Your mortgage is more than likely your biggest financial commitment. You may have taken out your mortgage a few years ago and haven’t thought about it since, other than to make your monthly repayments.
If this is the case, you could be paying more for your mortgage than you need to. Most lenders currently offer a cash back of €2,000 to cover the outlay of switching.
You need to be aware of the following factors to see if you are eligible to switch:
- Your Loan-to-Value (LTV) ratio, which is how much you owe on your mortgage in relation to how much your house is worth. Lenders will evaluate your loan to value ratio while they are underwriting your loan. In general, borrowers with lower LTV ratios will qualify for lower mortgage rates than borrowers with higher LTV ratios.
- The outstanding balance on your mortgage. If you have a small outstanding balance, you may find it difficult to switch – the average minimum new mortgage accepted by Irish banks for someone switching is around €30,000.
- You have been making payments on the mortgage over the last 12 months.
- You meet certain criteria. For instance, you will need to meet the new bank’s income criteria. If your personal circumstances have changed since you first took out a loan, you may have difficulties switching.
- The mortgage is not locked into a fixed rate contract with the current lender.
- Your credit rating. An Irish Credit Bureau (ICB) check will be done by the new institution. If you have taken out loans or credit cards since your first mortgage and have had problems repaying these, you may not be looked at favourably by the new lender.