How will I know if it makes sense to switch mortgage?
The first step in deciding whether you need to switch mortgage is to understand if there is a financial benefit in doing so.
You will only ever switch if it makes financial sense to do so – take 15 minutes to review what is for most your largest financial commitment. Speak to one of our advisors at doddl, we will tell you if it makes sense to stick with your current lender or to switch and save.
You can either switch your mortgage at current mortgage balance or release equity to carry out home improvements, clear home improvement loans, education loans or other.
What is the process involved in switching mortgage?
Let’s put it out there – it is not as easy as switching utilities but the benefits are huge making the time you take to gather documentation so worth it.
There is an application process involved – the bank needs to ensure the mortgage is still affordable.
Many lenders have introduced reduced document requirements making it easier for you to switch.
The documents you need to provide should be readily accessible online. Digital application platforms like our doddl DMx Platform exclusive to doodl clients, makes it easier to deal with the documentation, manage the process and transact.
Aswell as reduced documents making it easier & quicker to switch here’s some more good news –
✔️ New and enhanced switcher cashback offers have been announced this year with year 7 lenders in Ireland now offer cashback to mortgage switchers ranging from €1,500 to 2% of your mortgage back in cash (€350,k mortgage, €7,000 cashback lodged to your current account). The lowest rate on the market, a Green 4 year fixed is now available with €3,000 cashback.
✔️ At doddl we work with a legal partner called Beam who, through our integration, ensures a seamless switching process for our clients.
✔️ Rates have already dropped! Fixed and Variable rates started to fall again from May of this year, the first cuts were in anticipation of the ECB cut of June. Rates range from 3.2% to over 6.65% and this huge gap has resulted in the largest saving in over a decade. Our latest doddl Mortgage Switching Index shows that for an average mortgage of just under €310,k you could save up to €7,200 by switching mortgage lender.
Who can save Big by Switching?
With two new lenders entering the market in 2024 there are now 10 lenders in the market and more rates and products now than ever before. If you accept the first rate your bank has to offer you will miss out on what 90% of the market has to offer & chances are you will not get the best rate for your current circumstances.
Some areas where rates have dropped recently and you can achieve the largest savings are-
- Those with strong Building Energy ratings – The number of Green personal loans taken out increased by 90% in 2023. 94% of all new build homes built since 2017 have an A rating – if you have one then Green rates should be top of your list.
- Those with strong loan to values of 80% or lower, where you have more than 20% equity in your home are lower. Property price inflation (recent figures showing 10% y-o-y inflation) has meant that the value of homes has increased and you will have paid down some of your capital balance so your loan to value (mortgage divided by the value of your home) may now be lower than when you purchased your home. A homeowner who purchased a huge mid 2023 for €400,000 paying 10% deposit, mortgage €360,000. Price inflation of 10% bringing value to €440,000, mortgage now less than 80% based on repayments & price inflation. This could mean you are eligible for a much lower rate.
- Mortgages over €250,k are classed as ‘high value’ mortgages – some lenders tier their rates by mortgage level offering lower rates for mortgages of €250,000 or higher.
- Mortgages held with lenders who are higher than you can achieve on market – the huge disparity on rates from 3.2% to 6.65% means there are thousands of mortgage holders paying needless interest.
Why is there such a difference between mortgage interest rates in Ireland?
There is always a difference in rates across lenders, we don’t have a huge number of lenders and struggle with lack of competition but lenders generally focus on a key rate or two such as the pillar banks now with Green rates or EcoSaver products and others such as Avant Money tier rates by loan to value.
Funding costs influence rates but so does competition.
Latest research from the BPFI show that only 27% of mortgage holders researched rates.
If as a Nation we remain poor at reviewing our mortgage rates and switching where it makes sense to do so then there is no great incentive for banks to cut rates.
Competition creates market discipline, let’s try and make the market more competitive by reviewing rates.
What’s next for interest rates?
A big question for those rolling off fixed rates right now is whether rates will drop further.
The ECB cuts directly impact tracker mortgage holders but what about the vast majority of the market who do not have tracker rates?
The latest cuts have brought some competition to the market with some lenders focusing on the Green mortgage space, where rates.
No-one wants to pay more than they need to on their mortgage and so the question of further rate decreases is a very relevant one.
As a broker our daily role is to review rates and advise our clients as to their best mortgage options.
We expect that lenders are poised to tweak key rates to remain competitive such as Green/Eco Saver rates and also on lower loan to value & shorter term fixed rates which are popular with mortgage holders right now.
For those holding out for their current lender to drop rates, I would suggest that they review the market for the best rate they can achieve now.
Don’t just accept the rate your current lender has to offer, if it makes sense to switch, then act now.
Don’t know where to start?
Need Mortgage Advice?
Contact our expert team at doddl who can provide you with advice across all major lenders in Ireland, all at no cost to you. Start by providing some initial information –
I am looking to review my mortgage rate – Start Here
I am looking to buy a home – Start Here
Your dedicated mortgage switching specialist at doddl will speak with you to understand what your requirements are, what your situation is and to work through the best mortgage options for you.
We will work through the application and approval process and guide you through each step of the process to completing your switch.
