Your mortgage rate may be set against a loan to value figure recorded years ago. If your property has risen in value since, you could already qualify for a cheaper band, but nobody will tell you.
Most Irish lenders price mortgages in loan to value bands. Your LTV is the size of your mortgage as a percentage of the property's value, and pricing typically improves as the band falls, 60% and 50%. The lower your LTV, the less risk the lender carries, and the better the rate on offer.
Here is the part that costs homeowners money: your rate is generally set against the LTV recorded when the loan was drawn down. It does not adjust itself as your circumstances improve.
The first is obvious. Every repayment reduces the balance outstanding.
The second is the one people forget. The property's value changes independently of anything you do. Someone who bought in 2018 and has been paying down a mortgage since may be in a materially different band from the one their rate reflects, and paying accordingly.
Illustrative example: a mortgage of €270,000 drawn down against a property valued at €300,000. That is a 90% LTV.
Some years on, the balance has fallen to €255,000 and the property is now worth €340,000. The LTV is 75%, two bands lower. If the lender's pricing rewards that with a lower rate, the saving over the remaining term of the mortgage is a significant sum, against a one-off valuation fee.
That gap does not close on its own. It closes when somebody evidences the change.
Three steps, and the first two are free.
One: find your current outstanding balance. It is on your most recent mortgage statement or in your online banking.
Two: call your lender and ask two questions, what LTV band your current rate is priced at, and what bands and rates are available on your product. Ask specifically whether they will re-band on the basis of an updated valuation, and whether the valuation must come from their panel.
Three: if the answers suggest a band change is realistically in reach, get an independent valuation. If they do not, you have spent one phone call finding out, which is a good outcome either way.
It is worth being clear about something. A valuation might come back showing you are exactly where you thought, with no band change available. That is a legitimate result, and any valuer who implies otherwise is not someone you want writing a report you intend to rely on.
A valuation is worth having because it tells you what is true. If the answer is favourable, it can be worth a great deal. If it is not, you have paid a modest fee to stop wondering, and you know where you stand for the next time you look at your mortgage.
If you are looking at your LTV, look at switching too. The two questions belong together: the band your valuation puts you in affects the rate a new lender will offer, and a switch is often where the improved band actually gets realised.
JWL provides LTV and switcher valuations across Dublin and Leinster in lender-required formats. Email hello@jwl.ie.
Tell us about the property and what the valuation is for, and we will come back to you with a fee before anything starts.
Or email hello@jwl.ie