How to evaluate if it's worth breaking out of a fixed rate

[RedOnion]

Hi @Eoghan
I understand your thinking. However with KBC you can overpay by 10% of the initial balance during the fixed period without incurring a break fee. So for example if you've a 400k mortgage and fix for 3 years, you can overpay by 40k during the 3 years (before a break fee is calculated).

With Ulster Bank you can overpay by 10% per year (of the starting balance for that year). So using details above 40j in year 1, 36k in year 2, etc.

Personally, with the banks that give this flexibility, I don't think you need to split with the variable on a more expensive rate.

 

[Eoghan]

Hi @Eoghan
I understand your thinking. However with KBC you can overpay by 10% of the initial balance during the fixed period without incurring a break fee. So for example if you've a 400k mortgage and fix for 3 years, you can overpay by 40k during the 3 years (before a break fee is calculated).

With Ulster Bank you can overpay by 10% per year (of the starting balance for that year). So using details above 40j in year 1, 36k in year 2, etc.

Personally, with the banks that give this flexibility, I don't think you need to split with the variable on a more expensive rate.

Ok so would I be better off staying with Ulster if my goal is to pay off the mortgage quick factoring in kbcs 3000 switcher

 

[RedOnion]

Ok so would I be better off staying with Ulster if my goal is to pay off the mortgage quick factoring in kbcs 3000 switcher

Hi Eoghan, sorry I missed your post.
Do you qualify for the 2.2% rate with UB? In which case you'd have a lower rate than KBC, and more flexibility re overpaying without break fee?
I haven't calculated the numbers out so I might be underestimating the value of cashback.

 

[Eoghan]

Hi Eoghan, sorry I missed your post.
Do you qualify for the 2.2% rate with UB? In which case you'd have a lower rate than KBC, and more flexibility re overpaying without break fee?
I haven't calculated the numbers out so I might be underestimating the value of cashback.

No I don't qualify, only 76000 left. My thinking is that because I can pay more than the 10% per year with Ulster from now on, I should stick with them and do 45/30 split so I can pay more than 10% easily. Not sure how the numbers add up compared to KBC switcher deal and only 10% overpayment once.

 

[RedOnion]

only 76000 left

Ah, I mixed up your post with someone elses. Your low balance means the difference in interest rates is a very small annual difference.

Options: it's really a toss-up.

Switch to KBC, on a very short term if you can commit to it to repay faster, and net about 1,500 cashback. Rate marginally better than UB. Option to overpay by 7,600 over the fixed term. You have the 1,500 to cover any possible break fee if you want to overpay more.

Or stay with UB. Option to overpay 10% per year.