Swallow Break Fee or Port Loan?

Brendan Burgess said:
Hi skrooge

This is probably true and it's a brilliant idea.

But I don't think you can be definitive about it.

10 year money market rates might rise between the time he draws down the mortgage and when he looks for a break fee.

KBC might look at getting it based on when he drew down the initial mortgage.

If he stays with KBC, he should look at it but I think the safer option is to apply for a mortgage now to Avant.

Brendan
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Most definitely it's not without risk and I didn't mean to come across as definitive, more trying to think of possible solutions.

The first thing to do would be to clarify how the break free would be calculated under the new mortgage. If they can indeed clawback the 11k it's not worth it. I'd be looking at the T&C's closely rather than what the sales people say.

After that there are of course risks of movements in interest rates but over the short term (I'm presuming KBC will pay back the 11k in a matter of weeks) it may be an acceptable risk.

Finally there is no guarantee Avant will take you at their current rate. However this last bit can at least be partially dealt with in parallel.
 
Brendan Burgess said:
For a mortgage of €483k , you really should do the two hours work and get an Avant mortgage.

Brendan
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Given my clarifications above regarding the larger portion (slightly) of the loan being fixed for 2yrs at 2.3%, does this statement still apply?

My monthly repayments to kbc will be €2044. With Avant they'll be €1934. I'd never get back the 11k Break Fee, or am I missing something?
Point taken about rolling onto BOI's unattractive rates in a couple of years (I can fix the 2.3% portion to 3yrs rather than 2, to mitigate this a little) but I think it sounds like an expensive insurance policy, much as I'd like to get away from KBC.
 
Brendan Burgess said:
Yes. You should look only at the interest and not the monthly repayments.

Brendan
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I'm a bit lost now.
How long will it take me to recover the 11k Break Fee, given the difference in interest rates between the two rates I'll be on in kbc, and the new rate I'd be on if I go with Avant?
 
Did I not set it all out in this post?

Swallow Break Fee or Port Loan?

About to close on house purchase having sold home. Borrowing 488k, 35yr loan. We had 6yrs left on a 10yr fixed rate with kbc at 2.99% (incl Current account discount). To pay off the mortgage, we had to pay Break Fee of 11k, which is redeemable when we draw down new mortgage. However, the fixed...
www.askaboutmoney.com
 
Brendan Burgess said:
Did I not set it all out in this post?

Swallow Break Fee or Port Loan?

About to close on house purchase having sold home. Borrowing 488k, 35yr loan. We had 6yrs left on a 10yr fixed rate with kbc at 2.99% (incl Current account discount). To pay off the mortgage, we had to pay Break Fee of 11k, which is redeemable when we draw down new mortgage. However, the fixed...
www.askaboutmoney.com
Click to expand...

No, i think your calc was done on the assumption that my full loan would be subject to the 2.99% 10yr rate from KBC, but i've since noted that €283,500 of the loan is on a 2yr fixed rate of 2.3%.
Does this not skew things and make it a bit less of a no-brainer?
 
OK, so you need to keep things constant.

Rerun the figures comparing the portion fixed for 10 years with Avant and KBC and the portion fixed for 2 years with Avant and KBC.

Avant does not allow the mortgage to be split like this, but it's the best way of doing the comparison.

But look at the interest cost and not the repayments.

Brendan
 
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