Case study Challenging AIB's very high break fee

MacktheKnife

Registered User
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Hi,
I've been trying to move from an AIB 5 year fixed rate (5.35%) since October to a <50% variable.
The first quote I received was for €1,538, I then got a second quote (final offer) of €1,000.
In mid December I contacted them again requesting them to outline a breakage cost in accordance with S26 of the Mortgage Credit directive, this morning I received a letter with a quote of €1,176 and with same formula outlined.
Currently I owe €104,200 on a house currently worth on the region of €250k and my fixed term expires in July of this year.
Based on my calculations, all the quotes I have received thus far would mean me incurring a loss if I was to accept them.
Is my next step to start the formal complaint process or do I just suck it up for the next 6 months.
Any advice greatly appreciated.
 
Can anyone advise me on this?
I've been trying to move from an AIB 5 year fixed rate (5.35%) since October to a <50% variable.
The first quote I received was for €1,538, I then got a second quote (final offer) of €1,000.
In mid December I contacted them again requesting them to outline a breakage cost in accordance with S26 of the Mortgage Credit directive, this morning I received a letter with a quote of €1,176 and with same formula outlined.
Currently I owe €104,200 on a house currently worth on the region of €250k and my fixed term expires in July of this year.
Based on my calculations, all the quotes I have received thus far would mean me incurring a loss if I was to accept them.
Is my next step to start the formal complaint process or do I just suck it up for the next 6 months.
Any advice greatly appreciated.
Hi Mack,

AIB appear to have interpreted the legislation different to every other lender (including EBS). They calculate break fees based on the difference in the rate you're paying and the rate that they can charge for the remainder of the term. The fact that they originally reduced it to 1000 suggests they are open to a little negotiation. However what's gone against you us that they reduced their customer rates since, so the break fee has increased.

I don't agree with AIB's interpretation, but they insist it is correct.

Sorry I can't be more help. You could kick up a fuss if you have it in you, but unfortunately the legislation does not provide a definition of the term 'financial loss' so it's a difficult battle.
 
Thanks very much for that. I've opened the complaints process with them and I'm going to try and pursue it further. I kind of relish these sort of battles.
 
Thanks very much for that. I've opened the complaints process with them and I'm going to try and pursue it further. I kind of relish these sort of battles.
Hi,
Would you mind saying when you fixed, and how long is left? I can have a look to estimate what the break fee would be under a market rate scenario for you.
 
Hi,
Would you mind saying when you fixed, and how long is left? I can have a look to estimate what the break fee would be under a market rate scenario for you.
I fixed in July 13, so as of Wednesday coming I will have 6 more payments @5.35%.
The break fees quoted to me make so sense at all, AIB keep describing them as a great offer but it remains cheaper to just see the next 6 months out.
I just enjoy hassling Banks and Utility providers.
Funnily AIB Home Loans deny all knowledge of the €1,000 offer but the Mortgage manager in the bank claims they made it.
 
Hi Mack,

I'm not able to access historical 5 year rates at the moment, but when you fixed it was around 1.5 to 1.7%

The 6 month interbank rate at the moment is negative at -0.27%, so there would be a break fee on any calculation basis.

So say best case 104,000 * 1.77% *5/12. So about 770.

You'd need a more accurate 5 year rate to get a correct number.
 
Just to update a lodged a complaint with the FSO a few weeks ago and had my first call from a mediator this morning.
Hard to know how it will go, I outlined my case again and was asked what I wanted to resolve the matter, I stated be allowed moved to the the desired Variable Rate without delay or penalty and compensation for the additional interest I have paid in the interim.
 
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