Switching Mortgage : How Much Can You Save?

Switching your Mortgage Lender

Most of the banks in Ireland are again offering incentives to attract mortgage switchers – such as cashback –  but how much can you save by switching?  Is it worth it? 
Mortgage switching is still relatively low in Ireland . There are around 728,000 mortgages in Ireland according to the Central Bank (March 2021).
In 2019 5676 people switched their mortgage, this figure dropped to 4948 in 2020 (partly due to Covid. In the first 9 months of 2021 there were 4515 mortgages switched in Ireland. That works out at less than 0.8% of mortgages getting switched each year. In the UK – figures from the FCA’s Mortgage Market Study found that over three-quarters of borrowers switched their mortgage within six months of the end of an introductory deal.

Recent research into mortgage switching found that most non-switchers typically overestimated the difficulties of switching and underestimated the benefits of doing so.

There are still thousands of people in Ireland who could – but don’t even consider switching mortgage. If they realised the amount of money that can be saved – they would be daft not to consider a switch.
If your current mortgage rate is over 3.5% we say it is worth switching if you can.
Below  – we have done some comparisons that show switching a €300k mortgage can result in savings of more than  €12000 over 3 years. (Including cashback offers).
Larger mortgages will result in even bigger savings.

Switching Mortgage: Calculation of Savings :

A homeowner took out €300k mortgage over 25 years 5 years ago.  (Term now remaining 20 years).
The property is now worth €380K and the outstanding balance is €260k (LTV = 69%)
Their current mortgage rate (variable) is 3.7%
Repayments are  €1534 a month.
Total repayments over the next 3 years will come to  €55,224
After 3  more years of continuing with this mortgage, the outstanding balance on the mortgage will be €232,000

We have compared some of the options for switching mortgage providers by calculating the savings made over a 3 year period.

Important Note: These comparisons assume that the current payer’s variable rate will stay the same for the next 3 years.

Example 1 – Haven Cashback – Save €12,478 over 3 years

Switching to Haven at 2.55% for 3 years fixed with €5000 cashback.

  • A new 20 year mortgage of €260k will pay off the old mortgage in full.
  • The new repayments will be €1384 a month.
  • Total repayments of €49,824 over the next 3 years That is a reduction in repayments of €5400 over 3 years.
  • The balance remaining after 3 years will be €228,922  – which is €3078 less than it would be by continuing with the current mortgage
  • Haven give a cashback of €5000 on all new fixed rate mortgages over €250k
  • Switching fees of €1000
  • Overall Result with Haven after 3 years:  Better off by €12,478 ( €5400 + €3078 + €5000 – €1000)

Example 2 : Finance Ireland – Save €9k over 3 years.

Switch to a 3 year fixed rate (2.3%) from Finance Ireland

  • At 2.3%, a €260k mortgage over 20 years will have repayments of €1353 a month
  • This is a total of €48,690  over 3 years which is a saving of €6534 compared to the current 3.7% mortgage.
  • The balance remaining on the mortgage after 3 years will be €228,193  – which is €3807 less than it would be with the current mortgage. 
  • Overall Result after 3 years:
    • They will be better off after 3 years with Finance Ireland by €9,441 compared to their current mortgage.. (including switching fees)

The Haven cashback offer will save them €3137 more than the Finance Ireland mortgage over the next 3 years.

Also – with the Haven cashback mortgage, they get a €5000 lump sum straight away which may be of more use than a small saving every month.

Some of the lowest mortgage rates are only available through brokers – for example, mortgages from Avant, Haven and Finance Ireland can only be obtained through a broker. You can access all these lenders through Money Sherpa. Visit their website and arrange a free no-obligation call back to discuss your switching options.
( DFP mortgages, trading as Moneysherpa is regulated by the Central Bank of Ireland.)

switch mortgages

Multiple Switches :

It is possible to do multiple switches one after another to several of the banks offering cashback.
On a 250k mortgage, it could be possible to “earn” in the region of €10,000 in cashback from doing just 3 switches. (After legal fees) .
The banks do not ask you to repay the cashback – even if you switch away from them a week after getting the cashback.
More details here on Switching Mortgage for Cashback

Figures updated November 2021  –

Check out this page for details of the current  Lowest Mortgage Rates