How to turn rising house prices into a cheaper mortgage

Need an extra €100 a month? You could take advantage of loan-to-value shifts

Someone 10 years into a 30-year €300,000 mortgage would save €108 a month by changing from a mortgage with a 3.8 per cent interest rate  to one charging 3.1 per cent. Photograph: Getty

Someone 10 years into a 30-year €300,000 mortgage would save €108 a month by changing from a mortgage with a 3.8 per cent interest rate to one charging 3.1 per cent. Photograph: Getty

Have you thought about your LTV lately? No? Do you know what it is? Well, it might be time to find out, because if you purchased a property anytime after 2012-2013 and locked into a high standard variable or fixed mortgage rate, you should now be looking at a reduction on your monthly mortgage repayments, thanks to the sharp rise in house prices since then.

If you purchased with a 10 per cent downpayment at the time, you would have been offered an interest rate based on your LTV or loan to value – ie the cost of your mortgage was higher as the proportion of the loan to the value of your home increased. So you pay a higher interest rate on a loan that covered 90 per cent of the purchase price than one that covered, say, 80 per cent.

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