With so few larger family homes on the market, it’s no surprise that people are opting to renovate. But if you top up your mortgage when you borrow to renovate, you might be missing a trick. Switching banks instead can unlock a much lower interest rate. Do it right, and repayments on your revamped home could stay much the same.
Costly decision
With just 13,000 homes listed for sale nationally at the end of September, according to MyHome.ie, it’s no wonder growing families are spending to stay put. Numbers of mortgages being taken out by movers are close to their lowest level in a decade, says Martina Hennessy of doddl.ie. Less than one in five mortgage approvals in the past year, or just 9,000, were drawn down by people moving house, according to Banking and Payments Federation Ireland (BPFI) figures, she says.
On the flipside, the number of top-up drawdowns in the third quarter rose by 13.4 per cent year-on-year. Some top-ups are used for renovation. The average value of a top-up mortgage now stands at €135,000, says Hennessy. That’s a lot of extra debt to add to your mortgage.
When you’re addled with builders’ tenders and kitchen quotes and you need more from a bank, it can feel like switching banks will just add more hassle, but this could be a costly mistake. The repercussions of a poor borrowing decision will last far longer than the handles on your new kitchen cabinets.
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Householders who stick with their existing lender when borrowing to renovate, without reviewing market rates, can lose out on substantial long-term savings, says Hennessy.
“People are realising they can refinance, free up funds for renovations and lower their repayments all at once,” says Hennessy.
Switching isn’t that much faff as you might think, but the perceived hassle is costing people far more than they realise, says Hennessy.
[ What’s the best way to fund home renovations?Opens in new window ]
Rising house prices that make it difficult for some to buy provide a silver lining for existing homeowners, says Rory Doyle, mortgage underwriter with Nua Money.
“Many now sit on significantly lower loan-to-value ratios than they did just a few years ago,” says Doyle.
This means the ratio of how much they owe on their mortgage to how much their home is now worth has become more favourable.
“That puts them in a powerful position to switch and get a better rate, or to release some equity in their home,” says Doyle.
A 35 per cent increase in the volume of remortgage and switcher mortgages in the third quarter of this year, according to BPFI figures, shows Irish mortgage holders are becoming more proactive about better deals and are not afraid to move lenders for mortgage savings, he says.
How much can a home renovator save by switching? Hennessy gives the example of a borrower releasing €50,000 in equity to pay for renovations, increasing their mortgage to €300,000.
“They could save a lifetime total of €91,440 over a 30-year mortgage term by switching to the lowest variable rate of 3.09 per cent, instead of a 4.5 per cent rate from one of the pillar banks, once their loan-to-value is less than 80 per cent or less,” says Hennessy.
“That’s over €92,000 for the same mortgage – the only difference is the lender and the rate.”
The process
If you are borrowing to renovate by topping up your mortgage, the application process is almost the same whether you are sticking with your existing lender or switching to a new lender, says Sean Corbett, director of SYS Mortgages.
“Your existing lender will still need you to prove you can afford the top-up,” says Corbett.
“With your existing bank, you are avoiding solicitors’ costs, typically; topping up your mortgage wouldn’t require the level of legal work if you are switching from one lender to another,” he says.
Legal fees can amount to €1,500, but this will likely be outweighed by the savings from switching.
Because you are borrowing more money too, your new lender will need more documents than if you were just doing a straight switch, says Corbett. You will need to provide six months of current account statements, six months of savings account statements, details of any loans, payslips, and a letter from your employer, or proof of income from Revenue if you are self-employed.
Taking the time to consider better rates of other banks can make compelling savings, says Corbett. He cites a current switch-and-renovate client who, with a growing family, has decided to stay put and renovate, and do an energy upgrade to their C-rated home.
“They were on a rate of 4.4 per cent. I’m doing a ‘switch-and-renovate top-up’ with Bank of Ireland. They will get a new rate of 3.2 per cent, so it’s well worth their while switching,” says Corbett.
With a declaration from an engineer that your home will have a higher building energy rating (Ber) post-works, you can qualify for a lower “green” mortgage rate.
Despite borrowing and making the outstanding balance on their mortgage bigger, their monthly repayments have only increased slightly, he says.
“You’ve got the best of both worlds – you’ve got your renovation done and you are not paying much more than you were to start with,” says Corbett.
Increasing the mortgage term can make monthly repayments more affordable again, but this can make your mortgage more expensive in the long run, as you will pay more interest.
“If a client is doing a considerable amount of work on their property, they are normally increasing the term if they can to make it more affordable, but it depends on how near retirement they are,” says Corbett.
Those topping up to renovate are typically aged between 40 and 55, says Corbett of his client base. “Some [who are] doing substantial renovations try to push out the term.”
Policies for home improvement top-up loans vary by bank. Some will lend up to 90 per cent of the current value of the property; others will lend for structural works that will increase the value of the property after the works are complete.
If your loan is linked to the value of your home being increased by the renovation, the bank may stage the payment, sending a valuer to verify works before releasing the final amount.
Drawdown
Switching to a new lender can mean better rates, but check their process for releasing the borrowed funds versus your existing bank. For smaller projects, some banks will release the money in advance of the works being completed.
If you are doing non-structural works, such as insulating your home, changing the heating system, replacing the kitchen, bathrooms or windows, or adding solar panels, things can be straightforward. You can self-certify with quotations that you can get the work done for a certain amount, and the loan is usually given as a lump sum.
For bigger renovations, this is done on a drawdown schedule, says Corbett.
“Once an engineer signs off that your work has been completed, then the lender will typically release the money, but they will want a final valuation if there are substantial works because they will be lending based on the final value of the property rather than the current value, to make sure the loan-to-value stacks up,” says Corbett.
Not getting the money until works are complete can be a tricky situation, says Corbett.
If you have decent equity in your home, the lender may release some of it in advance to start the works, but typically, you need an understanding builder who will do stage one of the works, then an engineer signs off on it, and then the builder gets paid for the work done, says Corbett.
“I had [dealings with a particular] bank recently, and even though there was lots of equity in the property, trying to get €40,000 out of the bank for €200,000 worth of work being done – we had to jump through hurdles to get the client some money in advance to start the work.”
Typically you would get a valuation done up-front to indicate what value the renovation will add to your home, but you will need to get this value signed off again at the final stage before they will release the last tranche of money, says Corbett.
When to stick
Sometimes, topping up with an existing bank rather than switching can be the only option. If you are still in the middle of a five-year fixed loan for example, there will be a penalty for breaking that fixed rate. Ask your bank for an estimate of what the break clause would involve – sometimes the penalty will be too prohibitive to permit changing lenders.
If you are on a fixed rate and topping up with your existing lender, you can keep your existing mortgage on the fixed rate, choosing a better rate from your bank for the renovation top-up amount, says Corbett.
“If you are sticking with your existing lender, the top-up can be on the new rate, so you effectively have two mortgages on one property,” he says.
Some lenders offer a split rate mortgage, where some of the debt is on a variable rate and some is on a fixed rate. Though variable rates are higher, having part of the mortgage on a variable rate can provide flexibility to make big overpayments if this is something that is important to you.
Personal loan?
Not everyone borrows big for a renovation – topping up your mortgage isn’t the right course for everyone. There is typically a minimum mortgage top-up amount of €10,000 to €25,000. For smaller home improvements, a personal loan is an option. There were 17,740 new home improvement loans in Q2 2025, up by 10.3 per cent year-on-year, according to BPFI figures for the second quarter. The average home improvement loan was €12,823.
For a renovation involving retrofit works, the Government-backed Home Energy Upgrade Loan scheme offers competitive rates.
Rates on the up?
The mood music from the European Central Bank suggests interest rates could be on the up. Homeowners should act now, exploiting lower loan-to-value ratios delivered by rising house prices, to get better value on their borrowings before rates rise.
Being complacent now about switching your mortgage could mean your renovation top-up costs you more than necessary.
