Don’t let mortgage switching costs put you off switching. Switching mortgage improves your financial shape more than anything else bar winning the Lotto. In fact, if you bought after 2008 you will probably save over €20,000 by switching to lower rates.
That said, there are some upfront costs you need to know factor in, read on to find out what they are, how you can cover them with cash back and why switching still makes loads of sense.
- What are mortgage switching costs and switching mortgage legal fees?
- How much are mortgage switching costs, switching mortgage legal fees and how much is it to switch?
- Which banks cover mortgage switching costs, switching mortgage legal fees and what options are there?
- Does it still make sense to switch after mortgage switching costs and switching mortgage legal fees?
What are mortgages switching costs and switching mortgage legal fees?
The good news is that switching your mortgage is much less stressful, easier and nowhere near as costly than buying a new home. That said there are still some solicitor and estate agent upfront mortgage switching costs.
Don’t panic though these costs are usually much less than the savings from switching and with some lenders switching mortgage legal fees and estate agent costs are fully covered with upfront payments.
There are no land registry or search fees involved with switching, but you will need a solicitor to do a bit of paperwork for you. Switching mortgage legal fees cover the solicitor costs to:
- Request your house deeds on behalf of the new bank from your current bank
- Review and advise you on the terms of the loan the new bank is offering you
- Witness and process the loan agreement for the new bank
These steps give everyone involved in the switch peace of mind, the bank knows your ownership of the property is kosher and you understand the deal being offered to you by the bank.
As well as switching mortgage legal fees, the other mortgage switching cost is a valuation fee. An estate agent selected by the bank will also value your home, this allows the lender to make sure you are on the right mortgage rate.
How much are mortgage switching costs, switching mortgage legal fees and how much is it to switch?
So how much are the mortgage switching costs all in?
Switching mortgage legal fees range from about €1,000 to €1,500 excluding VAT at 23%. Typically solicitors in Dublin will be at the higher end of the range.
moneysherpa have agreed an all in switching price of €1,200 including VAT for customers switching with one of their mortgage sherpas . As well as the VAT this all in fee includes
- Legal Fees
- Bank Fees
- Search/Land Fees
- Declaration Fees
The other mortgage switching cost is the valuation fee which is much less at around €150.
So if you shop around, your all in costs should come in well below the €2,000 mark inc VAT.
Which banks cover mortgage switching costs, switching mortgage legal fees and what options are there?
Many of the lenders don’t want these costs to put off potential switchers so pay an upfront cashback incentive. These incentives usually cover mortgage switching costs including mortgage legal fees with cash to spare.
Ulster, AIB and KBC offer €1,500, €2,000 and €3,000 to cover mortgage switching costs.
PTSB, EBS and BoI offer 2% and 3% of the mortgage loan as cashback. So on a typical loan size of €200,000 that’s €4,000 to €6,000 into your hand, covering your legal fee costs and then some.
These deals are really useful if you can’t afford to cover the mortgage switching costs, but would save by switching. They also are a great option if you are looking to switch multiple times, as under EU law lenders can’t stop you taking more than one cash back.
That said, if you can afford to pay the mortgage switching costs upfront and are looking to get on the best long term deal, you should us the APRC rate rather than the cash back deal to choose your mortgage provider.
In our latest mortgage market review the Avant Money 7 year fixed rate product came out on top, despite having no cash back at all. The 7 year fixed rate is €6,775 cheaper than the best cash back product available on a typical loan size of €200,000.
That’s why you are often better to ignore cash back if you can and cover the mortgage switching costs yourself if you can afford it.
Does it still make sense to switch after mortgage switching costs and switching mortgage legal fees?
If you bought your house after 2008 you are probably on rates of 4% plus.
The rates for switchers right now are at an all time low at around 2%.
This big difference in rate means that you would save over €25,000 by switching on a typical mortgage size of €200,000.
This means that even after you factored in the mortgage switching costs including the legal fees, you would save over €23,000 over the lifetime of the mortgage.
The really great news is that comparing rates and switching is easier than ever thanks to services like moneysherpa.
moneysherpa have agreed an all in switching price of €1,200 including VAT for customers switching with one of their mortgage sherpa. Our recommended solicitor panel cover the majority of the country and are experts in property conveyancing, so if you choose to work with one of our mortgage sherpa’s we will point you in the right direction.
You can calculate your savings and book an appointment online instantly here.
One of our mortgage sherpas will also handle all the paperwork and answer all of your questions for free.
You can read our founder’s latest piece for extra.ie on the big mortgage switch and how much you will save here. Or you can check out our handy switching mortgage guide here.