Apologies, I missed your previous post in this topic. I've been meaning to do a case study in this specific rate.
Normally I'd tell you to look at the key post on break fees, and if the 4 year rate next year is less than the 5 year rate now, there'll be s break fee. But...
This is AIB.
Historically AIB calculated break fees based on the difference in the rare they charged. I've helped other posters fight it, and they've changed there terms and conditions to look at market rates. But they also kept the old condition as well, and you get the best of both.
The key part is
"(D%): Difference between your original fixed interest rate at the start of the fixed interest rate term, for the full fixed interest rate term, and the applicable fixed interest rate offered by the Bank at the time the mortgage loan is repaid or converted, for the period of (U)"
Your 5 year rate is 2.5%
The 3 & 4 year rates are 2.85%. i.e. higher than your rate.
The only way that AIB can ever charge a break fee on the 2.5% green mortgage is by reducing shorter term rates below 2.5%.
Could could you split thus our as a separate topic, in light of our ongoing discussion on AIB break fees. You might also review if I've written the above in English!
No, that makes no sense.I've also just spoken with someone in AIB who advised that you can pay a lump sum off a fixed rate mortgage and this doesn't count as breaking the fixed rate - does this sound correct?
Thanks Red Onion - apologies only seeing this now...Here's the full wording re when a break fee might be due for AIB. It clearly includes a lump sum repayment.
" you may have to pay us an early repayment charge if you; (i) repay all or part of your mortgage loan early, (ii) make an out of course repayment, or (iii) convert the interest rate on your loan to another interest rate. Any or all of these instances may result in a cost to the bank."
Hi Laura,the only way AIB could charge is a fee for breaking this fixed rate (in order to make a lump sum payment) would be if they had a fixed rate lower than that which we are on, e.g. lower than 2.5?
@Aph2016 Can you check the break for you were quoted? €2,500 doesn't seem right.Lender: KBC
Mortgage outstanding : €265k
Date i fixed: September 2018
Period: 3 years
Fixed rate : 2.65%
Term left : 19 months fixed at 2.65 %
Breakage Fee Quoted: I think it was around €2500 at the time I asked 2 or 3 months ago.
Anyone able to advise on how I can calculate the KBC breakage fee myself on a monthly basis?
That's a big number, and shows how deeply negative rates have gone. Interbank rates are currently negative out past 12 years. The 10 year rate was +1% when you fixed. At the time it seemed inconceivable that they could even stay that low.I thought I would post this, but more as a word of warning against long fixed mortgages
Mortgage outstanding : €316k
Date i fixed: June 2018
Period: 10 years
Fixed rate : 3.2%
Term left : Mortgage expires August 2044
Breakage Fee Quoted: €26,500
Don't be like me; don't fix for a long period
Yes, that's what I thought at the time too. I should never think that I understand markets!At the time it seemed inconceivable that they could even stay that low.
Hi,I worked out inter bank rate as -.42 and -.46.