Reasons why you may not be able to switch your mortgage
Review the below list to see if there are any reasons why you might not be able to switch to another lender at the moment.
But also ask yourself if any of the following reasons might apply to you in a few years' time. If you switch now to a lender with a generous cashback offer or a low introductory rate, you might find yourself "stuck" with that lender's high rates in the future because you are unable to switch again. See this post for information about the various lenders.
Some of the above reasons may not be a major problem for certain lenders. It is often worth talking to them or to a broker to see if you can still switch.
If you are definitely not able to switch to a different lender, you may be able to switch to a better rate (or fix for a longer period) with your current lender – and this is very simple and quick to do. Bear in mind that you can do this even if you are in the middle of a fixed rate. Feel free to ask for guidance in the switcher thread (supplying your mortgage information in the format shown in the first post). In the case of some lenders, you may even be able to get a better rate than they advertise by threatening to switch.
Note that being on maternity leave does not seem to be a problem for switching.
Review the below list to see if there are any reasons why you might not be able to switch to another lender at the moment.
But also ask yourself if any of the following reasons might apply to you in a few years' time. If you switch now to a lender with a generous cashback offer or a low introductory rate, you might find yourself "stuck" with that lender's high rates in the future because you are unable to switch again. See this post for information about the various lenders.
- You (or your partner, in the case of a joint mortgage) are on probation in a new job
- But you should still start the switch as soon as possible, since the process usually takes between two and four months
- You will be able to get approval in principle (AIP) with some lenders even if you are on probation, but you won't be able to complete the switch until your probation is over
- That being said, some lenders will let you complete the switch while you are still on probation. This seems to be the case when your loan-to-value and loan-to-income ratios are low, or when your new employment is considered very secure.
- Your (or your partner's) employment circumstances have changed significantly since you got your mortgage
- E.g., a large reduction in salary, or one of the couple is looking after the kids and no longer working
- Most lenders are unlikely to let you switch to them if your mortgage balance is greater than 3.5 times your combined annual income. E.g., if the balance left on your mortgage is €245k, your combined annual income usually needs to be at least €70k. (It is not the Central Bank that applies this rule – it is the lenders themselves.)
- If you are self-employed, consider Bank of Ireland or Finance Ireland
- You do not meet the new lender's affordability tests
- This can occasionally happen even if your income has not reduced since you took out your current mortgage
- For example, if you barely met the affordability tests when you took out your current mortgage, you might not meet the new lender's tests
- Affordability tests are typically based around the monthly mortgage payment as a proportion of your monthly income, and sometimes how much money you would have left at the end of the month after all outgoings
- Insufficient time with your current lender
- Usually you need to have been with your current lender for at least 12 months before a new lender will take you
- But different lenders have different rules (further info here)
- Your mortgage is in arrears
- You have a bad credit record
- General information on credit records
- Check your credit record
- Bank of Ireland or Finance Ireland may still lend to you
- You have a mortgage with a "warehoused" portion on which you are not paying any interest
- However, if 5 years have passed since you were last in arrears, you may still be able to switch even if part of your mortgage is warehoused
- There are serious defects in your property (mica, etc.) that have emerged since you first took out your mortgage
- Some types of defects are not a problem for switching
- There are problems with the title of your property
- For example, you/a previous owner built an extension that required planning permission but you/they did not get planning permission
- If you are lucky, you will simply need to get a certificate of compliance or a declaration of exemption
- Note that just because your current lender overlooked a problem like this with the title, that does not mean that another lender will
- It is also possible that your previous solicitor missed an issue like this with the title but it gets discovered by your new solicitor during the switching process
- For example, you/a previous owner built an extension that required planning permission but you/they did not get planning permission
- Your mortgage balance is too low
- Most lenders will only let you switch to them if your mortgage is at least €30k to €40k
- Avant will only let you switch to them if your mortgage is at least €100k
- ICS will only let you switch to them if your mortgage is at least €150k
- Note: if a particular broker tells you that your mortgage balance must be, e.g., at least €200k in order to switch, look for another broker. (The broker is imposing more conditions than the lender.)
- You and your partner have a joint mortgage and have split up and your partner won't agree to a mortgage switch
- Your loan-to-value ratio (LTV) is over 90%
- As an example, if your current mortgage balance is €276k and your property is worth €300k, your LTV is 276/300 = 92%
- Some lenders (Avant Money, Finance Ireland and ICS) are stricter than this and will not let you switch to them if your LTV is over 80%
- If you are in negative equity, your LTV is over 100% (your property is worth less than your mortgage) and you won't be able to switch
- The break fee is very high
- The break fee is also called the breakage fee, early repayment charge, ERC, break funding fee, break funding cost, break charge, early breakage charge, breakage cost, early redemption charge, etc.
- You may have to pay this charge if you are breaking out of your current fixed-rate mortgage before the fixed-rate period expires, but the charge is often very low or zero (especially for people who took out a fixed rate before spring 2022)
- Even if the charge seems high, the savings from switching can often be much larger
- You can use the switcher thread to request a calculation of the early breakage charge and the savings you would make (both estimated)
- You do not have enough savings to cover the upfront costs of switching (approximately €1,500)
- Even though switching usually saves you money over the medium and long term, you need to pay some fees upfront
- You should be able to find a solicitor who charges €1,300 or less, including VAT and outlays (see below)
- The valuation fee is €150 or €185. Note that some brokers will pay this fee for you if you are switching to Avant.
- You can ask for an estimate of your break fee in the switcher thread. It is often lower than people imagine (especially for those who took out a fixed rate before spring 2022).
- There are only a few years left on your mortgage
- Most lenders will probably only let you switch to them if there are at least 5 years remaining on your mortgage
- And even if a lender will let you switch to them, you might be better off re-fixing with your current lender (which is much simpler and quicker to do)
- Your property is older than 100 years
- This is not a problem on its own but you will need a structural survey
- If that survey shows certain types of problems, some lenders won't let you switch to them (see this case)
- You have moved out of the property and are now renting it out
- This means you would only be able to switch to a buy-to-let mortgage, which will have a higher interest rate
Some of the above reasons may not be a major problem for certain lenders. It is often worth talking to them or to a broker to see if you can still switch.
If you are definitely not able to switch to a different lender, you may be able to switch to a better rate (or fix for a longer period) with your current lender – and this is very simple and quick to do. Bear in mind that you can do this even if you are in the middle of a fixed rate. Feel free to ask for guidance in the switcher thread (supplying your mortgage information in the format shown in the first post). In the case of some lenders, you may even be able to get a better rate than they advertise by threatening to switch.
Note that being on maternity leave does not seem to be a problem for switching.
- _OkGo_'s comment: "the lender will just look for an additional letter from your employer confirming your return date and that there is no change to your position or salary"
- Itchy's comment: "Just been through the process. There was no extra requirements other than they requested a letter from the employer to state that they would be returning to their position."
- Note that Avant Money have told some people that they cannot draw down (complete the switch) until they have been back to work for one month and have received their monthly pay
- But they have allowed other people to draw down while still on maternity leave
- Get your broker to find out Avant's attitude to your particular case
- Fixed rates can be lower than variable rates, so the savings on a fixed rate will offset some or all of the break fee you may have to pay when you move
- You can fix for a relatively short period, e.g., 2, 3 or 4 years, which will help limit the size of any potential break fee
- E.g., if you expect to move in about three years' time, fix for 3 or 4 years
- Break fees are often a lot lower than people imagine
- Avant Money will waive or refund any break fee if you move home, provided you take out a new mortgage with them (subject to certain conditions)
- Therefore, you should still consider switching (or re-fixing with your current lender) even if you expect to move house in the next few years, but either avoid a long fixed rate or pick a mortgage that allows you to avoid a break fee when you move
- Re-fixing with your current lender is much simpler and quicker than switching to another lender, and avoids solicitors' fees
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