Switching your Mortgage Lender – is it worth it?
If your current mortgage rate is over 3.4% we say it is well worth switching.
Below we show some comparisons that show a switch to a mortgage interest rate of just 0.7% lower on a €240k mortgage can result in savings of more than €14,000 over 5 years. (Including cashback offers)
Back in the “Celtic Tiger” years most of the Irish banks were actively trying to get people to switch mortgages by offering lower rates and other incentives. In 2006 the mortgage switching market made up about 15% of all new mortgages in Ireland.
Now in 2018 – some of the banks in Ireland are still offering incentives to attract switchers – but how much can you save by switching? Is it worth it? ….
An example ; A home owner owing 80% of the value of their house – i.e. a €240k mortgage outstanding on a €300k property. (Term remaining 20 years).
Current mortgage (variable rate ) is 3.7% – and repayments are €1416 a month.
Total repayments over the next 5 years will come to €84,978
After 5 more years of continuing with this mortgage the outstanding balance on the mortgage will be €195,462
We have compared some of the best options for switching mortgage provider by calculating the savings made over a 5 year period.
Important Note : Comparisons assume that the current payers variable rate will stay the same for the 5 years. (They probably won’t – but they could rise.)
Switch to Bank of Ireland at 3% for 5 years fixed. (This is the current lowest rate available)
Repayments will be €1331 a month . Total repayments of €79,851 over 5 years That is a reduction in repayments of €5127 over 5 years .
The balance remaining after 5 years will be €192,735 – which is €2727 less than it would be by continuing with the current mortgage
BOI also give cashback of 2% to all new customers – which is €4800 on a €240,000 mortgage.
If you stay with them for 5 years you get an extra 1% cashback – which would be a total of €7200.
Switching fees of €1000 to be deducted.
Overall Result with BOI after 5 years : Better off by €14,054 !!
(Or €2330 a year)
Example 2 Ulster Bank @ 2.99% fixed for 5 years.
Repayments will be €11371 a month – a total of €79781 over 5 years which is a saving of €5197 compared to current mortgage.
The balance remaining after 5 years will be €192,696 – which is €2768 less than with the current mortgage. Cashback of €1500 to be added and switching fees of €1000 to be deducted.
Overall Result with Ulster after 5 years : Better off with Ulster Bank by a €8465
Example 3 Ulster Bank @ 2.6% fixed for 4 years.
(** We have used the 2.6% rate over 5 years in this comparison: – so the Ulster figures below may be worse than this if the 5th year rate is higher than 2.6%)
Repayments will be €1281 a month – a total of €77,001 over 5 years which is a saving of €7977 compared to current mortgage.
The balance remaining after 5 years will be €191,131 – which is €4331 less than with the current mortgage. Cashback of €1500 to be added and switching fees of €1000 to be deducted.
Overall Result with Ulster after 5 years : Better off with Ulster Bank by a €12808 **
Switch to EBS at 3.25% fixed for 5 years : Payments will be €1361 a month – a total of €81,684 over 5 years which is a saving of €7977.
The balance remaining after 5 years will be €193,733 – which is €1729 less than with the current mortgage. Cashback of 2% ( €4800) Switching fees of €1000 to be deducted.
Overall Result with EBS after 5 years : Better off with EBS by €8823
So the best switching deal is with Bank of Ireland
Figures updated March 13th 2018 –
Cost of Switching
There are some costs involved in switching your mortgage – you will need a property valuation and there will be legal fees too. On average – you can expect these two costs to come to about €1000.
Check out this page for details of the current Lowest Mortgage Rates