Key Post It may be much cheaper than you think to break out of a fixed rate early...

_ripped_off

Registered User
Messages
45
Thanks coyote. This is exactly what they are dragging their heals on because the letter deffo does not state what rate they hedged at or the interbank rate today.
I’ll post the exact breakdown later this evening but I think I’ll be back onto them on Monday.
 

Raudi Raus

New Member
Messages
3
KBC
354k
263,147.77
February 2019
5 years
2.93%
23
8410.79

Hi there, Selling up and redemption letter from KBC states they want 8410. Seems crazy! Any advice appreciated
 

Coldwarrior

Frequent Poster
Messages
158
KBC
354k
263,147.77
February 2019
5 years
2.93%
23
8410.79

Hi there, Selling up and redemption letter from KBC states they want 8410. Seems crazy! Any advice appreciated
The rates banks can borrow at have dropped a lot since then, hence the large break fee. This still seems high though, thought the break fees were capped at 6 months interest? I know UB cap it to 6 months, maybe KBC don't?

I assume you weren't planning on selling earlier in the year if you fixed for 5 years?
 

Paul F

Registered User
Messages
33
The rates banks can borrow at have dropped a lot since then, hence the large break fee. This still seems high though, thought the break fees were capped at 6 months interest? I know UB cap it to 6 months, maybe KBC don't?

I assume you weren't planning on selling earlier in the year if you fixed for 5 years?
I estimated the break fee myself and the value they quoted seems correct.

Only Ulster Bank cap the break fee at 6 months' interest.
 

Raudi Raus

New Member
Messages
3
No I knew there would be a break fee but we had to sell the house for personal circumstances and hope to buy in a different area. Didn’t want to rent out as didn’t want to be landlords and wanted to buy again in near future. A friend who is a broker said they would waive the fee if you take out another mortgage with them but when I rang the bank directly they said they wouldn’t and maybe it’s just a deal they do with brokers. Thanks for advice already given
 

Raudi Raus

New Member
Messages
3
Did you just fix for 5 years in February of this year? Did you not understand the implications of 'Fixed'?
Ya only took it out in February. Had waited 17 months for house to be built and a lot had changed since then.
 

Aph2016

Registered User
Messages
9
Lender: KBC
Rough value of property: €310k
Total amount borrowed: €275k
Amount of mortgage balance outstanding: €267k
Date you fixed: September 2018
Period for which you fixed: 3 years
Fixed rate: 2.65%
Term left: 24 months
Breakage fee quoted: €2200 :eek:

I was chancing my arm to break and fix at a 2.3% but not happening with that breakage fee.
 

Andrew365

Registered User
Messages
157
Lender: KBC
Rough value of property: €310k
Total amount borrowed: €275k
Amount of mortgage balance outstanding: €267k
Date you fixed: September 2018
Period for which you fixed: 3 years
Fixed rate: 2.65%
Term left: 24 months
Breakage fee quoted: €2200 :eek:

I was chancing my arm to break and fix at a 2.3% but not happening with that breakage fee.
What is the variable that contributes most to the break fee? Is there an equation to estimate?

I have requested a break-fee quote from KBC as well to refix at 2.3%. I hope the quote is most affected with time to maturity on the fix date.
 

xwing2018

Registered User
Messages
8
Lender: BOI
Rough value of property: €410k
Total amount borrowed: €360k
Amount of mortgage balance outstanding: €348k
Date you fixed: March 2018
Period for which you fixed: 3 years
Fixed rate: 3%
Term left: 17 months
Breakage fee quoted: €2300

Switching now to avail to a 2% cashback offer so even after €2300 break free and legal etc I'll be up approx €3300 and then plan is to switch again looking for the lowest fixed rate, most likely UB 2.3% for 2 years...
 

ongar11

New Member
Messages
5
Lender: UB
Rough value of property: €350
Total amount borrowed: €288k
Amount of mortgage balance outstanding: €277k
Date you fixed: JULY 2017
Period for which you fixed: 7 years
Fixed rate: 3.99
Term left: 4 yrs 10 months
Breakage fee quoted: awaiting letter from bank.

Ive estimated that 6 months cap would be approx €5500 but think if i switch i could save €200 a month and a saving of €12000??

Any advice?
Thank you
 

RedOnion

Frequent Poster
Messages
3,292
Ive estimated that 6 months cap would be approx €5500 but think if i switch i could save €200 a month and a saving of €12000??
This is a brilliant case study.

Yes, there's a break fee, but because of the 6 months cap with UB it's limited.

If you switch to a 2.6% rate, you'll save a net 13,000 in interest over remaining fix period, after paying the break fee.
 

ongar11

New Member
Messages
5
I was wondering if i was right! Just need to get the breakage fee amount in writing and go begging! :cool:
 

iancully86

New Member
Messages
2
Can anyone tell me whether this break fee sounds correct? @RedOnion i would be grateful if you have any insight....

Lender: PTSB
Total amount borrowed: €480k
Date you fixed: June 2018
Period for which you fixed: 5 years
Fixed rate: 3.1%
Term left on fixed rate: 45 Months
Breakage fee quoted: c. €2.8k

I previously was adivsed in May 2019 that there was no breakage fee, but struggling to understand how it has risen to €2.8k in a few months? I have repeatedly requested a breakdown of the calcualtion of the fee but I have been sent (7 or 8 times!!) the same letter stating what the break fee is and some illustrative example irrelavent to my circumstances.

Any help is greatly appreciated! Thanks in advance
 

RedOnion

Frequent Poster
Messages
3,292
I previously was adivsed in May 2019 that there was no breakage fee, but struggling to understand how it has risen to €2.8k in a few months?
Break fee now looks correct. 4 year interbank rate is c.0.2% lower now than 5 year rate when you fixed.

Rates were a little higher back in May so there was no break fee. Interbank rates have dropped quickly over the summer.

You'd still save a lot by switching to a better rate - I think if you switch to anything less than 2.9% you'd save money.
 

iancully86

New Member
Messages
2
Thanks very much @RedOnion - much appreciated.

I presume the “swap/market” rate that PTSB use in their terminology refers to the interbank rate?

Also, In terms of sourcing the interbank rate, I presume Bloomberg is the best source? Any alternatives? Thank you very much.
 

ongar11

New Member
Messages
5
This is a brilliant case study.

Yes, there's a break fee, but because of the 6 months cap with UB it's limited.

If you switch to a 2.6% rate, you'll save a net 13,000 in interest over remaining fix period, after paying the break fee.
I got the breakage amount. €5510. Just wondering if anyone can figure out the formula that ulster bank use. Just want to see if they are just using the 6 month cap.
Any advice greatly appreciated.
Thanks in advance
 

RedOnion

Frequent Poster
Messages
3,292
I got the breakage amount. €5510. Just wondering if anyone can figure out the formula that ulster bank use. Just want to see if they are just using the 6 month cap.
Any advice greatly appreciated.
Thanks in advance
They've applied the cap.
If not your break fee would be 14,000
 
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