Another break fee query

Crh2020

New Member
Messages
5
Hi,

Im looking for some expert opinions please!

I requested a break fee calculation from KBC to look at options to break out of a fixed rate of 10 years - there is 8 years 3 months left on the term.

I have been quoted €11,000 seems extortionate! I fixed in may 2018 with wholesale rate 0.93. The rate on the day I requested was 0.04 (according to what I wad told on the phone). There is €158,000 remaining and fixed term of 99 months left (8 years 3 months).

Does this amount seem correct? Crazy money! If it is correct I assume there's not a lot I can do but sit it out and get it rechecked occasionally. Also is there somewhere I can follow rates myself? The guy in KBC told me rates are not available to the public and I would just have to trust the figures they give me... well if that doesn't make me suspicious....!!

Thanks in advance for any advice and info.
 

Crh2020

New Member
Messages
5
Thanks for the info. Currently on 2.99% and will have 1 year left after fixed term is due to finish.
 

RedOnion

Frequent Poster
Messages
3,816
Ah, you've only 11 years left on the mortgage? So you're paying balance down over that period?

I'll attempt to factor that into an annuity curve but I don't have time right now to do it.
 

Crh2020

New Member
Messages
5
So I had 11 years left when I fixed for 10 years in 2018, and now with 8 years 3 months left on fixed term, the total remaining term is 9 years 3 months.

Was thinking if breaking was an option I could re-fix at lower rate, as some lower 5 year options out there, and possibly reduce the term again slightly by keeping the same monthly payment as now.
 

RedOnion

Frequent Poster
Messages
3,816
Assuming the break fee is correct (I'll get to that later), it's obviously not worth your while breaking.
You've 111 months remaining term, with 99 months fixed at 2.99%.
Even if you could refix at 2.3% the interest savings are only 5,900

The break fee itself I've struggled to match exactly. I've calculated 11,600 but I might just have the wrong dates. Using the rates they provided it works.

I apologise if the following gets technical. The break fee is calculated on your current balance. I performed a separate calculation based on the reducing balance of your mortgage. For example you only fixed 21k for the full 10 years because that's all that would be there. Another 18k for 9 years, 17k for 8 years, etc.
KBC T&C's don't allow for this (actually AIB is the only bank that does), but we could get into a technical argument about EU directive with them if it was worthwhile. But even allowing for that, the break fee would still be over 6k, so still in excess of your savings.

You shouldn't regret fixing. You can take great comfort from knowing exactly how much your mortgage will cost until it's less than an average car loan.

If interbank rates start to track upwards, and mortgage rates stay competitive, it might be worth looking at again, but for the moment it's not.
 

Crh2020

New Member
Messages
5
Thanks a million for looking into it. Will be sitting tight and will keep casual eye on rates.

Cheers
 
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