Calling AIB customers who fixed before the latest fixed rate cuts

misstealeaf

Frequent Poster
Messages
84
Moderator's note:

Due to a quirk in the way AIB calculates fixed rate break fees, there is a very good chance that if you fixed for 5 years within the last year at a rate of 2.85% , there will be zero break fee, as reported later in this thread

I requested a break fee from AIB last Monday when the cuts were announced. We had fixed on a 5 year rate of 2.85% last June.
Got the letter today, break fee of €0.00.


So you can break for free and fix for another 5 years at 2.55%

Brendan





Any idea on break costs with AIB- I know it depends on value of mortgage how long still fixed for etc. But i remember when looking at my husbands mortgage with Boi a few years ago they seem to take a different approach to calculating break costs. I stupidly fixed with AIB about 20 months ago at 3.3% so I’m wondering should I even bother requesting the break cost. I’m also one of the prevailing rate tracker cases with AIB.
 
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AnitaF

Frequent Poster
Messages
91
My mortgage was fixed for 5 years from July 2019 @ then fixed rate of 2.85%.

Presuming this most recent rate cut won't apply to me given I'm already stuck in a fixed rate?
 

RedOnion

Frequent Poster
Messages
4,597
My mortgage was fixed for 5 years from July 2019 @ then fixed rate of 2.85%.

Presuming this most recent rate cut won't apply to me given I'm already stuck in a fixed rate?
Correct.
But call and ask them for a break fee. It might still be worthwhile breaking and refixing at lower rate.
 

AnitaF

Frequent Poster
Messages
91
Anita

It's very important that when you get quoted the break fee, that you come back and post here about it.

Brendan
Absolutely will do Brendan. I just requested there now so will post reply for info for all here as soon as I receive it.
 

Healthinsurance

Registered User
Messages
11
Hi all,

I requested a break fee from AIB last Monday when the cuts were announced. We had fixed on a 5 year rate of 2.85% last June.
Got the letter today, break fee of €0.00.
I actually can't believe it and think I'm missing something to be honest! I requested a break fee a few years ago on a 2 year fixed and it was almost €900. (When AIB did the calculations differently to everyone else.)

So I think we're going to fix on a 3 year rate of 2.55%. I was really expecting a huge figure so am quite shocked. Definitely worth emailing for a quote.
 

AnitaF

Frequent Poster
Messages
91
Hi all,

I requested a break fee from AIB last Monday when the cuts were announced. We had fixed on a 5 year rate of 2.85% last June.
Got the letter today, break fee of €0.00.
I actually can't believe it and think I'm missing something to be honest! I requested a break fee a few years ago on a 2 year fixed and it was almost €900. (When AIB did the calculations differently to everyone else.)

So I think we're going to fix on a 3 year rate of 2.55%. I was really expecting a huge figure so am quite shocked. Definitely worth emailing for a quote.
Wow, that's mad. Did not expect a 'no breakage' cost so will be interesting to see what my requested response will be next week! I will post when I get it.
 

RedOnion

Frequent Poster
Messages
4,597
Absolutely will do Brendan. I just requested there now so will post reply for info for all here as soon as I receive it.
It'll take a few days for you to get the letter. Once it's generated they'll be able to see the letter and give you details over the phone. Give them a shout Thursday morning and ask for it.
 

Brendan Burgess

Founder
Messages
41,415
Here is how AIB calculates the break fee - it looks complicated, but it's not. Focus on D% (This is how Red Onion explained it to me )

• How do we calculate the early repayment charge?

We calculate the early repayment charge using the following formula: (A) X (U) X (D %) = € ERC [early repayment charge], where:

(A): Amount of your mortgage loan being repaid early, or converted to another interest rate.

(U): Number of months remaining before the fixed interest rate is due to expire, divided by 12.

(D%): Difference between your original fixed interest rate at the start of the fixed interest rate term, for the full fixed interest rate term, and the applicable fixed interest rate offered by the Bank at the time the mortgage loan is repaid or converted, for the period of (U).

2. When the remaining term does not exactly match a term for which there is a rate available, we will use the two closest rates and apply the most beneficial to you. For example, if you have 18 months remaining on your fixed term, we will use the more beneficial of the 12 and 24 month rates in our calculations.


Example using the figures from user Health Insurance
He fixed last June for 5 years at 2.85%
So today, he has 4 years and 9 months left
The two closest terms are
4 Years: 2.85%
5 Years: 2.55%

So they use the 2.85% rate
So D% = 2.85% - 2.85% = 0

So no break fee.
 

Brendan Burgess

Founder
Messages
41,415
Taking misstealeaf's case

I stupidly fixed with AIB about 20 months ago at 3.3%
Assuming this was for 5 years.
D will be 0.5% (3.3% -2.85%)
A : let's say €100,000
U: The remaining term of the mortgage: 4 years and 4 months

So the break fee will be : 100,000 @ 4.3 @.5% = €2,150

But if she fixes again at 2.55%, the saving will be 100,000 @ 4.3 @ 0.75% = €3,250

So, it's worth breaking it.

There is another calculation which AIB does, and if it results in a lower break fee, that is the fee which will be used.

Brendan
 

RedOnion

Frequent Poster
Messages
4,597
This is how Red Onion explained it to me
You've explained it better than I did at the first attempt! :)

It's my understanding that any customer currently on 3 or 5 year fixed rates of 2.85% can currently break out without any penalty, and refix at the new lower rates.

Customers on other rates should also assess their break fee Vs interest savings and see if they can save money.
 

tonymac

Frequent Poster
Messages
215
Fixed myself last May for 4 years at 2.85%. Rang today and they said theyll send me out a letter regarding refixing 4 both 3 and 5 years in which theyll tell me if theres a break fee or not. Will let ye know how i get on.
 

RedOnion

Frequent Poster
Messages
4,597
@tonymac
Thanks for this scenario, as I hadn't thought of it.
If they follow their own T&C's there'll be no break fee in your case.
 

Brendan Burgess

Founder
Messages
41,415
Hi tony

As Red says, you will get a break fee of zero.

But if you leave the decision until a year after you fixed, then there will be a break fee.

Brendan
 

tonymac

Frequent Poster
Messages
215
Hi Brendan and Red onion, thanks for coming back to me. That would be great as i wasnt sure. Will confirm for ye when i get response.
 

RedOnion

Frequent Poster
Messages
4,597
there is a very good chance that if you fixed for 5 years within the last year at a rate of 2.85% , there will be zero break fee, as reported later in this thread
To refine this further, anyone who has fixed with AIB since their April 2019 rate changes, can currently break with zero break fee. This is regardless of the term they have fixed for, all the way from 2 years to 10 years.

Happy to look at any specific scenarios not covered above to explain why.
 
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