Guide To Switching Your Mortgage Ireland

by | Aug 4, 2021 | Mortgages

The How To Guide To Switching Your Mortgage Lender

At Advice First Financial, we know that switching your mortgage can really save you money.

So, here are the steps involved in switching lender

Your mortgage is likely to be one of your biggest household outgoings for years so this is one bill that you really don’t want to overpay on! And just like any other bill, you should look into switching your mortgage every few years to ensure you’re not overpaying.

So how much could you save?

Is it an option for everyone? 

What are the steps involved?


How much could you save by switching mortgage?

Long answer short, you could save a lot!

Someone who has a mortgage of €150,000 remaining and is currently paying a 4.5% standard variable rate, and has at least 20% equity in their home, could save around €180 a month by switching to the cheapest rate on the market. That’s a lot of tax-free cash for your pocket!

And while there are some upfront costs associated with switching mortgage provider, in many cases banks will provide cashback to those who switch or a contribution towards the legal fees.

Is switching mortgage an option for everyone?

Each lender has its own set of criteria for accepting mortgage switchers and if your financial circumstances have changed dramatically for the worse since you took out your original mortgage, you may have problems switching to a new lender.

However, if you look to switch mortgage and don’t get accepted, your current lender won’t treat you any differently. In fact, your existing lender will not even know you looked to switch.

So, there’s no need to worry if you get rejected. It is always good to talk, and nothing ventured, nothing gained as they say!

In general, before switching, you must consider factors such as:

The outstanding balance on your mortgage. The minimum amount accepted by Irish lenders for someone switching is around €30,000 to €40,000. Anything less and the bank will feel it won’t be worth their while.

Whether you have a fixed-rate mortgage with your current lender. You may be charged a fee for switching out of a fixed-rate mortgage early so you may need to wait until the end of the term before you can consider switching. However, sometimes the penalty for breaking a fixed rate may be far less than the savings you’d make by switching mortgage lender.
So, it’s important to check and do the math.

Your credit rating. You must still have a good credit rating. A credit check will be carried out by the lender you’re trying to switch to and if you’ve taken out new loans or used credit cards and had difficulties repaying these, you will have problems switching.

How much equity is in your home? You will have difficulty switching if you are in negative equity or have less than 20%.

The term remaining on your mortgage. You may not be able to switch if you only have a few years remaining on your mortgage as again the bank may feel it won’t be worth the time.

Can I be penalised for switching mortgage provider?

This is a question we get asked to allot.
As mentioned, before you may have to pay a breakage fee if you’re on a fixed rate and are looking to switch lender before it’s due to end.

Other than this you cannot be penalised for looking to switch mortgage provider. This includes anyone who has gotten a ‘cashback mortgage’.

If you received cashback as part of your original mortgage you do not have to pay any of this money back when switching.

Here are the steps involved in switching your mortgage.

Know your current situation.
Find out the following as the lender will need to know

  • how much is still owed on your existing mortgage
  • the term remaining.
  • the interest rate you’re currently paying

You can find all this information on your most recent mortgage statement or by contacting your lender. You’ll also need a rough estimate of how much your home is currently worth.

With the above info to hand, compare mortgage rates to find out who’s offering the best rates and whether it makes financial sense to switch.

You can give us a call to do the comparison for you or this mortgage calculator and comparison service lets you easily compare interest rates, offers and cashback incentives from all of Ireland’s mortgage lenders and will quickly show you what your new monthly repayments would be.

Start the process to switch. 

You can give us a call to help you with the switching process or you can contact the lenders directly. Please note: There are a couple of lenders who only work through Brokers like Advice First Financial.

The documents.

Once you’ve chosen your new lender, we can issue you with a checklist of items needed, you’ll need to provide these to enable us to submit your mortgage application.
Documentation such as:

  • Certified proof of identity: such as a copy of your passport.
  • Certified proof of address: such as a recent household bill in your name. To be accepted most bills will need to be dated within the past three months.
  • Proof of your income: including your latest Employment Detail Summary and at least three recent pay slips.
  • You’ll be asked to provide a copy of your current account statement for previous 6 months
  • If you have any loans, you’ll need to provide a 12 statement for these.
  • Credit cards, you’ll need to provide 6 statements.
  • Evidence of any savings, 6 months’ statement
  • Employment status: your new lender will want information and proof as to what type of employment contract you are on. For example, permanent, contract, full-time, part-time etc.

In other words, it’s a bit like submitting a new mortgage application. However, the good news is that under new “Central Bank requirements” see below, the bank you’re looking to switch to must give you all the information you need to switch and give you a decision within 10 business days of receiving your completed mortgage application.

House valuation.
You’ll need to get an up-to-date professional valuation of your home. This is so that your new lender knows how big your mortgage is in relation to the value of your home and therefore how much equity you have. The more equity the better. The fee will be between €150 & €185. Each lender has a list of valuers they accept valuation from.

The legal bit.
You will need to get a solicitor on board to take care of conveyancing and any legal documents. Make sure you ask about any cashback incentives as many lenders offer money to help cover the legal costs of switching. In general, the legal fees for switching mortgage are a bit less than the fees for first-time buyers.

Mortgage protection.
If you decide to switch mortgage provider, you don’t need to take out a new mortgage protection policy as long as the amount you borrow, and the term of your mortgage remain the same.
In this case you just have to contact your current insurance provider and get them to reassign your existing policy to your new lender.
However, this might be an opportune time to look at getting cheaper mortgage protection too.

Direct debit.
When your mortgage is approved, your lender will ask you to fill in a new direct debit form so your repayments can be collected from your bank account. Remember to cancel the direct debit with your previous lender to ensure no further payments are taken.

That you Done. Welcome to a cheaper mortgage!

Get Advice

Talk to us now and book an appointment with one of our Letterkenny team of QFAs. We are here to help with your Financial Planning Concerns. Ask us questions on Retirement & Pension, Life Insurance & Protection, Mortgages, and Investment Advice. Get in touch here or give us a call at 074 91 03938.

Advice First Financial trading as Advice First Financial is regulated by the Central Bank.

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