A Guide for Irish Homeowners
Switching your mortgage can offer financial benefits. This guide outlines how you may be able to borrow additional funds when changing your lender in Ireland, the main methods for increasing your mortgage, and the relevant conditions you need to consider.
What Does Switching Your Mortgage Mean?
Switching your mortgage involves moving your home loan from one lender to another. It’s often done to:
- Secure a lower interest rate.
- Reduce monthly repayments.
- Access cashback or green mortgage incentives.
- Improve customer service.
Switching can also let you borrow more, a process known as a mortgage top-up or equity release.
Can You Borrow More When Switching?
Yes, many Irish lenders allow you to borrow more when switching your mortgage, if you meet their criteria. This is usually achieved by:
- Releasing equity in your home.
- Extending the mortgage term.
- Combining switching with a top-up loan.
Common Reasons for Borrowing More
Homeowners often borrow extra during a switch to:
- Fund home improvements.
- Pay for education or medical expenses.
- Consolidate debts.
- Invest in another property.
Key Conditions to Be Aware Of
1. Loan-to-Value (LTV) Ratio
- Most lenders allow borrowing up to 90% of your home’s current value.
- A professional valuation will be required to confirm your property's value.
- If you're using the First Home Scheme, you must retain at least 10% equity post top-up.
2. Loan-to-Income (LTI) Limits
- The Central Bank of Ireland caps new borrowing for switchers at 3.5x gross income.
3. Affordability Checks
- Lenders will assess your income, outgoings, credit history, and repayment capacity.
- You’ll need to provide specific documentation to evidence your income, savings, identity, etc. Your Broker can advise you on the specific requirements for the lender you are applying to.
4. Purpose of the Additional Borrowing
- You may need to declare how the extra funds will be used and, if applicable, provide evidence.
- Some lenders ask for quotes or invoices for renovations or large purchases. If your project needs planning permission, the bank will need to see it.
Benefits of Borrowing More During a Switch
- Lower interest rates compared to personal loans.
- Longer repayment terms reduce monthly costs.
- Cashback offers from lenders may help cover legal or valuation fees.
- Green mortgage discounts for energy-efficient upgrades.
Potential Drawbacks
- Higher repayments if you borrow significantly more
- Breakage fees if exiting a fixed rate early
- Legal and valuation costs (though often covered by lenders)
- A longer mortgage term may mean more interest paid over time.
How to Apply for a Top-Up While Switching
- Speak to your Mortgage Broker; they will be able to advise on the amount you could potentially apply for, likely repayments, and what documentation will be required.
- Calculate your equity by subtracting your mortgage balance from your property's value. Your broker can assist with this calculation. Also, consider whether planned renovations might affect your property's value.
- Submit a full mortgage application and supporting documents through your Broker.
- Provide documentation for the use of funds (if required) – This could be an invoice or full costings from a builder. Your broker can advise you on the specific requirements for your application.
- Appoint a solicitor to manage the legal aspects of the switch.
Tips for a Smooth Process
- Speak to your Broker early to determine the amount you may be able to borrow and understand the process for your specific circumstance.
- Start early — switching and top-up applications can take 6–8 weeks.
- Use a mortgage broker to compare lenders and rates.
- Check for cashback offers to offset costs.
- Review your mortgage protection insurance to ensure adequate cover.
Final Thoughts
Switching your mortgage can be a great opportunity to borrow more — whether for renovations, investments, or personal needs. Rising property values and competitive rates mean many homeowners are unlocking equity to improve their financial flexibility. Just be sure to understand the rules, assess affordability, and seek professional advice to make the most of your switch.
