This looks correct. Rates have fallen considerably since 2013.The difference in the original costs of funds (1.19%) and investment rate (-0.328%) is 1.518%.
The funding fee is calculated by;
€218,423.07 x 1.518 / 36500 x 217 = €
Hi, somewhere around 4,800Hi I am awaiting a breakage fee from aib. We fixed at 3.8% in june 2015 for 5 years. There is around €355,000 left on the mortgage. I think we borrowed €368,000. Any ideas on what I should be expecting? Have asked them to move to their variable rate which is 2.95%.
Thanks
They say they are following it. It's just their interpretation is different!Do aib not have to follow the EU directive? or is there a lender who will pay our breakage fee?
Did they provide a written quote?Lender: Ulster Bank
Rough value of property: €410k
Total amount borrowed: €275,000
Amount of mortgage balance outstanding: €246,500
Date you fixed: September 2016
Period for which you fixed: Until December 2019
Fixed rate: 2.99%
Term left: 22 Months at 2.99%
I recently contacted Ulster Bank for a breakage fee to move to the 4 year 2.6% rate. The fee quoted to me for breakage was 6 months interest at Euro 3216.14. I was thinking based on what I have read that this seems very high. Could anyone verify my concerns. Thanks in advance.
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.
I'm very surprised. Ulster calculate the break fee on the difference between what they could get for deposit at the beginning (about -0.01%) and what they'd get now for remaining term (about -0.12%).Hi thanks for reply. They sent me a reply with ll the different options available to me and the staggering fee of 3200 plus.what should be my next step.
It's a fairly good approximation. BoI say the difference between what they can borrow at the start, and can get for deposit at the end. With their credit rating there's very little difference between borrowing and lending interbank and both would be very close to EURIBOR.Am I right in my assumptions above about Euribor as the basis for the calculation?
PTSB very clearly state swap rates, which I think is a more true reflection of the cost to the bank.Does the same apply to other banks or can they lump other costs associated with funding the loan that they do not have to highlight the borrowers? KBC seem to take this approach
Personally I think they should be.Could AIB be challenged on their interpretation based on the EU rules
Hi, somewhere around 4,800
AIB have a different policy to all the other lenders. They base fee on the difference between your rate (3.8%) and their fixed rate for the remaining term (3.2%).
It's still worth your while as you'll save the difference between the 3.2% and 2.95%
It's a fairly good approximation. BoI say the difference between what they can borrow at the start, and can get for deposit at the end. With their credit rating there's very little difference between borrowing and lending interbank and both would be very close to EURIBOR.
Technically, yes based in the rules used by some banks. So it's another question of whether CBI should be prescribing a single methodology and an externally available rate.So does their credit rating affect the banks cost of borrowing and could this in turn affect the break fees??. If so a banks credit rating would be important to the customer
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