Reduce mortgage while switching

This is probably quite a basic question so apologies in advance. We're coming to the end of a BOI fixed term and looking at our options. We could also pay a lump off the mortgage and reduce the LTV. Is it possible for the mortgage we switch to to be for a smaller amount than the current mortgage and how does it work in practice, do you wait to be automatically moved to variable, pay a lump and then switch?

Thanks

Lowerswitch said:

This is probably quite a basic question so apologies in advance. We're coming to the end of a BOI fixed term and looking at our options. We could also pay a lump off the mortgage and reduce the LTV. Is it possible for the mortgage we switch to to be for a smaller amount than the current mortgage and how does it work in practice, do you wait to be automatically moved to variable, pay a lump and then switch?

Thanks

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Your current mortgage with BOI will be paid off when you switch.

For example if there's €100k left on the mortgage then at switching time you could get a €70k mortgage from the new bank and use €30k of your money to pay off the rest of the BOI mortgage.

And there's probably no reason to wait. The break fee if any will probably be minimal. Ask BOI to confirm.

Caveat: Of course if you're getting a bonus from BOI at the end of the fixed period then it might be better to wait and get the bonus.

Are you talking about switching to a new lender or to a different product within Bank of Ireland?

Switching to a new product within BoI
As PGF says, make sure to avail of any cash back at the end of the term.
Otherwise, check about reducing the balance now and see if there is a break fee. You don't need to wait until the end of the term.
BoI's products don't reward people much for lower Loan to Values, but check this out.

Switching to a new lender
You should not be switching to a cash back lender, but if you are, then borrowing the maximum is the right strategy. Take out a variable rate initially, pay down the mortgage as soon as soon as you get the cash back and then fix to get the best rate.
The best value lenders - e.g. Avant offer much lower rates for lower Loan to Values, so get the house valued and try to get the LTV below 60%.
Some lenders have lower rates for larger mortgages. But they are not usually competitive overall.