Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

Thanks. It's all clear.

It's just a hassle for me to be ringing AIB every month to get a break fee as I am on a 5 year fixed rate. I know most likely the break fee will be zero, but it's not guaranteed and I may end up paying 2-3k.

Is it possible to change monthly repayments to biweekly?
 
You seem to be confusing a number of different issues


masterboy123 said:
Is it possible to change monthly repayments to biweekly?
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I'm not aware of such an option with AIB but this would honestly make a miniscule difference to your mortgage. The difference between compounding biweekly and monthly is just not worth the effort, especially if your income is monthly.

If you google it, you will see lots of incorrect info saying that it pays off your mortgage quicker but they generally make the mistake of dividing the monthly payment by 2 and paying that amount biweekly. This is not compounding, it is equivalent to making 13 monthly payments in a calendar year or overpaying by ~8% (13/12)

masterboy123 said:
I know most likely the break fee will be zero, but it's not guaranteed and I may end up paying 2-3k.
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How could you end up paying €2-3k? If you make an overpayment without first confirming the break fee, you will be notified by post anyway so worst case scenario is that you get a €10-20 charge on a €1k overpayment. It's not going to be in the thousands.

But realistically, it is almost a certainty that no AIB fixed rates for 1-4 years terms will drop back below your current 2.1% so you will not have to worry about a break fee.

Just go ahead and set up a standing order for your monthly overpayments in your online banking and you can forget about it.
 
I read on this forum that people were paying 2k-3k in break fee. But I suppose that's the penalty on the whole mortgage amount and not for an extra repayment. Am I correct?

Say I have 110K left on mortgage and monthly repayment is 600. If I make an overpayment of 1000, and there is a break fee. What would it be?
 

I thought that's how AIBs fortnightly repayments worked? 26 annual payments, each half of a monthly repayment?

Edit: my mistake, I understand the point that was being made. Your mortgage is being repaid quicker yes but due to the fact that you are repaying more, not due to less interest being charged
 
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masterboy123 said:
Say I have 110K left on mortgage and monthly repayment is 600. If I make an overpayment of 1000, and there is a break fee. What would it be?
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Zero. It will be zero for as long as AIBs 1, 2, 3 & 4 year fixed rates stay above your 2.1% rate. It really is that simple for you.


masterboy123 said:
I read on this forum that people were paying 2k-3k in break fee. But I suppose that's the penalty on the whole mortgage amount and not for an extra repayment. Am I correct?
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If you ask for a break fee, it will be based on the total outstanding mortgage balance but really it is a percentage. Anecdotally, the worst break fees I've seen on AAM were in the 2-3%. But these were a very specific group of people who had fixed for a very long period of time before the rates dropped. You won't fall in this category.

To put it in perspective, if you start making months overpayments of €1k and you notice a break fee has been applied, I would highly doubt that it would be more than €10 (1%). Even at that, you are still saving the other 1.1% and 2.1% for each year thereafter that you have the mortgage.

In a nutshell, just start overpaying regularly and reassess if/when you get charged the €10. If you have a big one off lumpsum, then confirm it with AIB to be on the safe side
 
Where on the forum did you read that someone who fixed with AIB for three or five years has a break fee since AIB updated their break fee methodology?
I do not think that such a case exists.

You and I could pay off our whole AIB mortgage immediately without a break fee as long it was fixed for three or five years and rates are not falling for 1,2 and 4 years below the rate we fixed for - just because of the way AIB calculates it. The break fee for your example will be zero as long as the rates for the periods mentioned do not fall below your fixed rate.

Yes you can ask AIB for bi-weekly payment via a mortgage amendment form.

I do for two years monthly overpayments and am not bothering to call AIB every time asking for a break fee as I know it will be zero.
 
Hi all,
I'm currently planning on taking out a 5yr. fixed with AIB @2.95% - The issue I have is that there are outstanding issues with contracts which could mean that I'll have to return the money to AIB after the drawdown happens (should they not be resolved). Of course, in an ideal world all issues would be remedied before drawing down unfortunately that won't be the case for many reasons.

The question I have is what is the worst case (penalty) I'll be liable to for early breakage? Let's assume I'm taking out 200k in this example and decide to pay it back in 2/3 months where the 5year fixed product would still be offered at 2.95% for my LTV. According to my calculations the early breakage is 0 however AIB couldn't confirm this for me when requesting clarification.

Thanks in advance.
 
Thanks for the crisp explanation!
Sounds good, I am off to making some overpayments now
 
Hi there

70% of our mortgage has alway been fixed; in 2021 we fixed it for 3 years at 2.35%, so in 2024 we will have an option to fix again and we may go for 1-5 years depending on offers.

The 30% was initially on a variable rate, but in 2021 we fixed it for 3 years at 2.35%. This will default to a variable rate in 2024 unless we fix it again.

We have about 155K left to pay in total.

Should we ask for a break fee and, if still zero, fix both for 5 years now or wait until 2024?

If we transfer an additional €100-€200 on salary day into our mortgage accounts from time to time, do we have to pay a break fee? We don’t want to increase the amount we pay monthly, we want to have flexibility to transfer a couple of hundreds whenever we can. We bank with AIB as well, so online transfers from our current account to our mortgage accounts should be easy to make. We haven’t tried that yet in case we’re not supposed to.

Thank you.
 
You are a bit late imho for refixing - also no one can say what the rate is in 2024. Personally I would not refix - especially after the hike today. But who knows and the rate might even increase further by 2024. Depends on your risk appetite.


And yeah if you fixed for three years or five years the break fee should be zero.
 
For the five year rate there should be no break fee.
As an alternative idea you draw down the mortgage as a variable and you fix later.

Anyway the solicitor only requests draw down if signature/closing is imminent as far as I know. Would find it unusual of the solicitor requesting it while it is unclear if or when you close.
 
Am I right to assume that given rates have now increased, and specifically for me I'm talking about the 5 year green rate, the previous ability to restart the fixed rate period at the original 2.1% after making an overpayment is gone?
 
MoneyLar said:
the previous ability to restart the fixed rate period at the original 2.1% after making an overpayment is gone?
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Just to be clear, overpayments and refixing are two separate things.

If you are currently on the 2.1%, you can make overpayments and you won't face any break fee for doing so esp now that all of AIB's rates have gone up

If you were planning to restart the 5 year term then you can only do that at 3.1% now. So probably not a good idea. But there is no overpayments involved in refixing
 
Thanks and yeah I know they are separate, it was more down to the nuance for a while of a rock bottomed green rate meaning that when I and others previously overpaid AIB would break the fix rate and of course you can then avail of the full 5 year green rate again at the same low rate from that point. Given the rate increases that has now gone?
 
MoneyLar said:
previously overpaid AIB would break the fix rate and of course you can then avail of the full 5 year green rate again at the same low rate from that point
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That's not how it works.

You do not break the fixed rate when you overpay. Your overpayment is subject to an ERC which we know will be zero. But your existing fixed rate continues unchanged, e.g. if you are 1 year in, you will still have 4 years after any overpayment

To refix the entire principal is an entirely separate form and has nothing to do with overpayments
 
My understanding how AIB did it, and I saw it with the fixed term being reset, was to allow a lump sum payment they break the fixed rate and as you say with zero charge, and then refix you for a term. The term they gave me was a full five years again. I made the overpayment very early into my fixed rate period / drawdown of the original mortgage so maybe that had something to do with the 5 years being reset.

It was the reset the clock ad per your OP in this thread. They might be two different concepts altogether but in doing the overpayment it allowed me to reset the fixed rate clock at the same rate
 
I had a look back at the documentation I received from AIB when I first requested a break fee and I think I understand where the confusion is coming from. The language used by AIB in that letter is a bit ambiguous.

If you request a break fee, you will receive a letter based on the full outstanding principal. The letter I received included the following statement:
If you wish to proceed to break from your fixed rate, we require a signed authority from all parties to the mortgage loan instructing us to break you out of the fixed rate by close of business dd/mm/yy
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The letter also included all the possible rates and the mortgage amendment form so I can understand why it's not clear. It kind of implies that you need to fully break and refix when in reality it is only one option available to you.

For your case specifically, you will not face an ERC if you want to make an overpayment. You can request the break fee for peace of mind to confirm it is zero. But once you have this, you do not need to sign and return this form indicating any changes to your mortgage. You can simply transfer your lump sum to your mortgage account.

What this means is that your existing mortgage product continues unchanged, you stay on the same 2.1% rate. A week or two later you will receive a letter from AIB confirming the payment and reduction in your monthly payment going forward but they will confirm that the end of your 5 year fix is still the same, e.g. if your current 5 year fix expires on 09/12/25, that will stay the same.

If you want to check this for yourself, you could make a nominal overpayment today in your online banking (e.g. €100) and wait to see the letter you receive in 2 weeks. It will confirm no change to your exisiting terms
 
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