Break fees with Kbc mortgage

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Lucylu2021

New Member
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Hi. I'm selling my property currently 3years into 22 year mortgage with a 10 Yr fixed rate of 3.2%. Kbc have quoted a 15k break fee. This seems very high. I was originally told it would be 10k 2 years previous. Is there anyway of appealing this or even reducing it esp kbc leaving the market. Any help be great thanks
 
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Your mortgage contract/documentation should explain how the breakage fee is calculated. There should be no confusion or lack of transparency about this.

Who exactly told you that it would be 10k two years ago and through what medium? KBC or somebody else? Do you have it in writing from KBC?

Whatever the normal breakage fee is there is nothing to stop you from trying to negotiate it down but have a clear strategy for "selling" this to them and don't rely on indignant claims that what they're asking for is "extortionate".
 
Thanks - in terms of a strategy to negotiate it down what tactics could I use that kbc would take me seriously and consider reducing it? Thanks
 
Unless you'll be drawing down a new mortgage for another home there's no real room to negotiate on the break fee.
 
Brendan Burgess said:
That does seem high.
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As I said before the mortgage documentation should explain how the breakage penalty is calculated so even if it's considered high there should be no confusion or opacity about how it's arrived at. The basic formula seems to be outlined here but there may be more detailed info in a specific borrower's mortgage contract/documentation?

www.kbc.ie

KBC Ireland

KBC Ireland
www.kbc.ie www.kbc.ie
 
The formula is set out, but most people would not have access to the interest rates necessary to do the calculation.

Of course, she could ask to see how it's calculated so she could check the figure.
Brendan
 
Brendan Burgess said:
The formula is set out, but most people would not have access to the interest rates necessary to do the calculation.

Of course, she could ask to see how it's calculated so she could check the figure.
Brendan
Click to expand...

I see...

B = (W - M) x T / 12 x A, where:

B = The Break Funding Fee.

W = The Wholesale Rate Prevailing at the date of the existing fixed rate applying to the loan was set.

M = The Wholesale Rate prevailing at the switching/redemption date for the unexpired time period of the Fixed Rate Period.

T = Period of Time in months to the end of the Fixed Rate Period.

A = Principal amount which is subject to the existing fixed rate and which is being switched or redeemed.

‘Wholesale rate’ means the rate per cent per annum which the Lender determines to be the market rate applying to an appropriate interest rate swap for the relevant time period.
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T should presumably be 84 months (7 years)
A should presumably be €185K
But I have no idea what W and M should be.
 
Thanks Red

Lucy, just to explain this to you and why they are justified in charging you such a high break fee.

When you took out the mortgage 3 years ago, KBC could have put the money on deposit at 0.86%.

Now, if you repay your mortgage, they will have to find a home for the money, and instead of earning 0.86%, they will have to pay 0.27% for someone else to mind the money for them.

That difference is 1.13% which costs them about €2,000 a year in lost profits.
So for 7 years, that is €14,000.

Brendan
 
Can anyone tell me what kind of fee I could be looking at with KBC? Fixed for 5 years in December 2019. €165k left on mortgage. Not sure where to find the wholesale rates.
 
Kbc don't publish wholesale rates but if you request a redemption figure they will post you put a breakdown within 7-10days.will give break fee. It's only valid for 10 days
 
Lucylu2021 said:
Kbc don't publish wholesale rates but if you request a redemption figure they will post you put a breakdown within 7-10days.will give break fee. It's only valid for 10 days
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Thanks. Yeah, I will be requesting it. Was just hoping someone here might know the rates. Weighing up some options.
 
RedOnion said:
Your break fee should be c. 1,500

Swap rate 16th Dec 2019: -.19%
3 year rate now -.46%

You'll need to get exact rates from your bank
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Thanks. I'll request the cost from them this week. Thinking of switching to AIB or Avant. 1500 is not too bad if it's around that.
 
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