Case Study: Internal Mortgage Switch UB

Hi, long time reader, first time poster. Could I ask to calculate the break fee for me please RedOnion or if it's not too much trouble, post a dummies guide to calculating it myself. I and many other readers would be very grateful. Teach a man to fish and feed him for life and all that lol

Can I message you my details? Do u need exact date of fixing or just the month?
 
Hi,
The following thread (hopefully) explains how break fees are calculated.

Key Post - Understanding Fixed Rates breakage costs

Moderator's note: for anybody who is thinking of switching their mortgage (or re-fixing with their current lender), consider posting your mortgage details in the switcher thread (in the format shown in the first post). Someone will calculate an estimate of the break fee (if any) and of the...
www.askaboutmoney.com

If you tell me when you fixed (month should be close enough to estimate), and for how long, I'll estimate the break fee. If you don't want to post your balance I'll calculate it for 100k, and you can multiply it out yourself.
I prefer to post publicly except in specific scenarios. I make mistakes, and by posting public others can correct me.
 
Fixed October 2019 for 5 years @ 2.8% for 420k.

Thanks for the above, interesting reading.

Am I correct in saying the break fee is negative (i.e. zero)
 
RedOnion said:
Hi,
The following thread (hopefully) explains how break fees are calculated.

Key Post - Understanding Fixed Rates breakage costs

Moderator's note: for anybody who is thinking of switching their mortgage (or re-fixing with their current lender), consider posting your mortgage details in the switcher thread (in the format shown in the first post). Someone will calculate an estimate of the break fee (if any) and of the...
www.askaboutmoney.com

If you tell me when you fixed (month should be close enough to estimate), and for how long, I'll estimate the break fee. If you don't want to post your balance I'll calculate it for 100k, and you can multiply it out yourself.
I prefer to post publicly except in specific scenarios. I make mistakes, and by posting public others can correct me.
Click to expand...
Thanks Red, I’ve reviewed this myself and now see why you advised zero for my fee. I’ll be eagerly waiting to see what Ulster Bank themselves calculate.
 
Hi RedOnion

Would you mind assisting me also (and if you can explain how id do it myself)

Current balance 461k
Remaining term 18yrs 4 months
Fixed at 2.5% (ending 31/3/2023) on 28 March 2018

looking at the new 2.2% rate but maybe its not worth while?
 
@Blackrock1
5 year interbank rate when you fixed: 0.36%
3 year rate now (remaining term): -0.26%
Break fee 9,020
That'd be capped at 5,760 (6 months interest).

Interest savings c. 4,370

So it'd cost you 1,400 (but would be fixed at 2.2% for an extra year)
 
RedOnion said:
@Blackrock1
5 year interbank rate when you fixed: 0.36%
3 year rate now (remaining term): -0.26%
Break fee 9,020
That'd be capped at 5,760 (6 months interest).

Interest savings c. 4,370

So it'd cost you 1,400 (but would be fixed at 2.2% for an extra year)
Click to expand...

thank you unlikely to be worth while then !
 
BourbonWithIce said:
The break fee for me is likely to stay negative (i.e. zero) until such time as the interbank rates rise is that correct? And that's unlikely in the immediate future ceteris paribus?
Click to expand...
The opposite. It'll stay zero until interbank rates drop.
They've risen slightly since you fixed, which is why it's zero.

It gets confusing, because we're looking at negative rates here.
 
mojoask said:
I stand corrected. Do you mind sharing the calculation?
Click to expand...

I picked a different start date, and ended up with a slightly different estimate break fee here. You'll need the exact figure from them to make a decision.

Balance
430000​
Interbank Rate at beginning
0.03%​
4 years
Interbank rate now
-0.26%​
3 years
Difference
0.28%​
Fixed Term remaining
38​
months
Break fee estimate
3,867​
Balance * rate Diff * remaining months/12
Interest Savings:
Current Rate
2.60%​
New Rate
2.20%​
Difference
0.40%​
5,446.67​
 
HollowKnight said:
I thought it changed from 0.14 to -0.129. I'll ring them Monday and ask to send on their figure anyway.
Click to expand...

Here's what I was coming up with for you. I think we have the same starting rate, but a very different number for the current interbank 3 year rate?

Balance
430000​
Interbank Rate at beginning
0.140%​
4 years
Interbank rate now
-0.258%​
3 years
Difference
0.398%​
Fixed Term remaining
38​
months
Break fee estimate
5,419​
Balance * rate Diff * remaining months/12
Interest Savings:
Current Rate
2.60%​
New Rate
2.20%​
Difference
0.40%​
5,447​
 
RedOnion said:
Here's what I was coming up with for you. I think we have the same starting rate, but a very different number for the current interbank 3 year rate?

Balance
430000​
Interbank Rate at beginning
0.140%​
4 years
Interbank rate now
-0.258%​
3 years
Difference
0.398%​
Fixed Term remaining
38​
months
Break fee estimate
5,419​
Balance * rate Diff * remaining months/12
Interest Savings:
Current Rate
2.60%​
New Rate
2.20%​
Difference
0.40%​
5,447​
Click to expand...
My balance is 303000.
And the new UB rate is for 5 years, so do you not use today's 5 year rate?
 
HollowKnight said:
And the new UB rate is for 5 years, so do you not use today's 5 year rate?
Click to expand...
Ah, I see now what you did. I should have spotted earlier.

The new rate has nothing to do with the break fee. You've 3 years left on the fixed rate, so it's the 3 year rate today that you use. It's the same break fee whether you were repaying or fixing again.

Sorry - used another posters balance, but it shows your break fee is almost identical to the savings (it'll be slightly different in reality as the balance is reducing).
 
RedOnion said:
Ah, I see now what you did. I should have spotted earlier.

The new rate has nothing to do with the break fee. You've 3 years left on the fixed rate, so it's the 3 year rate today that you use. It's the same break fee whether you were repaying or fixing again.

Sorry - used another posters balance, but it shows your break fee is almost identical to the savings (it'll be slightly different in reality as the balance is reducing).
Click to expand...
Thanks for this, I understand it better now.
 
BourbonWithIce said:
Does the same apply to other banks i.e. PTSB, AIB, EBS etc?
Click to expand...
As @HollowKnight mentioned, they all have slight nuances. However, the basic calculation using interbank rates is there for all of them.
UB cap the break fee at 6 months interest.
AIB do a 2nd calculation based on their own mortgage rates, and use the lowest result.
Nothing significant about the others. I think there's a table in the key post I linked earlier with the terms of each bank.
 
RedOnion said:
@_ripped_off
Your break fee should be currently a big fat ZERO.
Click to expand...
So I just rang UB, spot on Red the breakage fee is zero! It’s lost in the post somewhere so only valid until Tuesday 28th.
However to avail of the 2.2% we need to clear down some of the principal to get to 80% ltv so just need to convince himself that would be a good use of savings!
 
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