Bank of Scotland's decision to enter the Irish mortgage market has prompted many to look again at their home loan costs.
The bank is offering variable rate mortgages at a rate of 3.99 per cent, or an APR of 4.1 per cent, nearly one percentage point below the lowest existing rate on the market - the 4.85 per cent (APR 4.9 per cent) offered by EBS Building Society.
Bank of Scotland's offering provides an even bigger discount on the standard variable rate of 5.25 per cent offered by a host of Irish lending institutions, including Irish Permanent, First Active and AIB. Bank of Ireland and ICS Building Society are just a fraction lower at 5.24 per cent, while Irish Life Homeloans and National Irish Bank have pitched their variable rate at even higher levels.
A borrower with a £50,000 mortgage over a 20-year period, currently paying 5.25 per cent, would save £34.50 a month, or £414, a year with the new lender. For those on larger mortgages, the savings are even more significant.
However, there are some costs involved in switching your mortgage from one institution to another. Borrowers have to pay a solicitor to handle the legal side of the business, typically at a cost of £400 to £500.
In addition, home owners may face valuation costs and other fees, such as the land registration fee of £250 to register the new loan and stamp duty on the mortgage, which is calculated at one tenth of a percentage point.
For those on variable rates, the cost of switching should generally average between £800 and £1,000, mortgage advisers say.
But they urge borrowers to do their sums carefully before taking the plunge. For instance, someone with a £50,000 mortgage at 5.25 per cent would need at least two years for the savings involved in switching to Bank of Scotland to out-weigh the costs. And, as many of those involved in the mortgage market are quick to point out, there is no guarantee that Bank of Scotland will maintain the same differential with other lenders over the two years.
They point to previous examples of institutions coming into the market with rock-bottom rates, only to end up at the top of the pile a few years down the line.
Alternatively, if the local lenders start to lose significant amounts of business, they are likely to respond with lower rates, narrowing the gap with the new Scottish entrant.
However, for borrowers with large mortgages or for those determined to stay on a variable rate - such as those who want to maintain the freedom to pay down their mortgages - it may make sense to consider the options.
ASIDE from the costs outlined above, most lending institutions do not impose extra penalties for people who wish to switch. Unlike Britain, where a tie-in clause which forces borrowers to remain with the institution for a number of years is common, mortgage holders in Ireland face no redemption penalty.
Bank of Ireland, EBS and Irish Permanent, for example, say there is no penalty for variable rate customers who choose to leave. Irish Nationwide says it does not levy charges either, unless that is, the property is a commercial one or used for commercial purposes.
No doubt, most institutions will attempt to persuade you not to move but, aside from the cost, the biggest obstacle in the path of the determined customer is the hassle of organising the switch.
However, as usual, those on fixed rates have less flexibility than variable rate borrowers. If you are on a fixed-rate contract, you will have to break it to change lenders and will thus be faced with the usual financial penalties that involves.