Dowling Financial examined how much could be saved by a homeowner who took out a 30-year variable mortgage last year and who now has €500,000 left to repay over the next 29 years.
Bank of Ireland is the most expensive lender for a homeowner getting a variable mortgage to borrow more than 80pc of the value of their home. Bank of Ireland charges 4.5pc interest on such a loan.
Had you taken out a 30-year mortgage with Bank of Ireland last year and still have €500,000 left to repay on that loan over the next 29 years, the interest over the next 29 years will add up to €396,090 — assuming you’re borrowing more than 80pc of the value of your home, according to Dowling Financial. This is almost €133,000 more interest than you would pay if you switched your remaining 29-year mortgage of €500,000 to AIB on November 1 — the date that AIB will cut the interest rates on its variable mortgages.
From November 1, AIB will charge 3.15pc interest on a variable mortgage where more than 80pc of the value of the home is being borrowed. Under that rate, the interest on a €500,000 variable mortgage over the next 29 years would add up to €263,282. That’s much lower than the interest you would pay with Bank of Ireland — or with Permanent TSB, which charges 4.2pc interest on such a loan, making it the second most expensive lender in this case.
The interest on a €500,000 variable mortgage (where more than 80pc of the value of the home is borrowed) would add up to €365,611 with Permanent TSB over the next 29 years — so in this case, a homeowner would save €102,329 by switching from Permanent TSB to AIB.