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5 Top Tips for Mortgage Switching

May 02, 2023

We recently discussed mortgage rates on RTE Today with Claire Byrne. Hear full interview -> Listen Here 

As a follow on from that interview, we thought it was worthwhile to share some information on mortgage switching and highlight the importance of reviewing your mortgage rate and switching where it makes sense to do so.

Mortgage Interest rates in Ireland

While tracker mortgage holders have borne the brunt of rate increases those on variable rates and fixed rate will also be impacted as funding costs have increased and as the pillar banks, who have the lions share of the market have increased rates.

More people will be exposed to rate increases as the rising cost of borrowing spreads from tracker to variable to fixed rate holders rolling out of current fixed rate contracts.

Over 90% of new mortgages are drawn on fixed rates and due to availability and pricing of fixed rates the majority of mortgages are on 3 – 5 year fixed rate terms which leaves us exposed to rate increases.

Approximately 50,000 mortgage holders (value €12bn) are in short term fixed rates and will be rolling out in the next 3 years into a very different rate environment. These mortgage holders will see a significant uplift in their mortgage repayments.

Top tips for mortgage switching

1. Don’t be afraid to switch your mortgage – Mortgage Switching is not as difficult as you think

Many people do not switch because of deterrents such as difficulty comparing offers, time, worries about making a mistake and the perception that it is a difficult process.

At doddl we work with all major lenders so understand exactly what rates and terms will be offered to you so can easily compare the market for you. When you make contact with doddl you will be allocated a mortgage specialist who will discuss all requirements with you, explain the process and work you through the mortgage that will best suit your needs. We also have a mortgage application platform that we have built with you the customer in mind to make it as easy as possible to complete the switching process.

There is paperwork involved which we will help you with but the savings you can make far outweigh your time to complete the switch.

You dont need to know everything about mortgages because we do. Its our role to work with you from enquiry to completion. Our service is free, we get paid by the mortgage lender you choose to take your mortgage with but really important to note that the payment is the same regardless of lender so no bias on our behalf.

2. Don’t pay needless interest – Switching your mortgage can result in huge savings

For most households their mortgage is their largest financial commitment and as such it is one we need to take control of and reduce where possible.

If we take an example of a mortgage holder who 3 years ago would have secured an average rate of 2.5%.

If they are now rolling out at 4.6% then for every €100,000 that they owe (over 30 year term) they will see a repayment increase of €118 per month so for a very average €250,000 mortgage that would be a monthly increase of €295 per month or €3,540 per annum. You could look to switch to a rate of 3.25% (as at 2nd May lowest market rate) and save €193 per month on the same €250,000 mortgage – this will save you €2,322 per annum. Find out how much you could save with our mortgage switching calculator.

3. Compare the market – There is a big difference between rates that banks offer

There is a huge difference in rates on market – the lowest 3 year fixed rate 3.25%, highest 6.2%. It is so important to get market based advice when reviewing rates and terms, do not accept the first rate that is offered to you, do your research or work with a broker such as doddl who offer a free service and work on your behalf to secure the best rates for you.

ESRI research published in April highlighted that 46% of consumers said they did not compare offers on mortgages despite what the study found are difference in interest payments that can add up to tens of thousands of Euro. Research also found that one in four who are eligible to switch could dave 20% on their mortgage repayments.

Dont pay more than you need to on needless interest, speak to one of our mortgage specialists at doddl. We will guide you through all options and will tell you if it makes sense to switch and we can help you through each step.

4. Don’t automatically assume that if you stick with your current mortgage lender they will give you a better rate

This is not the case, many mortgage lenders have a suite of new business rates and also back book rates and they offer their lower rates to new business customers. By all means find out what rate your existing bank will offer you but be sure to compare this to other rates you could secure. Our mortgage specialists at doddl can help you compare

5. The costs to switch do not outweigh the benefit

Firstly to say, you will only switch if there is a financial benefit to do so. When switching there are valuation costs c. €185 and legal costs (we work with a partner who offers a flat fee €1,225 as at May 2023). These costs are one off and a number of lenders offer switcher packages to cover costs and in some cases up to 2% cashback at draw down. You will only switch if the benefit outweighs the cost and based on rates many of our clients will have saved enough in the first six months of their new mortgage to cover the costs. This is particularly relevant when you are fixing and locking into a 3 or 5 year product, the benefit of securing a lower rate is significant.

Need advice be sure to contact one of our mortgage specialists at doddl –> Get Started today

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