Mortgage Switching – What’s involved and who can save big?

May 21, 2024

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?

Lets 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. The documents you need to provide however should be readily accessible online. Digital application platforms like ours at doddl, make it easier to deal with the documentation, manage process and transact.

There are 10 lenders in the market and more rates and products now than ever before with BOI’s EcoSaver mortgage adding 64 new rates. Your dedicated mortgage switching advisor 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.

Approximately 70,000 mortgage holders will be rolling off low fixed rates in the next 12 months. The reality is rates have increased and so to keep your mortgage repayments as low as possible you need to do your research or speak to our team at doddl.

Interest adds no value to you or your home, paying more than you need to is needless. Don’t be afraid to switch – the process is much more straightforward than when you purchased initially.

Who can save Big by Switching?

There are now 10 mortgage lenders in the Irish market so if you go to one lender or accept the rate offered by your current lender you could miss out on what 90% of the market has to offer.

Our latest doddl.ie Irish Independent Mortgage Switching Index shows that the highest rate in the market is now double the lowest rate. Rates range from 3.45% to over 7% and this huge gap has resulted in the largest saving in over a decade. The Index shows that for an average mortgage of just over €309,k you could save up to €7,812 by switching mortgage lender.

New and enhanced switcher cashback offers have been announced over the last six weeks, 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.

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 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
  • 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 Non Bank lenders who’s rates are significantly higher – Finance Ireland and ICS in particular. If you have a mortgage with these lenders you can save hugely by switching. Their rates were extremely low pre 2022 but have risen dramatically in the last two years.

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 BOI with their EcoSaver product and others such as Avant tier rates by loan to value.

However in the last 6 weeks, 6 lenders have reduced rates so the gap between rates on the market has widened.

Lenders pricing policy relates to their funding mix so the cost to them to lend. Banks will have deposit holders funds (currently with a relatively low return) that they can use to reduce their cost to lend whereas non-bank lenders are exposed to markets when funding.

 What’s next for interest rates?

A big question for those rolling off fixed rates right now is whether rates will drop further.

The latest cuts have brought some competition to the market with the main pillar banks focusing on the Green mortgage space, where rates start at 3.45%.

Tracker mortgage holders whose rate is directly linked to the ECB refinancing rate can be very hopeful of cuts to their mortgage rate this year with market analysts believing that we could see rate decreases from next month.

The vast majority of Irish mortgage holders who do not have tracker rates, will see their rate influenced by the funding mix and pricing policy of the Irish lenders and not directly by the ECB.

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.

Most mortgage holders do not want to speculate when it comes to their mortgage, they like to lock in certainty.

Recent rate decreases have brought us competitive rates at sub-3.5% While these are not at the sub 2% level of 2022 it would take extraordinary economic circumstances to see them fall back to similar levels.

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.

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 buy a home – Start Here

I am looking to review my rates and switch my mortgage – Start Here 

In related news...