Breakage Fee - options

T

the leds

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Hi all,
We're almost 4 years into a 10 year fixed mortgage. We have the house up for sale and will face a hefty breakage fee when the sale goes through (hopefully in the spring). Original loan was 370k, there's about 340k left and we were quoted a breakage fee of ~22k a couple weeks back.
Before anyone says it, I know we shouldn't have fixed for that long but COVID turned everything upside down for us in terms of working from home, where we have to live etc.
Have I any options open to me apart from sucking it up and paying the fee? Short term interest rates had been rising up until last week which was helping bring the fee down but they've dropped considerably in the past few days bring the fee back up again.
 
BOI, 3.3% rate.
We plan to buy a new house which will be mortgaged to approx the same amount. However we do not have the a house lined up yet (suitable houses are very slow to the market where we're looking at the moment) and there's no guarantee that we'll have one lined up when the sale of the current house is going through.
We may also buy a site and go the new build route.
 
I understand that if you draw down a new mortgage within 6 months you can keep the fixed rate and get the break fee refunded. But there's better rates out there, so it'd cost you more in the long term.
 
Thanks RedOnion.
Yes, that's correct re the 6 months. Not sure any mortgage offer out there at the moment would compensate for a 22k breakage fee over a 6 year period?
I guess I was just posting to make sure that I'm not missing anything regarding break fees. Is there any point in trying to negotiate with the bank? Or is it just a matter of hoping interest rates go up in the meantime and reduce the fee?
 
They are large numbers indeed but to put it into context if you could refix at 2.1% you'd save €23,500 in interest over the remaining 6 years. Not a decision to be made lightly but it your location/LTV allows for a lower rate it might warrant further consideration.
 
Thanks for getting back guys. Yes, we would likely be able to avail of a 2.1% in our circumstances so that's a positive.
Ideally we'd like to be able to reduce the break fee substantially as well but it appears there's nothing that can be done on that front really.
 
Does Bank of Ireland allow you to overpay x% of your mortgage each year?

If so, do that first before repaying the balance.

Brendan
 
Hi Brendan, yes, they allow overpayment of 10% which we've been doing from the start.
Or do you mean to front load the overpayments for the remaining 6 years just before we sell? Surely that's not possible?
 
I believe BOI allow you to overpay by an additional 10% of your monthly repayments rather than a percentage of the outstanding mortgage balance.
 
Thanks for the input folks. Guess it's just a matter of hoping interest rates increase a bit to bring down the fee.
 
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