Switching your Mortgage Lender – is it worth it?
If your current mortgage rate is over 3.4% we say it is worth switching if you can.
Below – we show some comparisons that show a switch to a mortgage interest rate that is just 0.7% lower on a €240k mortgage can result in savings of more than €7000 over 3 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 2019 – most of the banks in Ireland are again 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%
Repayments are €1227 a month.
Total repayments over the next 3 years will come to €44,171
After 3 more years of continuing with this mortgage the outstanding balance on the mortgage will be €227,873
We have compared some of the options for switching mortgage provider by calculating the savings made over a 3 year period.
Important Note : These comparisons assume that the current payers variable rate will stay the same for the 3 years.
Switch to Bank of Ireland at 3% for 3 years fixed.
Repayments will be €1336 a month . Total repayments of €48,111 over 3 years That is a reduction in repayments of €2875 over 3 years .
The balance remaining after 3years will be €222,863 – which is €475 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.
Switching fees of €1000 to be deducted.
Overall Result with BOI after 3 years : Better off by €7152
Example 2 KBC @ 2.85% fixed for 3 years.
Repayments will be €1120 a month – a total of €40,312 over 3 years which is a saving of €3859 compared to current mortgage.
The balance remaining after 5 years will be €226,450 – which is €1423 less than with the current mortgage. Cashback of €3000 to be added and switching fees of €1000 to be deducted.
Overall Result with KBC after 3 years : Better off with KBC by €7282
Example 3 Ulster Bank @ 2.99% fixed for 3 years.
Repayments will be €1137 a month – a total of €40,921 over 3 years which is a saving of €3250 compared to the current mortgage.
The balance remaining after 3 years will be €226,668 – which is €1205 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 3 years : Better off with Ulster Bank by a €4955
Figures updated January 29th 2019 –
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