Homeowners Can Save €91,440 by Switching Mortgages for Renovations

As the housing market tightens, homeowners are increasingly choosing to renovate rather than relocate. With only about 13,000 homes listed for sale in Ireland at the end of September, according to MyHome.ie, families are investing in their current properties. However, many are unaware that switching mortgage providers could significantly reduce their interest rates and monthly repayments, potentially saving them a lifetime total of €91,440.

The trend toward renovation rather than moving is underscored by statistics from the Banking and Payments Federation Ireland (BPFI), which indicate that fewer than one in five mortgage approvals in the past year were for home purchases, totaling only 9,000. In contrast, the number of mortgage top-ups for renovations surged by 13.4 percent year-on-year. The average value of these top-ups now stands at €135,000, adding significant debt to existing mortgages.

Switching lenders can be a cost-effective strategy for homeowners needing additional funds for renovations. According to Martina Hennessy of doddl.ie, sticking with the current lender without exploring market options may lead to substantial long-term losses. Homeowners can refinance to unlock funds for renovations while simultaneously lowering their repayments. Hennessy explains, “People are realising they can refinance, free up funds for renovations and lower their repayments all at once.”

The rise in house prices has also worked to the advantage of existing homeowners. Rory Doyle, a mortgage underwriter with Nua Money, notes that many homeowners now sit on lower loan-to-value ratios than they did previously. This favorable position allows them to switch lenders and access better rates, or to release equity for renovations. A recent increase of 35 percent in remortgage and switcher mortgages during the third quarter indicates that more homeowners are actively seeking better deals.

Switching to a lower interest rate can yield significant savings. For instance, Hennessy outlines a scenario where a homeowner increases their mortgage to €300,000 by releasing €50,000 in equity for renovations. By switching to the lowest variable rate of 3.09 percent from a higher 4.5 percent rate offered by some major banks, the homeowner could save a total of €91,440 over a 30-year mortgage term.

The process of switching lenders is not as daunting as many believe. Sean Corbett, director of SYS Mortgages, clarifies that the application process for a top-up is similar whether retaining the same lender or switching to a new one. While existing lenders often require proof of affordability, switching lenders might involve additional legal fees, roughly estimated at €1,500. Nevertheless, the potential savings often outweigh these costs.

Homeowners considering renovations and switching lenders should prepare to provide comprehensive financial documentation. Corbett advises that borrowers may need to submit six months of statements for current and savings accounts, proof of income, and details of any existing loans. He highlights a current client who is refinancing and renovating their energy-rated C home, switching from a 4.4 percent rate to a new 3.2 percent rate while managing to keep monthly repayments only slightly higher.

Certain renovations may also qualify homeowners for lower “green” mortgage rates if an engineer certifies that the property will achieve a higher building energy rating following the works. This financial strategy can enable homeowners to upgrade their properties while maintaining manageable mortgage repayments.

When considering a mortgage top-up, homeowners should also evaluate the terms and conditions set by different banks. Some institutions may lend up to 90 percent of the property’s current value, while others may have specific policies regarding structural renovations that enhance property value. Additionally, the payment structure can vary, with some banks releasing funds in advance for smaller projects, while larger renovations may require payments to be disbursed upon completion.

While switching lenders can provide better rates, homeowners must also be aware of potential penalties for breaking existing fixed loans. If currently locked into a fixed-rate mortgage, some homeowners may find it more beneficial to negotiate a top-up with their existing lender rather than switching entirely. Corbett notes that in such cases, borrowers can maintain their fixed rate while obtaining a better rate for the renovation top-up.

For smaller home improvements, a personal loan may be more appropriate, especially given the recent increase in new home improvement loans, which totaled 17,740 in the second quarter of 2025, reflecting a 10.3 percent year-on-year increase. The average home improvement loan was €12,823 during this period.

As interest rates are expected to rise, homeowners should consider taking action now to capitalize on lower loan-to-value ratios resulting from increased property values. Complacency regarding mortgage switching could lead to higher costs for renovation top-ups in the future.

In summary, homeowners looking to renovate should evaluate their mortgage options carefully. The potential savings from switching lenders can be substantial, making it a wise financial decision for those seeking to improve their living spaces without incurring excessive debt.