Penalization for breaking a fixed rate

Suelms

Registered User
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5
I am looking into breaking a fixed rate with Ulster Bank.I had a 7 year fixed rate of 3.9% but I only have 2.8 years left out of the 7 years,,,..The amount left in the mortgage is 203,000 for 21 years. They have given me a quote of 3.960 breaking fee.It looks to me as excessive, could it be right?.Many thanks in advance.
 
Did they send you a worked example where they got this value? @RedOnion is the fixed rate break expert here!
 
Looks right.
Rates have dropped since you fixed. UB cap break fee at 6 months interest, which is exactly what they've quoted you.
If the 3 year rate now is more than 0.7% less than the 7 year rate when you fixed, it's right.

Even if you pay the break fee and refix at their current rates, you'll still save money!
 
Thanks a lot for your response. The thing that gets me confused is that they penalised me the same independently of how many years I have left in the fixed term.
Between the penalization and the solicitors fee I will only be saving about 500 in three years.
So, I am paying around 650 euro interest a month, is this multiplied by 6 how you calculate what the breaking fee should be?
Also, it has taken them more than a month to get back to me and so far they have only given me a quote by phone, as I am waiting for the letter that never seems to arrive. This is what got me thinking that they are not giving me the right amount.
Many thanks again for your help


Looks right.
Rates have dropped since you fixed. UB cap break fee at 6 months interest, which is exactly what they've quoted you.
If the 3 year rate now is more than 0.7% less than the 7 year rate when you fixed, it's right.

Even if you pay the break fee and refix at their current rates, you'll still save money!
Th
 
If they didn't apply a cap, your break fee would be about 5,300. That's giving you benefit of short term to maturity.

I'm really confused about your maths.

You're currently on 3.9%, with 2.8 years left.
You can call them, break, and ask to refix at 2.3%, and save 5,400 in interest, even after the break fee. No solicitor, or messing about.

You're comparing to switching I think? Even then, switch to 3% with 2% cashback, and you'll save 5,500 interest, after break fee. But you need to pay solicitor out if that.
 
Hi RedOnion,
Could you please explain how I could save 5,400 in interest if I refix at 2.3 %? I would only be saving less than 100 euro a month , which amounts to less than 1200 a year?
Many thanks in advance
 
Hi RedOnion,
Could you please explain how I could save 5,400 in interest if I refix at 2.3 %? I would only be saving less than 100 euro a month , which amounts to less than 1200 a year?
Many thanks in advance
Interest on 203k at 3.9% for 2.8 years is a little over 22k. Whilst at 2.3% for 2.8 years is around 13k.
That's the savings.
 
Interest on 203k at 3.9% for 2.8 years is a little over 22k. Whilst at 2.3% for 2.8 years is around 13k.
That's the savings.
THanks a lot for responding. Why is it that I am only seeing a difference of round 100 euro a month difference?
Sorry but I am not sure how to calculate all this
SU
 
THanks a lot for responding. Why is it that I am only seeing a difference of round 100 euro a month difference?
Sorry but I am not sure how to calculate all this
SU
You're looking at your repayments only and not the level of interest you're paying. Your repayment includes capital and interest.
 
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