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.
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:
This depends on a few things including:
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.
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.
Switching to another lender involves applying for a new mortgage and meeting their lending criteria. Your eligibility depends on things like:
It’s only worth switching if you’ll save money after any fees you have to pay. To check that the timing is right:
Fees vary depending on the lender and solicitor you use, here are some of the costs involved:
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.
Here are some things you can do to help you find the best deal:
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.
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.
Find the best first time buyer and home mover mortgage deals in Ireland using our comparison.
It varies depending on the lender and your individual circumstances, but you should allow around four to five weeks for the switching process.
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?
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.
Lenders have to follow the Central Bank of Ireland mortgage measures which require them to:
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: