Reviewing your loan to value (LTV)

You could get a better deal with your current lender so it might be worthwhile checking before you start applying to other lenders. With most lenders, the interest rate you get will be based on your loan-to-value ratio (LTV). Over the lifetime of your mortgage your LTV will change, based on the balance of what you owe reducing, and any change in the value of your home.

It is important to be aware of your LTV as it is possible it has changed since you drew down your mortgage. Lenders do not contact their customers directly encouraging them to review their LTV, so you should contact your lender if you think your LTV has changed. You will need to get an update valuation of your property, which cost you about €150. You may then qualify for a lower rate based on your revised LTV.

Costs involved in switching

If you can switch your mortgage, there will be some costs involved including legal fees. Compare your current deal with any you might consider switching to and think about all costs involved. These can include:

• Redemption fees – this is the fee to cover the cost of breaking your fixed rate.

• Legal costs – some lenders may offer to meet the cost or pay a contribution toward your legal fees. Check first if there is a limit on how much the new lender will pay, if the legal fees are more than this, you will have to pay the remainder of the cost.

• Valuation fees – the new lender will want a current valuation of your house. The cost of this will generally be incurred by you.

• Product fees – some lenders charge a fee to arrange the loan. This can be around 0.5% of the total cost of the mortgage.

• Brokers’ fees – some brokers charge a fee to give you mortgage advice or to arrange your mortgage. Many brokers do not charge a fee so it’s worthwhile checking in advance.

• Administration fee – some lenders charge this fee to cover additional services before you receive your mortgage. You may also be charged this fee for rearranging the terms of your mortgage. You may not get your money back if you do not go ahead with your mortgage application.

Are special offers worth it?

Most lenders offer incentives to encourage you to move your mortgage but you should consider if these incentives are really worth it.  These incentives typically include:

• getting a percentage of the value of your mortgage back in cash

• a set amount of cash back

• money towards your legal or valuation fees

Cashback offers are attractive because they give you money in the short term. But they might not make financial sense in the long term if you look at how much the mortgage will cost you overall. You should always think about the interest rate, because a low interest rate is what could mean significant savings on your mortgage.

The Mortgage Credit Regulations  were introduced in March 2016. These regulations prevent lenders from  requiring mortgage holders to repay cash-back payments if they took out a mortgage since March 2016. So if you took out your mortgage since March 2016 and got a cash-back payment from your lender, you don’t have to repay this money if you switch your mortgage to another lender.

Financial advice

Make sure you are happy that any decision you make is right for you. To help with this, you may want to get financial advice. You can get a list from the Central Bank’s register website (click into ‘by register’ – ‘Register of Investment Product Intermediaries’) but make sure you know what type of advisor you are using, how many lenders the broker represents and what they will charge you.