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Switching Mortgage to new lender

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  • 02-01-2020 2:25pm
    #1
    muwaahidi
    Registered Users Posts: 20 ✭


    Hi there,

    Could anyone suggest any cons / pro if you switch current mortgage to another provider to get better deal?
    Reason is that property Value has increased since bought and Loan to Value (LTV) has also decreased (Less than 60%), currently on variable rate 3.8% with my bank, and same bank has offered 3.1% after negotiation but when searched, online calculator showing me offer of 2.7% variable rate but I have concern:

    - Would there be any issue with currently bank to deduct anything while switching to new provider?

    - What frequency can we switch mortgage to get better deal during mortgage period?
    Any pros / cons for above exercise especially if you want to upgrade your current house in future (selling current house and buying bigger / expensive then current one?

    Is there big hassle involved while switching mortgage to new lender on same property I'm living in?

    Thanks.


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    #2
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    muwaahidi wrote: »
    - Would there be any issue with currently bank to deduct anything while switching to new provider?
    If you're on a variable rate, then there is no penalty for switching. Penalties only happen when you're on a fixed rate and try to change before the fixed rate period ends (though many will waive the penalty anyway).
    - What frequency can we switch mortgage to get better deal during mortgage period?
    As often as your sanity can take it.
    Any pros / cons for above exercise especially if you want to upgrade your current house in future (selling current house and buying bigger / expensive then current one?
    Not really any cons tbh unless your new mortgage is going to damage your ability to save. If the new mortgage is a better deal than the old one, then go for it. The only reason people don't is because of the hassle of switching (see below).
    Is there big hassle involved while switching mortgage to new lender on same property I'm living in?
    Basically it's the same as buying a house, without the hassle of another party. The new mortgage provider will want stacks of paperwork, you will have to pay for a valuation on your own house, and you'll have to pay solicitor's fees that will work out to a couple of grand. You won't have to pay stamp duty though.

    So if you're switching to save yourself €1,000 over the life of the mortgage, you're wasting your time. But if you're saving €20k, then it's worth looking at.


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    #3
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    After the mental torture of buying a property many people shy away from switching but there are real savings to be made. Yes there will be paperwork but it should be much the same material that your current mortgage provider would have required. Your original solicitor should have a lot of the paperwork already. The first thing to do is get mortgage approval. After that you can worry about getting the solicitor involved.

    The additional cost will be the solicitor but some banks offer cashback (some are a % of the mortgage, some are a fixed cash amount) that might cover this cost. Depending on how much your mortgage is you might actually make money.

    Different banks have different rules. I haven't checked in a while but most require you to be with your current provider for a period of time. I think AIB, BOI and EBS are 12 months. PTSB I seem to remember being the most restrictive at over 12 months (think it was 18 months). Ulster was only 6 months and KBC told me that had no minium requirement.

    It can be well worth switching do the maths and if it pays I'd encourage you to go for it.


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    #4
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Surely the first thing to do is ring up your existing lender and ask for their best rate.

    It will probably be a fixed rate offer, but should be loads better than 3.8%.

    Why did you opt for variable in the first instnace OP?

    My LTV is better than 60% (just) and got a 2 year fix with KBC for 2.25%

    I'll look at moving once thats up but my first port of call will be KBC for another fixed period. Why incur the hassle if you can just get a better deal and stay put? I'll only move if KBC don't offer me something competitive based on the market in 18months time. If you end up staying with your own bank, its typically as simple as agreeing it over then phone, they then send you a letter to sign and you post it back. You avoid all the hassle and costs of solicitors etc.


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