |
| Haven | Get up to €5,000 cashback* |
| PTSB | 2% cashback |
*on mortgages over €250,000 but excluding the Green 4 year fixed
What lenders must do to help you 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
Find Ireland’s lowest mortgage rates and switch today.
How to get the best switcher deal
Here’s how to choose a better mortgage and start saving.
Switching to a new mortgage
What happens next?
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 a range of 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.
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?
When can I switch my fixed rate mortgage?
With a fixed rate mortgage, it’s usually best to wait until the end of your fixed period before switching, otherwise, you may have to pay an early redemption charge.
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:
- Overpay your mortgage
- Switch your mortgage
- Redeem your mortgage
