# Discussion: Should customers be let out of fixed rate mortgages?



## Paulk (8 Apr 2009)

Given the growing decrease in mortgage interest rates and the frustration from people who committed to fixed rate mortgages for a number of years, do you think that the Government will force the banks to enable such people to  extricate themselves from the fixed contract without any significant financial penalty?

Or is this wishful thinking?


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## callybags (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

The latter, methinks.


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## sanne (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I would not agree that the banks can just get away scot free.  They got their bail out and we should get ours! I have been on to my bank and its clear they are not going to do anything without serious political pressure being applied.  

The circumstances that were in place when many fixed rate deals were struck has changed beyond what anyone ever expected.  So it seems only fair that the banks should revisit their policy given the huge changes that have happened.  It will be for their own good if they work with people now to find middle ground on coming up with a fair market rate for these fixed deals.  

I suspect that my bank has already refinanced my mortgage based on a much much lower rate than the fixed amount that was originally agreed to while I am paying while I still pay through the nose for a fixed rate mortgage.  

Its up to all of us to pile the pressure on - sent a letter to the CEO of you bank and talk to your local TD.  The banks are low on political capital at the moment and are relying on the government ie taxpayer to keep them afloat.  

They CANNOT get away with this.


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## Kate10 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I don't agree with the notion that banks should be forced to release everyone who wants out from a fixed rate.  By doing so you restrict the bank's ability to make a profit.  Ultimately the person who pays for that will be the tax-payer.

In my view, unless you were mis-sold a product, or you are in very serious financial trouble such that you cannot make your mortgage payment, you should not be released from a fixed rate mortgage without paying your penalty.


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## Teknon (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

Would you be calling for this if rates had have gone the other way, up up up ????  You would be secure with your rate of 4% while banks would be paying 10% or whatever........... I think not ! You signed up to the fixed rate and knew the risks (or at least you should have). Deal with it and move on !


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## Paulk (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Teknon said:


> Would you be calling for this if rates had have gone the other way, up up up ????  You would be secure with your rate of 4% while banks would be paying 10% or whatever........... I think not ! You signed up to the fixed rate and knew the risks (or at least you should have). Deal with it and move on !



No of course I wouldn't if the rates went higher than my current 5.4% fixed interest rate, however, as Sanne said we are bailing out the banks for years of mismanagement and corruption. 

The deductions in interest rates from the ECB have been unprecedented. Since we are currently bailing out the banks, it is only fair that it is reciprocated.

If we weren't bailing out the banks, I wouldn't feel so strongly that the Government should assist people who wish to extricate themselves from fixed rates.  

At the end of the day, fair is fair. Fianna Fail and the banks have brought shame on this country.


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## Kate10 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I think the phrase "bailing out the banks" is misleading to some extent.  I think the guarantee scheme, which hasn't been called on yet, was a bail out yes, or will be a bail out if it is called upon before the time limit runs out.  Under the recapitalisation scheme, the govt will expect a return on the money put into the banks which ultimately goes back to the tax payer.  It's not like the banks were just given a big lump of money and told to go off and do what they like with it.

I do think the banks need to be sent a strong message on how to deal with people who are in genuine and severe financial difficulty, and I think, given the context, those people should be dealt with generously.


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## Paulk (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

*Kate10: *"the govt will expect a return on the money put into the banks which ultimately goes back to the tax payer."

What direct impact will this have on tax payers?


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## Nalah (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

you can't expect people to simply change their fixed mortgages to variable, however I think it's daft that they will not allow people to pay lump sums off a fixed loan at 5.4% and and the same time pay huge coupons on the recent bonds they have issued (or received from the Gov)


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## Kate10 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

As far as I know, the banks are obliged to pay a fixed rate of return to the govt for money invested in the banks through the re-capitalistation scheme.  In other words, unless the banks fail, the govt will make a profit on the deal.  That profit goes directly into govt coffers to be spent like any other govt income, therefore benefiting the tax-payer.


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## Paulk (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

*Kate10:* "That profit goes directly into govt coffers to be spent like any other govt income, therefore benefiting the tax-payer"

Yes, I really have faith that this government will distribute any such profit equally and fairly 

The Government has demonstrated flexibility by changing its rules re the banks (ie bailout), so the banks could easily assist people who are trapped in high fixed rate mortgages.


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## mf1 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

"so the banks could easily assist people who are trapped in high fixed rate mortgages."

Why? Unless I am missing something, you took a gamble, it did not work in your favour...................I don't understand it - you're aggrieved because things did not work in your favour.........and because the banks got a bailout as otherwise they'd go under and our economy would collapse, you want a bailout too?

Does not compute.  

mf


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## so-crates (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

Firstly, I doubt there is a get-out-of-jail card in the offing on this, no matter how many letters of righteous (or otherwise) indignation are written to politicians and banks. Fundamentally you sat down and (probably with the short view in mind that you wanted to be guaranteed repayment amount for a period of time) agreed to a term of repayments at a fixed rate. The bank will of course have tried to maximise their risk coverage by charging you a premium rate for the privilege of knowing your repayments. That they proved lucky and you unlucky has nothing whatsoever to do with the "bailout" of the banks. You chose the risk you wished to endure (of course those who didn't opt were left with the uncertainty of what they will be repaying in the future), it is now not so palatable as it was then but in essence it is the same risk you were happy to sign up to. Cry as you might - the circumstances are changed, they are unprecedented ... no they aren't, they are difficult but they aren't unprecedented. Rates have dropped previously (and by large differentials to!). Leads to the rule of thumb - don't fix for long periods. Interest rates change at a higher frequency than the terms of fixed payment periods.

Secondly, there is an implication both in what you said and sanne said that the rates the banks are paying are ECB - this is not necessarily true so it is a fallacy to assume they are paying so much less than they were.

I would concur with Nalah - it is not so unreasonable to make it possible to pay off a percentage of the capital as a lump sum.


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## Berbatov (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

If  interest rates had gone the other way you'd be sitting pretty on your 5 % and wouldnt be budging off your fixed interest rate. I had a fixed interest rate that came to an end last year and i was left with a choice , do i fix again? or do i take a chance and not fix?. Took the latter choice and the rest is history . Its all about taking a gamble and hoping you pick correctly. Why should the banks give up on their profit?. Swings and roundabouts


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## Kate10 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

The other thing to mention is that, in most cases, penalties go up as rates come down.  We fixed last year (at 5.35%) and broke out again four months later, paying the small penalty due at the time (about €800) because we thought that rates would continue to drop - it seemed to be the consensus at the time.  If we had waited our penalty today would be around €25,000 so we would be stuck.

What I'm trying to say is that a lot of people waited too long.  There were opportunities to break out when rate cuts started and were predicted to continue.  I don't know why people waited.  Maybe they didn't believe that rates would continue to fall.  Maybe it was due to inertia.  Or maybe they didn't understand how penalties are calculated.  However, the choice was there, and many people chose to stay with their fixed rates.


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## Kine (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

People didn't leave/move as many don't pay attention to what the ECB announces. Most people only become aware of anything liek this when the "media" start reporting on it.

I for one am in a fixed rate (18 months through it now) and while I'm "losing" out now, I was gaining at the time. Anyway, I had no choice when getting the mortgage, the lender would only give me a fixed. When rates were above what I'm on, I was "winning". Remember, rates can go up as well as down.

I stayed on mine as at the end of the tunnel, there's a light....which is the tracker I come off on to


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## newirishman (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I am on 5.85% 5yr fixed last year in August. My bet was that interest rates will raise over the next years (and I was not alone in betting on this) but bad luck so far 
However, I would have fixed that 10 or even 15 years if the bank would have done that. 
I was offered 4.65% in April last year so I wasn't too impressed by the bank when the best they could offer in August was 5.85%.
But: It was my decision. I do not cry for mammy (or the government in this case) because life is unfair. 
And when interest rates go through the roof end of next year I will be laughing...


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## mf1 (8 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

It is always worthwhile to imagine yourself standing in front of a high court judge. Running your emotionally charged argument. And being told that you are quite wrong.  

Listen to what you are being told. You are on a hiding to nothing. 

mf


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## Senna (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

Moody, the crowd who rate banks and countries, have cut the rating of nearly all banks in Ireland (12 in total), this will mean (its the start) it will cost these banks more to borrow.  Banks dont get money from the ECB, so the ECB rate isn't all that relevant.  After todays news i would say there is even less chance of getting them to break fixed rates.  

I have sympathy for anyone on a high fixed rate, as its just not a nice situation for the average Joe/Jane to be in.  But unless you start to default on you mortgage, nothing will be done by the gov or banks, why would they?  The banks are in dire straights and if they're making more money off you, they're not going to bend over backwards for someone who is making the payments.  The gov is having to pump more money into the banks, so their not likely to ask the banks to stop taking this money.  I'm sorry but that just the way it is, you gambled and lost, its as simple as that.

Also, has anyone enquired about dropping to a lower fixed rate. i.e. you have 5 years left on a 5% fixed mortgage, but their current 5 year rate is 4%.  Its not as good as the standard variable but the breakage fee will be less and the new rate will probably be a better gamble as rate will rise in 2/3 years.  Something to consider.


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## LDFerguson (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I usually hold the opinion that if you enter into a contract with your eyes open, you must deal with the consequences if it doesn't go your way.  

But on this issue, I feel there is some merit in a proposal for a once-off amnesty where owner-occupier mortgage-holders get a brief "window" of time to break out of a fixed rate entered into prior to October 2008 without penalty.  

In Brian Lenihan's Budget speech, he said "The Government has decided that from the 1st of May, Mortgage Interest Relief for principal private residences should only be available for the first seven tax years of the mortgage. I believe this move is justified given the significant recent reduction in interest rates and in house prices."

He is using the rate decreases as a justification for a reduction in TRS, but those on a fixed rate don't benefit from such decreases.  

The ECB rate cuts were designed to stimulate the economy, but this aim will be diluted by all those on fixed rates.

As has been said before, these are unprecedented times - perhaps there is scope for one more unprecedented action?


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## Bronte (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> I usually hold the opinion that if you enter into a contract with your eyes open, you must deal with the consequences if it doesn't go your way.
> 
> But on this issue, I feel there is some merit in a proposal for a once-off amnesty where owner-occupier mortgage-holders get a brief "window" of time to break out of a fixed rate entered into prior to October 2008 without penalty.


  I agree wholeheartedly with this option as a 'once-off' option.  And like you I think people who signed on the dotted line of a fixed rate ought to have known what they were getting into.  BUT the banks, the bankers, the regulators and the developers are all getting off scott free and the tax payers are paying and will continue to pay for their mess so a once off option, to give something back to ordinary householders would be the right thing to do.


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## Kine (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> In Brian Lenihan's Budget speech, he said "The Government has decided that from the 1st of May, Mortgage Interest Relief for principal private residences should only be available for the first seven tax years of the mortgage. I believe this move is justified given the significant recent reduction in interest rates and in house prices."
> 
> He is using the rate decreases as a justification for a reduction in TRS, but those on a fixed rate don't benefit from such decreases.


 
Very valid point, I listened to the budget the other day and thought the exact same thing. As I mentioned earlier, I'm on a fixed, but in a few months time (assuming interest rates have remained the same....they can always go up ) my mortgage will drop by c.€600 when I come off! I'd be able to stimualte the economy with that much extra cash!!


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## NorfBank (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

How would fixed rate holders feel if the lenders postponed the fixed rate penalty?

You would be put on the variable rate now but agree to pay the penalty either at the end of the term or when you sell your property?

Maybe as a condition you would have to put €x  per month into a savings account with the lender until there was enough to pay the penalty?

The penalty could be index linked to keep the banks happy.

The details would need to be ironed out but it would give some breathing space to hard up borrowers at the present time.

Opinions please..


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## LDFerguson (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



NorfBank said:


> How would fixed rate holders feel if the lenders postponed the fixed rate penalty?


 
It's an interesting idea, but in many cases, doesn't the penalty equate roughly to the savings made?


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## kopkidda (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I think LDFerguson has made an excellent point above,is there anyway that we can air theses points to the parties concerned?


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## NorfBank (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

There still will be a penalty to be paid, I'm don't think the banks will agree to a total  amnesty.
It just postpones having to pay it until the economy (hopefully) turns.

Say the penalty is €15k, 30 year mortgage. That equates to about €40 per month that the customer would have to put in the savings account until the end of the mortgage.


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## kopkidda (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



NorfBank said:


> There still will be a penalty to be paid, I'm don't think the banks will agree to a total  amnesty.
> It just postpones having to pay it until the economy (hopefully) turns.
> 
> Say the penalty is €15k, 30 year mortgage. That equates to about €40 per month that the customer would have to put in the savings account until the end of the mortgage.



Interesting point,the banks are getting let off left right and centre,surely its time for the irish government to give us tax payers a little bit back.I know loads of people on fixed rates and i can tell you that it would stimulate the economy if their was some sort of an amnesty.

But the question is,how long is the variable rate going to stay as low as it is?


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## DerKaiser (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> I usually hold the opinion that if you enter into a contract with your eyes open, you must deal with the consequences if it doesn't go your way.
> 
> But on this issue, I feel there is some merit in a proposal for a once-off amnesty where owner-occupier mortgage-holders get a brief "window" of time to break out of a fixed rate entered into prior to October 2008 without penalty.
> 
> ...


 
It is very likely that we will end up owning the banks.  If we allow everyone on a fixed rate to break out of it, it is effectively a transfer of wealth from those on fixed rate mortgages to those that are not.

The majority of people on fixed rates can afford to pay and should be held to contract.  The focus should be on finding a solution _only_ for those who are in genuine difficulty and this measure would not achieve this


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## Berbatov (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

all fixed interest rate holders misery will be compounded even more at the start of next month with JCT more than likely cutting rates by a further 0.25% bringing the ECB to 1%.


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## Kate10 (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

Why do people keep saying things like "the banks are getting away with it" etc etc?  Clearly they did not get away with anything.  They are barely surviving.  What is a bank anyway?  Ultimately its the banks shareholders who pay the price for a failing bank, and if the banks fail totally, then each and every one of us with suffer.  Developers don't appear to be getting away with anything.  Most have lost virtually everything.  NAMA is going to buy their debts, seize and sell the security for whatever it can get for it, and developers will still owe the balance.


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## LDFerguson (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Kate10 said:


> NAMA is going to buy their debts, seize and sell the security for whatever it can get for it, and developers will still owe the balance.


 
Yes but it appears that NAMA will be buying the debts for less than actual value.  So the banks will have to write down the value of these debts to some degree.  

Just a hunch, but I would expect that the cost to the banks of allowing fixed rate mortgage holders a limited period to break out would be less than the write-down on developer loans.  Bear in mind that many people would turn down the option for a variety of reasons.  

DerKaiser - policing such a scheme so that only those in difficulty would qualify would be very labour intensive.  Opening it to all would get around that - those in difficulty would jump at it.  Many of those who aren't might well stick with their fixed rate.  Bear in mind that ECB rates will almost certainly go back up - the only question is when.  So many will hang on to their fixed rates for safety.


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## Bronte (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Kate10 said:


> Developers don't appear to be getting away with anything. Most have lost virtually everything.


  I didn't see any of them living in council housing built by themselves nor down the dole office.  Most of them will have ringfenced their PPR etc so they can't really be touched.  Ditto for the bankers as they swan off to their yachts in Marbella and their gross pensions.


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## DerKaiser (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> DerKaiser - policing such a scheme so that only those in difficulty would qualify would be very labour intensive. Opening it to all would get around that - those in difficulty would jump at it. Many of those who aren't might well stick with their fixed rate. Bear in mind that ECB rates will almost certainly go back up - the only question is when. So many will hang on to their fixed rates for safety.


 
No one will hang on to their existing fixed rate as they could switch to the current fixed rate.

I don't know the figures, but say there's 100,000 people on fixed rate mortgages with an average break out fee of €10,000.  That's a €1bn pardon!

I don't think as a society we can in all conscience allow this to happen.

The banks already deal with people in arrears on their mortgages and try reschedule payments.  Let them continue to do this, why hand out a free €10,000 gift to everyone on a fixed rate regardless of their personal circumstances?


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## kopkidda (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



DerKaiser said:


> No one will hang on to their existing fixed rate as they could switch to the current fixed rate.
> 
> I don't know the figures, but say there's 100,000 people on fixed rate mortgages with an average break out fee of €10,000.  That's a €1bn pardon!
> 
> ...



Would this 1bn pardon as you put it not help to get some liquidity back intot he economy,i think it would!


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## Paulk (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

"In Brian Lenihan's Budget speech, he said "The Government has decided that from the 1st of May, Mortgage Interest Relief for principal private residences should only be available for the first seven tax years of the mortgage. I believe this move is justified given the significant recent reduction in interest rates and in house prices."

He is using the rate decreases as a justification for a reduction in TRS, but those on a fixed rate don't benefit from such decreases."

That's an excellent point *LDFerguson*. The Government is so hypocritical by only applying rate cuts to the equation when it suits them. 

Anyway, after the elections in June, it will be clear that Fianna Fail won't be in power for much longer. The fact that people on low salaries are now paying for years of mismanagement and deception by bankers and politicians is abysmal. We are basically bailing out criminals.


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## DerKaiser (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



kopkidda said:


> Would this 1bn pardon as you put it not help to get some liquidity back intot he economy,i think it would!


 
It would aright.

You could even look at it in terms of giving back a large chunk of the 2% extra health levy imposed in 2 million workers in the budget to the 100,000 fixed rate mortgage holders who are surely more deserving of the money.....


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## kopkidda (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



DerKaiser said:


> It would aright.
> 
> You could even look at it in terms of giving back a large chunk of the 2% extra health levy imposed in 2 million workers in the budget to the 100,000 fixed rate mortgage holders who are surely more deserving of the money.....



Now your making sense.


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## LDFerguson (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



DerKaiser said:


> No one will hang on to their existing fixed rate as they could switch to the current fixed rate.
> 
> I don't know the figures, but say there's 100,000 people on fixed rate mortgages with an average break out fee of €10,000. That's a €1bn pardon!
> 
> ...


 
Okay - let's modify the plan - rules in the Amnesty that preclude you from availing of a fixed rate from the same bank for a specified period of time.  

Your other arguments seem to be based on the presumption that the banks will all be nationalised.  How would you feel about this suggestion if this does not transpire, or if it is implemented prior to any such nationalisation?


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## MentalNote (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

They should force the banks to let everyone on a fixed rate mover to variable. Then they should force the banks to force everyone on a tracker rate on to standard variable too!

Sense: this post makes none!


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## GreenQueen (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



so-crates said:


> Good luck in getting out of your fixed rate - I do not wish them on anyone and for myself would have only opted for such an arrangement if I was worried about not being able to absorb significant rate increases (I stress- tested rate change of over 500 basis points as I felt that the rate at the time was extremely low). I have no particular interest in whatever you wish to crow about when you do but if you have sensible suggestions and approaches it may help others who also wish to tackle the cross and bring their costs into line with current variable and tracker rates, I am sure that would be both constructive and welcome.



I was one of those who did fix after stress testing an increase in mortgage rates against our income.  I calculated that an increase in mortgage rates would put us under too much pressure financially so fixed nearly 2 years ago for 5 years.

We're now in a position where we are locked into a fixed rate mortgage and we still have an increased amount to pay thanks to the introduction of a time limit on TRS on the interest portion of our mortgage.  The limiting of the TRS wasn't something that I could forsee 2 years ago and we now fail any sort of stress test because we only have 1 income as opposed to 2.

There is a case to be made for an amnesty for fixed rate primary household owners to be allowed to break from their fixed rate mortgages in the light of the reduction in TRS.  Given the increased amount of unemployed the state will be put under further pressure to assist benefit claimants by way of Supplementary Welfare Allowance for mortgage payments.  If fixed rate holders were allowed to break then the amount of SWA payable by the state would be reduced, thus decreasing financial pressure on the state.

Another factor which has been missed is that the Medical Card is means tested.  Part of the means testing process takes into account your monthly mortgage repayments.  If (in general) mortgage repayments are reduced then the amount of families eligible for the Medical Card is reduced, also decreasing the burden on the state.


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## DerKaiser (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> Okay - let's modify the plan - rules in the Amnesty that preclude you from availing of a fixed rate from the same bank for a specified period of time.
> 
> Your other arguments seem to be based on the presumption that the banks will all be nationalised. How would you feel about this suggestion if this does not transpire, or if it is implemented prior to any such nationalisation?


 
Encouraging people onto variable rates is one thing but excluding them from fixing their rate could actually turn out to be the greatest scandal of all time if interest rates began to rise again.

My appeal to people's better instincts is based on the fact that banks will be most likely nationalised and the taxpayer will ultimately bear the brunt.

Lettng people breach their contractual obligations is not in the interests of the banks owners be they the state or private sharholders.

People, however, seem to have lost all perspective of what is fair. Just because a few corrupt developers have gamed the system does not mean that all bets are off as regards what is fair in society and what is not.

Resources are limited and need to be directed where they are most needed.


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## tracy3135 (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

You are speaking a lot of sense.  I am fuming that there are such people out there who seem to be revelling in other people's misery.  Those of us stuck in a fixed rate mortgage are feeling the pinch a lot more than those of you that are not.  My husband and I are civil servants who have had our wages cut by €500 per month EACH and on top of that we are in a fixed rate.  Yes we could afford the mortgage when we were earning €1000 per month extra but now we are in a position where we will probably lose our home!  This was not forseen by us.  Have a bit of understanding in these times


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## charliemacck (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I'm not sure I get the point of this. Surely, the* whole point *of going onto a fixed rate mortgage is that you are taking a risk that interest rates will go up and you'll save money? And therefore, you're risking interest rates going down and losing money?

If people can go onto a fixed rate mortgage and pay less than people on non-fixed rate, then change to a non-fixed rate whenever they want, *what is the point of banks offering fixed rate mortgages*?

Someone, please explain this to me.


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## GreenQueen (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

In layman's terms.

Yes of course you fix your rate at the risk that it will go up or down.  You normally cannot get out of a fixed rate mortgage before the period of time you fixed for is up without a penalty.

The reason why people are having a difficulty with fixed rate mortgages right now is because of the reduction in TRS on mortgage interest payments as announced in the budget.


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## charliemacck (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



GreenQueen said:


> The reason why people are having a difficulty with fixed rate mortgages right now is because of the reduction in TRS on mortgage interest payments as announced in the budget.


 
Yes, but that TRS applies to people both on fixed and non-fixed. A bank cannot know what a government plans to do as regards taxing mortgages at every budget, so my question still remains.


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## Paulk (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

If the Government can suddenly decide to change its TRS policy due to unprecedented economic circumstances, then there is absolutely no reason why they can't ask the banks to change their fixed rate policies (also due to unprecedented economic circumstances).


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## chrisboy (9 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Paulk said:


> If the Government can suddenly decide to change its TRS policy due to unprecedented economic circumstances, then there is absolutely no reason why they can't ask the banks to change their fixed rate policies (also due to unprecedented economic circumstances).




You're right, they could.. But at the end of the day if the govt. are the main shareholder in the bank, why would they be letting you go to variable rate?


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## Senna (10 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



tracy3135 said:


> we are in a position where we will probably lose our home!



If anyone on here is in real difficulties and defaults on their mortgage repayments, then YES you will get out of your fixed rate.


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## Berbatov (10 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Senna said:


> If anyone on here is in real difficulties and defaults on their mortgage repayments, then YES you will get out of your fixed rate.


 
Is that a definite or mere speculation?.


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## Bronte (10 Apr 2009)

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Berbatov said:


> Is that a definite or mere speculation?.


 
My guess is that it's definite but on the quiet and not officially but they are doing it for people in trouble/arrears as for sure no bank can be seen to take someone (a family) to court to reposses if the couple had done their best to repay and coming off a fixed rate and longer term would have fixed the situation.  There would be a riot.  

Senna's point is probably that you have to miss a mortgage payment or two in order to get out of your fixed rate.  

In relation to fixed rates I find that the level of penalty currently is somehow anti competative, is it me ? 10 to 20K to get out of these fixed rates seems an extraordinary amount.  I understand there has to be a penalty to compensate the bank but that's a prohibitive amount for most people.


----------



## charliemacck (10 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Paulk said:


> If the Government can suddenly decide to change its TRS policy due to unprecedented economic circumstances, then there is absolutely no reason why they can't ask the banks to change their fixed rate policies (also due to unprecedented economic circumstances).


 
Banks are private firms (well, at least for now!). Expecting them to change the details of a financial agreement based on what the government does, is like expecting Tesco's to drop the cost of wine and beer if the government raises the level of tax on alcohol. 

I mean, obviously it would *nice* for people with fixed-rate mortgages if it happened. But the banks are under no obligation to do so.


----------



## Kine (11 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



mugga said:


> I'm stuck in a fixed rate and feel really angry over it. My bank manager when I asked to change said I'd signed a contract and basically tough........ Howecer banks signed contracts too and all their debt is being cleared for them just like that. They should be told as circumstances are so unusual at thios time to let people out.


 
Yes, because it's that simple for the banks, there are no massive financial penalties for any arrangements made and they're rolling in the €€€€.


----------



## MandaC (11 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I am lucky enough to be on a tracker (ECB +.5% for the life of the mortgage)

I think the once off option for people to come off their fixed rates would be a great idea, though I do think people are trying to blame the government/banks instead of simply just saying they made the wrong choice. Mea Culpa!

What I really find awful though are the penalties banks are looking for to release people from their fixed rates.  How exactly are these penalties calculated does anybody know?


----------



## Complainer (11 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



LDFerguson said:


> Yes but it appears that NAMA will be buying the debts for less than actual value. So the banks will have to write down the value of these debts to some degree.


Are you getting mixed up between 'actual value' and 'book value', Liam? There is a huge difference between those two figures.


MandaC said:


> I am lucky enough to be on a tracker (ECB +.5% for the life of the mortgage)
> 
> I think the once off option for people to come off their fixed rates would be a great idea, though I do think people are trying to blame the government/banks instead of simply just saying they made the wrong choice. Mea Culpa!


It's not luck, Manda. Both you and I made conscious decisions to go with a tracker, knowing the risk that this carried. There is no way that those who took other risks should now be bailed out at the expense of the taxpayer.

Would those proposing a release for fixed rate mortgages also propose a release for those who over-borrowed, and are now unable to pay back due to the amount they borrowed?


----------



## DerKaiser (13 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Complainer said:


> Would those proposing a release for fixed rate mortgages also propose a release for those who over-borrowed, and are now unable to pay back due to the amount they borrowed?


 
Dangerous question!  I have no doubt that many people would think it would be justifiable, many people seem to feel anything that would put extra money in their pockets is fair.


----------



## so-crates (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



Complainer said:


> It's not luck, Manda. Both you and I made conscious decisions to go with a tracker, knowing the risk that this carried. There is no way that those who took other risks should now be bailed out at the expense of the taxpayer.


Hear, hear! Those on trackers took the risk of being at the whim of ECB rates, those on variable took the risk of being at the whim of their respective banks, those on fixed opted for a different sort of risk - they opted for stability and gambled on a rising market which hasn't come to pass. It isn't enough to declare now "unprecedented" and decide you want something different to what you signed up to. There isn't any clause in your contract to allow you to do that. Mortgages always carry risk. Despite the last few years protracted growth and almost universal employment it is always possible to lose jobs, lose income, be hit with new taxes, bear the brunt of punishing interest rate rises (or in this case drops), etc. In other words, these aren't unprecedented events, even bank nationalisations, credit issues aren't unprecedented. It is just that a sizeable proportion (perhaps even a majority) of people on fixed rate mortgages are probably in their twenties or thirties, recent property purchasers, stretched to achieve the mortgage anyway with little or no experience of truly hard times (no different from myself there) and now surprised that the world hasn't continued down the path it seemed to be in 2007 (although by that stage the credit crunch was already past infancy).


----------



## Timbo (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

This talk of fixed rates is all a bit strange.

People take out fixed rates in order to _*reduce repayment risk*_. You know exactly what your repayments will be. Anyone who took out a fixed rate in the past is in exactly the same financial position vis a vis their mortgage repayments that they expected to be when they made the contract.

So why the moaning? They got exactly what they wanted - surety in their outgoings. They are paying no more and no less.


----------



## steviel (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

You break your fixed rate deal without penalty, and I have to pay for it as a taxpayer.  How is that fair?  You took your chance, and in the long run it might still work out for you.  You cant have it both ways!


----------



## sanne (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks.  Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue.  Long may that continue and the best of luck to all of you that take on the good fight.  This is winnable!  

I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage.  You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts.  There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me.  Some even boast about the prized position of their own mortgage arrangement.  Enough said.


----------



## DerKaiser (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

Not sure if I can say this, but were you not rapped over the knuckles for that post?

Thankfully most people here understand the concept of honouring a debt and a contract.  You don't even have to know about finance, a simple understanding of how to make a bet would make you realise why it would be wrong for a bank to give in to your whims


----------



## Complainer (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



sanne said:


> I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks.  Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue.  Long may that continue and the best of luck to all of you that take on the good fight.  This is winnable!
> 
> I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage.  You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts.  There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me.  Some even boast about the prized position of their own mortgage arrangement.  Enough said.


Can I just clarify if you understand the fact that SOMEONE has to pay for your decision to go fixed rate? If so, please clarify who you propose should pay this?


----------



## bond-007 (14 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

You signed up for a fixed rate, live with it. Simple.


----------



## so-crates (15 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



sanne said:


> I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!
> 
> I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.


 
I don't think anyone quibbles with your getting out of your fixed rate mortgage - there is a path available to do so. Two in fact, the first a penalty in cash, the second a penalty in time (as in wait until your fixed rate period is up). What they quibble with is your assertion that everyone else should pay for your decisions. 

You seem to think that this is some sort of rallying point. It isn't. You made a contract. Assuming you are an adult you ought to be able to make contract which means that you are capable of understanding your responsibilities, obligations and privileges. Are you trying to say that you wish to be treated as a child?

Begrudgery by definition is envy - those not on fixed rate don't envy you. So perhaps the whiff of "begrudgery" you detect is you envying those not on fixed rate?


----------



## PC100 (15 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



sanne said:


> I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!


 
Hardly a political issue!

Has there been a dramatic change in your financial situation? - if you or your partner have been laid off or put on a three day week, speak to the bank and they may waive a % of the break penalty and put you on a variable rate or they may take 25 or 50 points off your fixed rate.

If there has been no significant change in your circumstances you will find it difficult to renegotiate.
As another poster pointed out, if ECB rates had gone the other way, would those on fixed rates be offering to pay more to align themselves with those on variable rates? Simplistic but the simple fact is that fixed rate loans are designed to lock you in and protect you from the flucuations of the market.


----------



## LDFerguson (15 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



PC100 said:


> As another poster pointed out, if ECB rates had gone the other way, would those on fixed rates be offering to pay more to align themselves with those on variable rates?


 
I think this argument is weakened in the current climate.  

Banks lent a lot of money to developers to build houses.  If property prices had continued to rise / no recession etc., these loans would have been repaid and the banks would made a tidy profit and wouldn't have needed any Government Guarantee scheme, NAMA etc.  

But things went against the bank and the Government stepped in to help.  

Extraordinary times.


----------



## Timbo (15 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



sanne said:


> I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.


 
Hold your horses there.

What pain? Your repayments are the same as they were when you took out the mortgage. Are you telling us that you took out a mortgage you couldn't actually afford to pay???

Stop whinging. If you want a variable rate, go refinance and fulfil any financial obligations you have to extrecate yourself from yor fixed rate. 

There are too many people suffering genuine distress at the moment to worry about your simple case of regret.


----------



## darag (16 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

As I explained in another post breakage costs for fixed rate loans (or savings for that matter) are real for banks.  They've effectively exposed themselves to fixed rate instruments on your behalf when you took out the loan.  Allowing you to redeem early which is effectively what you are doing by breaking the term in not some whimsical favour a bank can grant without losing a lot of money.

The government is facing borrowing over 20 billion this year.  It's simply nonsensical to suggest they borrow another billion and distribute it to fixed rate mortgage holders.  That such an action is being seriously proposed is weird.


----------



## Gmol (17 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



sanne said:


> I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!
> 
> I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.


 

I have a fixed term mortgage and am about half way through it, like everyone else who fixed their mortgage I took a gamble that interest rates would go up and they didn't. It was my choice and I have to live with it. I'm curious why you expect to be allowed change your mind because things didn't work out as you wanted them to? Like everyone else on a FT 
contract I would like to avail of the lower variable rate especially after a very significant pay cut but despite the difficulties it brings I have to live with it


----------



## Raskolnikov (19 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

If the ECB interest rates had rocketed over the last year, rather than fall; how would fixed rate mortgage holders feel if the banks forced onto more expensive variable mortgages because they were losing money?


----------



## jodyanne (30 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*

I wish I had understood about getting out when the rates began to fall.  Didn't know enough about the formula to realise that the breakage cost would go up so high as the rates went down.  It seems obvious now but wasn't then.  Ah well, tough lesson but a lesson


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## Paulk (30 Apr 2009)

*Re: Extrication from Fixed rate mortgage?*



jodyanne said:


> I wish I had understood about getting out when the rates began to fall.  Didn't know enough about the formula to realise that the breakage cost would go up so high as the rates went down.  It seems obvious now but wasn't then.  Ah well, tough lesson but a lesson



My sentiment exactly. When applying for my mortgage, I simply accepted what my mortgage broker told me at the time (mid 2007)  ie that rates would continue to rise for the forseeable future so fixing was the best option. I simply did not even question this. 

Anyway, you live and learn. I just hope that the rates don't increase dramatically by the time my fixed term comes to an end to in approximately 16  months! 

I've learned a lot from this site.


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## minion (2 May 2009)

Id love if you could just opt out of a fixed rate.

If that was the case i would fix now so im covered if rates rise, and just opt out if rates fell again.  It would be great.


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## Questionable (2 May 2009)

..hmm...I'm with LD Ferguson on this, has anyone mentioned the fact that the Minister for Finance has asked the Financial Regulator to investigate the breakout fees been offered, it seems to be a significant development.


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## renno rannes (2 May 2009)

when i got my mortgage years ago i went for variable rate and soon after it went up and up and up, but i lived with it because it was my choice, the people who fixed knew there mortgage would not go up so had that luxury, now that it went down they dont want it anymore. So thats just tough you cant have it all your way.


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## DerKaiser (2 May 2009)

Questionable said:


> ..hmm...I'm with LD Ferguson on this, has anyone mentioned the fact that the Minister for Finance has asked the Financial Regulator to investigate the breakout fees been offered, it seems to be a significant development.



I think this is a move for more transparency.

The basic idea is that the break out cost should be based on the rate at which the bank could access funds when the mortgage was taken out compared to the rate it can access funds at the time of breakage.

Some people are being quoted unfair break out rates as some banks seem to be setting the parameters in their break out formulas to rates not consistent with the market.


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## babybisi04 (15 May 2009)

of course, customers should be allowed to come out of fixed rate depending on their current circumstance, if they're still earning as much as they were when they took the fixed rate, then it's fine, but if not, is it better for banks to reposses customer's homes and then still lose or allow them come out of fixed rate if repayment is too high for them to keep? if the government bailed out the banks from their debts then they should bail out customers from fixed rate.


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## mf1 (15 May 2009)

babybisi04 said:


> of course, customers should be allowed to come out of fixed rate depending on their current circumstance, if they're still earning as much as they were when they took the fixed rate, then it's fine, but if not, is it better for banks to reposses customer's homes and then still lose or allow them come out of fixed rate if repayment is too high for them to keep? if the government bailed out the banks from their debts then they should bail out customers from fixed rate.



"of course"? That is nonsense. Take the time to read the rational responses to some of the emotive, tabloid headlinism, magic wand waving, self absorbed, naive, irresponsible, clueless ravings of some people who simply will not accept responsibility for their own actions. And I'm not referring to the Banks here!

mf


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## dublincelt (15 May 2009)

Having read through the entire thread, I outline my story here with great apprehension. However here goes, in April 08 I signed up to a fixed rate mortgage of 4.99% with IIB Homeloans. Having paid the developer up to 10k of a deposit I was ready to receive the cheque and complete the house purchase. This is where my first major issue comes in. IIB would only issue the cheque subject to me changing to their new terms which where variable at 5.15%. So the rate and type of mortgage that I had SIGNED up for were changed to suit themselves. Secondly, I was now faced with IIB raising the rate every few weeks so that by August I was on a rate of 5.99%. Up a whole percentage point from the original agreement I had signed. 


The biggest fear I had was that the Interest rate continued to rise and I couldnt afford my home so I fixed for 3 years reluctantly at 5.95%



Now I have heard it said that the banks have to charge a breakout fee due to the fact that they have borrowed money on my behalf at a higher rate. However my cheque was issued when they had a fixed rate offer at 4.99%. So where are they getting the justification to quote me €13,905 which is what they have done?

And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?

I dont believe their is justification in how this bank have acted and have been allowed to act by an impotent financial regulator.

I would advise anyone negotiating a mortgage to steer well clear of KBC Homeloans, unethical practice does not even come close to how they operate at least in my personal opinion.


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## NorfBank (15 May 2009)

dublincelt said:


> And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?



Don't be apprehensive (most of us are friendly here )

Correct me if I'm wrong but it seems you had not drawndown the mortgage on the fixed rate initially so there was no actual breaking of a fixed rate so no penalty would be incurred?

You are being quoted the €13905 because if KBC allow you to break your mortgage and then reinvest the mortgage amount in the market they will get a much lower rate of return as interest rates have fallen significantly since the time you fixed. They are making 5.95% off you whereas for arguments sake they would only get 3% if they reinvested it. They have quantified this loss to be €13905.


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## elcato (15 May 2009)

You signed a deal then you should have been offered it. Did your solicitor not advise at this stage as you should have got the original offer as per signing. Are you sure you signed a legally binding contract or did you just sign a few forms for application ? Something does n't add up here.


> And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?


I dont understand this. If the original contract was signed as stated then they did not 'break' you from a fixed rate. But obviuosly a bank would allow anyone who wanted to break from a fixed rate to a higher rate. This is just ordinary business sense (in general).


> The biggest fear I had was that the Interest rate continued to rise and I couldnt afford my home so I fixed for 3 years reluctantly at 5.95%


So what's the problem ? You are able to afford it for the next 2.5 years as you expected. In the next while rates could rise and you will be in a good position. 
The point of this thread is whether people should be allowed break from a fixed rate at no penalty. Your first argument seems to be a problem about whether IIB acted legally in offering you a mortgage. At the end of the day you had an option not to sign. Maybe you should look into the practice of IIB and gather all the relevant docs to see if you have a case to bring to the ombudsman. If the contract was indeed fully binding I would think you have a case.


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## babybisi04 (16 May 2009)

mf1 said:


> "of course"? That is nonsense. Take the time to read the rational responses to some of the emotive, tabloid headlinism, magic wand waving, self absorbed, naive, irresponsible, clueless ravings of some people who simply will not accept responsibility for their own actions. And I'm not referring to the Banks here!
> 
> mf



we all have our right to different opinion, and guess wat u dont av to agree with mine. it's a free world

if the banks can make mistakes and went into debts, show me one man who is perfect and i'll rest my case


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## minion (16 May 2009)

babybisi04 said:


> we all have our right to different opinion, and guess wat u dont av to agree with mine. it's a free world



Its not really.
The banks have to charge you what it costs them for someone to exit a fixed rate deal.  There is no opinion involved, just costs.


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## dublincelt (17 May 2009)

Just as a follow up. I have found the document in question outlining IIB changing me from Fixed to Variable in May 08. Here it is word for word,

*Dear Sirs,*

*We refer to the above and in particular to the Fixed rates condition of our Letter of Offer dated 10/04/2008 Prior to negotiating the Loan Cheque, we would be obliged if you could advise the Borrower, that their Variable rate has changed to 5.45*


*Many thanks for your assistance.*


*Yours Sincerely,*


*NEW BUSINESS DEPARTMENT*

  That is the letter IIB sent to my solicitor AFTER I had paid out over €12,000 of a deposit. I had signed up to a fixed rate yet they knew they could force me to variable due to the vulnerable stage of my contract negotiations with the developer.

  Then less than three weeks later I get the following letter,

*Dear xxxxxxx*

*We wish to confirm as announced by IIB Homeloans in the press on the  24th May 2008**, the standard variable rate has been increased by 0.20% and your revised interest rate is 5.65% etc…….*

  This went on for several months until I eventually fixed at a revised rate of 5.99%.

  My main issue is that I was broken from a fixed rate by the bank when it suited them. However when I try to do the same I am quoted the €14,000,


  Do I have a possible case to argue with the regulator here?


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## minion (17 May 2009)

dublincelt said:


> Just as a follow up. I have found the document in question outlining IIB changing me from Fixed to Variable in May 08. Here it is word for word,
> 
> *Dear Sirs,*
> 
> ...




Was you it your loan OFFER they were talking about or your actual loan after you had drawn it down.

Did you draw down your loan on a fixed or variable rate (on the date you got the keys)?


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## darag (17 May 2009)

Fixed rates are based on the prevailing interest rates when you draw down the loan not when you get approval.  It is these rates which determine the cost to the bank of offering a fixed rate and it would be impossible for banks to offer a fixed rate product if they had to tie themselves to a rate for a loan which may not be drawn down for months or longer.  You would have been offered the benefit if rates had fallen.

If it didn't work like this, then effectively the customer would be in receipt of a free option on interest rates since they could wait and chose whether to take out the loan or not.  This couldn't work; if interest rates dropped you would ignore the earlier loan offer and would have no problem getting a lower fixed rate from some-one else or even the same provider; if they rose, you could accept the offer but the bank would lose money.  One or other is likely to happen and both disadvantage the bank so there would be no incentive to offer such a product.

This should have been made clear to you.  I'm pretty sure this condition would have been stated in the terms and conditions.


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## dublincelt (17 May 2009)

> Was you it your loan OFFER they were talking about or your actual loan after you had drawn it down.
> 
> Did you draw down your loan on a fixed or variable rate (on the date you got the keys)?



As far as I am aware it was the loan offer and the cheque was issued on the condition that I switch to their variable terms. At no point have I stated otherwise. So my point remains, I selected IIB as my mortgage provider due to their rates in April08. However when the cheque was sent to my solicitor they sent the first letter above with it. I had already paid out my deposit so how else was I to proceed. I signed no other documentation apart from the original paperwork with the broker in April. And then     disastrously   with the letter IIB sent out some months later offering me a new fixed rate term.


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## csirl (19 May 2009)

Financially speaking, a fixed rate mortgage is a luxury item. They are usually more expensive than variable rate mortgages in the long term. This is because they include a risk premium on top of the rate. Fixed rate customers pay the bank to take a financial risk on their behalf. Asking anyone, bank or otherwise, to take a financial risk on your behalf is always expensive. Anyone who opted to take a fixed rate mortgage would have been easily able to afford a variable rate. You may introduce the argument of tight payments stress testing etc., but the difference in the rates at the time of offer is usually large enough that it largely erodes what would be the stress test margins on the variable rate anyway thus making it insignificant.

So, the people who are advocating the banks, using taxpayers money, to get them off a fixed rate mortgage are those who's disposable income was such that they could afford to buy the luxury product of a fixed rate mortgage at a time when the average punter could only afford the cheaper variable or tracker rate? Any they want the average punter who cant afford their luxury to pay for it?


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## Robin Banks (19 May 2009)

Like most things in life, it's very simple. You take a fixed rate mortgage, you're betting that interest rates are going up. You stay variable you're betting that they're going down, or that the premium for going fixed is not justified.

I bet on Arsenal to beat Man U last Saturday. Can I be bailed out too? I made a bad call so obviously it must be someone else's fault. That's how the world works, right?


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## bond-007 (19 May 2009)

The irony is that there are now people on sub prime mortgages getting rates lower than those that fixed last year..


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## Robin Banks (19 May 2009)

All mortgage lending in Ireland is subprime.

The collateral is massively overvalued. The terms are too long. The income multiples are too high. The margins on lending are negative.

All our banks are insolvent and getting worse.

If you need any evidence as to how our banks are both bankrupt and insolvent it is here

[broken link removed]

Mortgage standard variable rate 2.25% Deposit account 2.85%. Not forgetting all the tracker mortgages the idiots gave out. Imagine guaranteeing your customers you'll sell them bricks at a 0.7% margin over one supplier's price for the next 35 years when you don't buy your bricks from that supplier. You couldn't make it up how thick the Irish Bankers are.  

No wonder the government are forced to take over.


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## csirl (19 May 2009)

> All mortgage lending in Ireland is subprime.


 
This is a bit of a sweeping statement. The majority of mortgages in Ireland are repaid in full with a very low default rate in comparison with many other countries. One aspect of Irish lending which makes it less "sub prime" than many western economies is that the debt is not restricted to the value of the property - even if a mortgaged property is sold in negative equity, the recipient of the loan is still liable to pay back everything borrowed and, the vast majority do.

On residential property, we seem to have escaped the NINJA loans of the USA and the mortage based on rental yield rather than property value that is common in the UK.


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## Robin Banks (19 May 2009)

csirl said:


> On residential property, we seem to have escaped the NINJA loans of the USA and the mortage based on rental yield rather than property value that is common in the UK.


 
Mortgages based on rental yield would be fantastic in Ireland. Would've stopped the bubble in its tracks.


Rents are and always were bounded by incomes which are flat or declining in real terms for the last decade. However mortgages went into the stratosphere based on nothing but imaginary future projections of property prices based on a linear continuation of bubble gains.

A classic asset bubble. Just like the NASDAQ in 1999-2000.

NASDAQ broke 5000 in March 2000. Sitting on 1700 today nearly 10 years later.

I'm quite confident the price of an average house in Ireland will be a lot less in 2016 than it was in 2006. A long slow painful deflation of imaginary debt based "wealth" beckons.


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## Robin Banks (19 May 2009)

csirl said:


> The majority of mortgages in Ireland are repaid in full with a very low default rate


 
http://www.independent.ie/business/...-as-homeowners-battle-with-debts-1743419.html

This is going to get a LOT worse before it starts getting better.


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## minion (19 May 2009)

dublincelt said:


> As far as I am aware it was the loan offer and the cheque was issued on the condition that I switch to their variable terms. At no point have I stated otherwise. So my point remains, I selected IIB as my mortgage provider due to their rates in April08. However when the cheque was sent to my solicitor they sent the first letter above with it. I had already paid out my deposit so how else was I to proceed. I signed no other documentation apart from the original paperwork with the broker in April. And then     disastrously   with the letter IIB sent out some months later offering me a new fixed rate term.




Im afraid you dont have a case.  You need to understand the terms of your contract a bit better.


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## csirl (20 May 2009)

> Mortgages based on rental yield would be fantastic in Ireland. Would've stopped the bubble in its tracks.


 
Dont know how you can say this. Mortgages based on rental yield were where people borrow more than the purchase price of the property on the basis that the theoretical maximum rental yield of the property was sufficient to make the repayments on the higher mortgage. The extra money above the purchase price was usually used to invest in other property. I just cant see how getting a 120% or 130% mortgage is a good idea - automatically in negative equity from day 1. 

What's even worse about these rental yield mortgages is that the maximum rental yield used always assumed 100% occupany and that the landlord was able to get planning permission to subdivde the house into several bedsits (the HMO phenom in the UK). The reality is that 100% occupancy is never achieved and that through failure to get PP or because they wanted to maximise their borrowings, the properties usually ended up with less bedsits that stated in the original mortgage application.

The incredible thing about this is that many of the major banks in the UK routinely gave rental yield mortgages on potential HMO properties which had absolutely no chance of getting PP to be coverted into HMO. How wreckless is that?


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## dellie (22 May 2009)

_PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.


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## minion (23 May 2009)

dellie said:


> _PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.




I was under the impression they had taken notice and surprise, surprise the banks have no choice but to charge what they charge for a break out.
So then the government decided to look into publishing the formulae behind the costs.

You can get these formulae now, but nobody wants to know.


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## bond-007 (23 May 2009)

dellie said:


> _PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.


Why? 
Those that entered into fixed rate mortgages were aware of what they were getting into. Why should the government intervene where someone took a gamble and lost?


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## ardmacha (23 May 2009)

The government should absolutely not intervene. Irish banks are uncapitalised and the government is having to underwrite them. To excuse a substantial part of the interest payments due to these banks just means that the rest of us taxpayers have to take the hit. Taxpayers who don't own homes at all in many cases. 

A fixed rate mortgage means fixed payments. If rates go up this is a good deal, if rates go down it is not so good. But that is the risk you take, you can't expect other taxpayers to pay your interest for you.


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## rameire (23 May 2009)

> _PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.


 
no


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## callybags (23 May 2009)

dellie said:


> _PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.


 
This must be the most ridiculous post I have seen to date.

Can the government get on to BoyleSports because they are giving far too short odds on Barcelona winning the Champions League?. it's just not acceptable.

Also, I've just realised that where I bought my house is not close enough to where I work. Could the government intervene to sort out this problem? 

What happened to individuals taking responsibility for their own actions?


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## Bronte (10 Jun 2009)

Despite much searching I cannot find the thread I want, it was one where I ranted a lot about banks/builders developers etc.

Well today I'm incensed that a bank has loaned money to it's own staff for property purchases/investments/speculation but they, the staff, are getting the kid glove treatment.  Have I got the story correct, the staff's loans are being written off as bad debt but we the public who are paying for the bad loans (NAMA) are being told nothing.  Also the staff still have their jobs but they don't have to pay back the bad debt nor do they have their homes/assets seized.  They will not be brought to court, much less prison, what type of a system is this.  Are the rest of you not just burning with fury at this?


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## TheBigD (10 Jun 2009)

<delete>


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## DerKaiser (10 Jun 2009)

Bronte said:


> Despite much searching I cannot find the thread I want, it was one where I ranted a lot about banks/builders developers etc.
> 
> Well today I'm incensed that a bank has loaned money to it's own staff for property purchases/investments/speculation but they, the staff, are getting the kid glove treatment. Have I got the story correct, the staff's loans are being written off as bad debt but we the public who are paying for the bad loans (NAMA) are being told nothing. Also the staff still have their jobs but they don't have to pay back the bad debt nor do they have their homes/assets seized. They will not be brought to court, much less prison, what type of a system is this. Are the rest of you not just burning with fury at this?


 
Take a deep breath.  

Anyone with a written down loan has to continue to make payments.  The process of writing it down simply means that the bank is being realistic about it's chances of being repaid in line with prudent accounting practices.

This thing is a non-story compared to the loans for shares, hidden directors loans and dodgy deposits from other institutions.  Most likely staff got preferential loan terms (most companies do this) and have now had their pay cut or are unlikely to ever get a bonus again so their ability to repay is seen as less likely


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## so-crates (10 Jun 2009)

babybisi04 said:


> of course, customers should be allowed to come out of fixed rate depending on their current circumstance, if they're still earning as much as they were when they took the fixed rate, then it's fine, but if not, is it better for banks to reposses customer's homes and then still lose or allow them come out of fixed rate if repayment is too high for them to keep? if the government bailed out the banks from their debts then they should bail out customers from fixed rate.


 


babybisi04 said:


> we all have our right to different opinion, and guess wat u dont av to agree with mine. it's a free world
> 
> if the banks can make mistakes and went into debts, show me one man who is perfect and i'll rest my case


 
hmm - somehow there is something terribly appropriate about the moniker you have given yourself... If you want a contract whereby you can break out of a fixed rate when your circumstances change you should negotiate such a contract before signing it. You can't simply throw your toys out of the pram and demand attention babybisi. 



dellie said:


> _PLEASE SIGN PETITION __www.actiononfixedmortgages.com_. AIM is to get the government to take notice and do something about charges of getting out of a fixed mortgage.


 
Good grief! No, I wouldn't sign up to anything so ludicrous.



Bronte said:


> Despite much searching I cannot find the thread I want, it was one where I ranted a lot about banks/builders developers etc.
> 
> Well today I'm incensed that a bank has loaned money to it's own staff for property purchases/investments/speculation but they, the staff, are getting the kid glove treatment. Have I got the story correct, the staff's loans are being written off as bad debt but we the public who are paying for the bad loans (NAMA) are being told nothing. Also the staff still have their jobs but they don't have to pay back the bad debt nor do they have their homes/assets seized. They will not be brought to court, much less prison, what type of a system is this. Are the rest of you not just burning with fury at this?


 
 It's not exactly unusual that banks loan to their staff preferentially. The problem isn't really that the staff have been loaned to it is the policies that Anglo engaged in wholesale. Like Der Kaiser says, the loans haven't suddenly disappeared, these self-same staff are still obliged to repay them.  I suppose in a twisted sense it gives them a double incentive to ensure that the bank succeeds in getting repayments for all outstanding loans...


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## shirley_d (10 Jun 2009)

Getting a mortgage is one of the largest decisions of a life time, you need to understand what your doing. I do not have one yet because of the following considerations.


Is the house worth the price?
-I do not like over paying for anything, this was no exception.

Just because they will give me this load can I really repay it? 
- If I go for a 35 year mortgage and my circumstances change I have no room for negotiations, How much will they lend me at a 25year and can I buy what I want for that.
- should I factor interest rate relief into my calculation?, no because things like that are subject to change I'll not factor it and see if I can afford if rates go up by 3%
- How much of our income am I really willing to pay, I could loose my job, have an ill child or relative that needs permanent care.. generally the unknown.


Granted I did a lot of reading and was fairly sure things couldn't go on forever. So I decided not to buy, but I'm doing the second phase of research now by reading threads like this one as I'll look for a mortgage in Jan.

When you decide what you can afford you look at the mortgages themselves.

What are the types what are the risks and what are the rates?
Then you think of things like, if its fixed what happens when it ends?
If I come into a lump sum from a relative, does my mortgage provider allow me to may the money of the principle with out penalty can I build that into my mortgage contract?

Insurance what does it cover? Illness, unemployment? 

End result, I'll get a 25year mortgage perhaps with not the lowest rate if some of the term are more important. And I have room to move if something goes wrong.


What I'm highlighting here is that we all have free choice, and you should do your homework before you sign a contract. If you find your self with little choice perhaps its a sign you are overstretching yourself. If you are getting a load you can very easily afford my guess is the banks will be easier to deal with.


A contract is a contract, the banks know what they are doing we should too. And then live with the choice


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## Bronte (11 Jun 2009)

DerKaiser said:


> Take a deep breath.
> 
> Anyone with a written down loan has to continue to make payments. The process of writing it down simply means that the bank is being realistic about it's chances of being repaid in line with prudent accounting practices.
> 
> This thing is a non-story compared to the loans for shares, hidden directors loans and dodgy deposits from other institutions. Most likely staff got preferential loan terms (most companies do this) and have now had their pay cut or are unlikely to ever get a bonus again so their ability to repay is seen as less likely


 
Deep breath is not doing it for me.  I like to know the truth and I guess I'll have to wait about 10 years or so for that.

I'm not annoyed that staff got preferential treatment in their loan rates.  I'm annoyed they don't have to repay the debt and can continue in their good jobs.  Ordinary people are not getting their loans written off if they have difficulty repaying them.  I understood, but I'm open to correction, that the staff in fact do not have to make repayments 'if they cannot afford to'.  Meanwhile banks are increasing their charges, cancelling overdrafts, hiking up the rates on investment mortgages and telling all and sundry they are open for business.


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## shirley_d (11 Jun 2009)

As has been already stated they have not had the loans written off, for all you know they have classified them as a risk because they are planning to make them redundant (being cheeky here) or perhaps there partners were made redundant.

If you are a a risk and are having difficulty they may have classified your loan in this way too, doesn't mean they don't want what they can get. And you wouldn't necessarily know about it.


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## Dazzles (14 Jun 2009)

Hello.....I know this has all being discussed before but I am hoping that someone could offer a bit of advice.

Myself and my husband were forced to put our newly built home on the market due to a drastic change in circumstances.  My husband has now being out of work for three months and has only now being called for an assessment with regard to getting JSA.  To cut a long story short we are in a terrible mess finacially.  So luckily we got a buyer for the house, we are losing money but have no other choice but to get out.  So all was going well - buyer very happy and all until the solicitor called us in Friday to tell us that our bank KBC were looking for E10,000 for us to break out of the mortgage.  This means that we are going to have to actually borrow this money to pay KBC.  I have researched this and understand that a lot of people are in the same situation.  Personally I think its horrible and very unfair of the banks - we are not making money on this sale but a loss and we now have to borrow money in order to sell our home - but who cares what I think!  

So my query.....is there any chance that we could do something about this?  Or that the Financial Regulator will be addressing this issue anytime in the near future (we are trying to close the sale in a week or two!!!!! No pressure!).  Or should we just go with what we are being offered and be thankful of getting out? I am desperate!  

Also....if I post up details of our mortgage would anyone be able to do the calculations (just to be sure they are correct) as I can't figure out where they are coming up with the amount.

Any advice really, really appreciated.  I feel like I am cracking up!


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## so-crates (15 Jun 2009)

Um - Dazzles - it may be best to start a new thread. You are looking for specific advice in a general discussion so your post may not get the attention it deserves.

I can't see IFSRA "addressing the issue" to your satisfaction in order to help you with those deadlines. Hard and all as it is, I think you are going to have to deal with the problem as it stands. 

I know you are losing money on this. I am guessing though you have a fixed rate mortgage? From the banks perspective it is losing money by letting you pay off the mortgage in full at this time hence the requirement to pay a breakout fee. As another poster has pointed out, the current low interest rates mean that breakout fees are currently very high.

Have you spoken to KBC and explained your situation in full? Have you queried them as to how they have arrived at a figure of €10k? Will you be able to sort out the additional €10k in the next two weeks? Are you already borrowing to cover the negative equity?


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