I'm considering breaking my fixed rate mortgage that has 3 years to run.
The fixed rate agreement was entered in March 2011 at 4.6% for 5 years.
The bank will charge the lesser of 6 months interest or the cost of refinancing.
The cost of refinancing is calculated as P x (R - R1) x T
Where:
P = Principle outstanding
R = Financing cost on day of fixed agreement
R1 = Financing cost today
T = Time remaining
My question is, which financing cost do the banks use? EURIBOR or ECB Refinancing Rate?
The fixed rate agreement was entered in March 2011 at 4.6% for 5 years.
The bank will charge the lesser of 6 months interest or the cost of refinancing.
The cost of refinancing is calculated as P x (R - R1) x T
Where:
P = Principle outstanding
R = Financing cost on day of fixed agreement
R1 = Financing cost today
T = Time remaining
My question is, which financing cost do the banks use? EURIBOR or ECB Refinancing Rate?