Outstanding mortgage balance (how much you still owe) About 5K (five)
What would the balance be if you re-drew the maximum amount that you are allowed to? 235K
Approximate current value of your property 450K
The date you started your fixed-rate mortgage (month and year) - Its a variable 30 year mortgage with 22 yrs remain.
How many years you fixed for n/a
Your current mortgage interest rate 3.1% varible
Your current monthly repayment (excluding any overpayments) less that ten eur a month
Your property's BER (Building Energy Rating) – check it here or estimate it if necessary ~D2/D3
Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? No
Did you use a broker when you took out your current mortgage? Yes
@Reick Let's first look at the scenario where you are able to redraw the full €230k almost immediately, leaving you with a balance of €235k.
- Switching immediately to KBC's 3-year fixed rate (2.25% with no cashback) will save you about €5,620 over the next 3 years. And it is very simple to do (no bank statements, salary cert or solicitor, etc., needed).
- If you move home within the next 3 years you could face a break fee
- Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €4,600 over the next 3 years. And it is very simple to do (no bank statements, salary cert or solicitor, etc., needed).
- But if you move home within the next 5 years you could face a break fee, and it would be higher than if you had only fixed for 3 years
- Switching immediately to KBC's 10-year fixed rate (2.85% with no cashback) will save you about €1,540 over the next 3 years – but with the longer security of 10 years on a fixed rate. And it is very simple to do (no bank statements, salary cert or solicitor, etc., needed).
- This is not a good idea if there is a reasonable chance that you will move home in the next few years because you could face a large break fee when you move
These savings estimates use for comparison the scenario of staying on the variable rate with KBC and assume that that rate doesn't change between now and January 2026 (which is very unlikely). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.
Be aware that it is currently taking KBC some time to process these 'break and re-fix' requests, and they might increase their interest rates before they process yours – see
this thread.
An even worse possibility is that your mortgage (the full €235k balance) could be transferred to BOI after you re-draw the €230k but before you manage to re-fix with KBC – leaving you with a €235k mortgage and only being able to avail of BOI's higher rates. So tread very carefully!
You should probably have a very good reason before re-drawing a large amount from your mortgage. Some good reasons for doing so are:
- Paying off expensive debt (credit cards, personal loans, car loans, etc.)
- Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
- Saving money for any expenses you will have over the next few years (kids; buying a car; childcare; home renovations; adult children going to college, etc.)
- Maxing out your pension contributions (very large tax relief is given)
in approximately that order.
Another potentially good reason for re-drawing funds is so that you have the 10% deposit needed to buy your next house without having to sell your current house at the same time. This means that you won't be part of a "chain" of buyers/sellers, which should give you an advantage in bidding wars. Then you can sell your old house after you move in to your new house.
Investing in the stock market may or may not be a good reason for re-drawing funds from your mortgage – it usually isn't. (It is a terrible idea if you are not maxing out your pension contributions first.) There are basically no low-fees index funds available to most people in Ireland. If you don't invest the "right" way, you will pay very high levels of tax on any gains. (Avoid ETFs.)
If you do invest the re-drawn funds, you might gain 4% per annum after tax. (That's a long-term average – you could of course lose money.) And you would be borrowing money at 2.25% or 2.4% p.a. to invest in the hope of a 4% p.a. average gain. That sounds like an OK bet but not a great bet. And it could go wrong.
Consider posting a thread about your situation in the
Money Makeover forum.
