Key Post Switch or re-fix my mortgage? Breakage fee calculator and savings estimates for your case (Ireland)

[Godders]

Wow. That’s brillian. Thanks Paul. Big difference between €22,000 and €400! I won’t pretend to understand why… but I will chase it up with KBC and let you know how I got on.

Hi Paul, the letter arrived from KBC yesterday. Posted on the 15th with 10 working days to accept . The break fee is 0 - which is nice.

Thanks again

 

[Honestly]

Your break fee should be around €60 at the moment – but confirm it with EBS (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Permanent TSB's 5-year fixed rate (2.55% with €5,339 initial cashback and 2% monthly cashback) will save you about €3,700 over the next 4 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 2.95%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €2,860 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) will save you about €2,340 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.2% with no cashback) will save you about €820 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 15-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,180 over the next 4 years – but with the even-longer security of 15 years on a fixed rate
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.55% with no cashback) will leave you worse off by about €2,700 over the next 4 years – but with the even-longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  • And your interest rate (initially 2.55%) will automatically fall as time passes and you move into lower loan-to-value (LTV) brackets. See the section "How we decide rate reductions" on this page.
  
  
• Switching immediately to EBS's 5-year fixed rate (2.75% with the €3,300 cashback in July 2024) will save you about €70 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

These savings estimates use for comparison the scenario of switching to the 2.75% rate with EBS when the current fixed rate ends. You would get the EBS €3,300 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland, if you are at least 3 years into your fixed rate you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move.


You only need a broker when switching to certain lenders (Avant and Finance Ireland, for example). You always need a solicitor if switching lenders. Shop around for a lower solicitor quote – €1,300 all in should be achievable.


If you have a standard mortgage protection policy (with Irish Life or Zurich, etc., even if it was organised by EBS) you can simply transfer it to the new lender. But if it is a "block cover" plan that is specific to EBS, you cannot transfer it and you'll need to get a new policy. See this post. Check with EBS which type you have.


You can see from my savings estimates that in your case their is a trade-off between bigger savings and a shorter period on a fixed rate versus smaller savings and a longer period on a fixed rate. You have to decide which you value more.

This is so great, thank you!

I think I will go for a 7 year fixed rate with Avant at 2.05%. I am not trying to save monthly outgoings, I am mostly trying to secure a good fixed rate for a long period. I expect the next few years will be tumultuous and having a fixed rate will be beneficial. I'm deciding against 10 years instead because if I did decide to switch from Avant because of better market conditions I'd rather have had the lower rate of interest during the period I stayed with them. Here's hoping I'm not back in a decade regretting that choice.

I assume with Avant, as I am with EBS, I can break the mortgage anytime so if better rates come on the market I can make that change and do this same exercise again.

You only need a broker when switching to certain lenders (Avant and Finance Ireland, for example). You always need a solicitor if switching lenders. Shop around for a lower solicitor quote – €1,300 all in should be achievable.

I haggled him down to €1,475, and as he did my mortgage and I like working with them, going to stay with them.

If you have a standard mortgage protection policy (with Irish Life or Zurich, etc., even if it was organised by EBS) you can simply transfer it to the new lender. But if it is a "block cover" plan that is specific to EBS, you cannot transfer it and you'll need to get a new policy. See this post. Check with EBS which type you have.

Great, it's with Irish Life so optimistic it can move easily, thank you.


Another question I have is about splitting the mortgage. I know you can split it by rates (some on fixed, some on variable). Is it possible to split it by banks (100k with EBS, 160k with Avant)? In an optimistic scenario, I might have a 200k payout (after taxes) from company shares in the next 12-18 months, and if so I'd like to pay half of that off the mortgage. Avant only allow overpayment by 10% per year (I could do 26k over four years but that doesnt seem efficient). I guess I could pay a penalty to over pay and it would be worth it at that rate. The reason I mention keeping 100k with EBS is because my current terms allow me to overpay with no charges (I paid 50k last year as mentioned)

 

[Honestly]

If you have a standard mortgage protection policy (with Irish Life or Zurich, etc., even if it was organised by EBS) you can simply transfer it to the new lender. But if it is a "block cover" plan that is specific to EBS, you cannot transfer it and you'll need to get a new policy. See this post. Check with EBS which type you have.

Got a reply from EBS:

It is a block policy which is paid with your mortgage the premium is Eur 40.45 per month.

Your post says block policies cant move, but the thread has folks saying they could, so will wait to hear back from EBS.

Just gonna have a rant about the life insurance. I have to pay a premium because I am 20 stone and 5'8''. Simply because I am fat. Doesnt matter that I am fit, healthy, hike / swim / and am active, or that I eat well and have access to private healthcare etc, all things that are better indicators of my health than simply my weight. So now if moving it means I have to go through the embarrassing process of talking to a broker again, and it boils my blood.

 

[Paul F]

I assume with Avant, as I am with EBS, I can break the mortgage anytime so if better rates come on the market I can make that change and do this same exercise again.

You are always free to switch to another lender at any time, but you may have to pay a break fee, and you will have to pay solicitors' and valuation fees.

Note that this post suggests that Avant will not let you switch to a different Avant rate while you are in the middle of a fixed rate – you have to wait until your fixed rate expires.

Is it possible to split it by banks (100k with EBS, 160k with Avant)?

I believe there is nothing in law to prevent this, but I'd say that it is highly unlikely that any lenders would entertain the idea.

I might have a 200k payout (after taxes) from company shares in the next 12-18 months, and if so I'd like to pay half of that off the mortgage. Avant only allow overpayment by 10% per year (I could do 26k over four years but that doesnt seem efficient). I guess I could pay a penalty to over pay and it would be worth it at that rate.

Remember that the penalty (which is calculated in the same way as the break fee but pro rata) can often be low or even zero. If interbank rates rise between the time you fix and the time you overpay, the penalty will be zero.

 

[Paul F]

Hi Paul, the letter arrived from KBC yesterday. Posted on the 15th with 10 working days to accept . The break fee is 0 - which is nice.

If you are planning to switch to another lender, you may want to consider "locking in" your zero break fee in case it rises.

You can do this either by

• switching to KBC's variable rate (3.0% but it could rise at any time), or
• switching to a relatively short fixed-term rate, e.g., 2.5% fixed for 1 year or 2.25% fixed for 2 years

ahead of the move to another lender.

Switching to a short-term fixed rate does not eliminate the possibility of a future break fee (when you move to another lender) but on average it reduces the possible size of any break fee.

On the other hand, if you want to stay with KBC, you can ask to re-fix on one of their lower rates, e.g., 3 years fixed at 2.25%, or 5 years fixed at 2.4%.

 

[Paul F]

I fixed on the green rate with AIB at the end for 2.15%. I asked to overpay but they messed up the application so I have a window now where I can set it to the level I want for no penalty.

I have capacity to overpay on the loan significantly and considering doing this to about 30-40% (€1,077 --> €1,400/€1,500) per month . I've run the numbers here () and can see how much it will save me over time and it's pretty significant. I have no immediate need for this extra cash and can't see a downside at the moment.

As discussed in the below thread, it is quite likely that you will be able to overpay without limit for the foreseeable future, although it would be safer to check before any overpayment:

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

Moderator's note: Because of a quirk in how AIB calculate their break fee / early redemption charge, you can make unlimited overpayments on some of their fixed rates without penalty. Or you can break out of your existing AIB fixed rate and re-fix on a different rate, again without penalty. (You...

www.askaboutmoney.com

When you get your loan-to-value (LTV) ratio below 50%, you will be eligible to switch to the 2.1% rate (if AIB are still offering it by then). If you think your property is worth more than €420k, you could ask AIB to perform a fresh valuation in order the shorten the time for your LTV to drop below 50%.

I'm maxed out on monthly pension contributions, don't have any other debt and have money set aside for investment through a broker. Is there anything I'm missing other than missing out on the utility of the extra cash?

Your priorities should usually be:

• Paying off expensive debt (credit cards, personal loans, car loans, etc.)
• Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
• Saving money for any expenses you will have over the next few years (kids; buying a car; childcare; adult children going to college, etc.)
• Maxing out your pension contributions (very large tax relief is given)
• Overpaying your mortgage (or possibly investing, but only if your investment horizon is at least 5 years, ideally 10)

in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.

 

[TRS30]

I just think the BTL is going to cause issues if I look to switch at the minute. Hadn't really considered it would be an issue till spoke to PTSB yesterday. I appreciate all banks have different criteria so might give AIB a call to see what they say.

The plan in my head at the minute, is move to UB 5 year rate at 2.2%, pay off small loan (6K) ASAP and then redirect funds to PTSB credit account.

I will definitely be looking to switch in 5 years when 2.2% rate is done as hopefully BTL will be in better position so not be an issue and as you mentioned earlier PTSB do not (currently) have the best rates (existing customers).

Re being treated as an existing customer of PTSB, I am going to wait till i get something official from UB and then take this up with PTSB, as being forced to them shouldn't take away my new customer status.

Couple of updates.

Spoke to AIB on the phone and person I spoke to was interested until I brought up the BLT and then they wanted statements, lease agreements etc before they would even give me a verbal 'it's a runner or not'.

Letter from UB arrived confirming no breakage fee and another letter with rates form, showing 2.2% 5 year fixed option.

Am just going to go with this now and avail of the PTSB credit a/c for over payments till the 5 years is up and then look to switch.

 

[derval d]

Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with KBC (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Permanent TSB's 5-year fixed rate (2.55% with €5,959 initial cashback and 2% monthly cashback) will save you about €4,800 over the next 4 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 2.95%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €3,900 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to AIB's 4-year fixed rate (2.15% with €2,000 cashback) will save you about €3,760 over the next 4 years
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €2,260 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will save you about €640 over the next 4 years – but with the even-longer security of 15 years on a fixed rate
  
  
• Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €320 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,020 over the next 4 years – but with the even-longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of switching to the 2.25% rate with KBC when the current fixed rate ends. And that's assuming that KBC (or Bank of Ireland, if they have taken over your mortgage by then) are even offering a 2.25% rate in February 2024 – it could be higher (or lower). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland, if you are at least 3 years into your fixed rate you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move.

If you are thinking of switching to the 4-year 2.15% fixed rate with AIB, you will need to ensure that your loan-to-value ratio (LTV) really is below 50%. Your LTV estimate is 298.0k/600.0k = 49.7%. This is not a concern for any of the other rates listed above – they only require an LTV below 60%.

Paul, thanks for your detailed response. KBCs letter dated 27 April 2022 confirmed the break fee of zero; which is valid for 10 working days. I’m currently collecting the docs for a broker to look to switch. Thanks for the insight.

 

[Paxton]

Hi Paul,

NEW ONE

• Current lender: Bank of Ireland
• Outstanding mortgage balance (how much you still owe): €219,353.31 on 29 Apr 2022
• Approximate value of your property: Paid €285,000 in Jan 2018 off plans, conservative estimate €330,000 today, fair estimate worth €350,000 today,
• The date you started your fixed-rate mortgage (month and year): 26 Nov 2018. Rate expires on 26 Oct 2023.
• How many years you fixed for: 5
• Your current mortgage interest rate: 3.0%
• Your current monthly repayment (excluding any overpayments): €913.60 standard repayment, making the allowable 10% overpayment of €91.36 on top of this also.
• Your property's BER (Building Energy Rating): A3
• Are you due to get extra cashback from your current lender in the future: Yes, I confirmed today with BOI that I will receive 1% of the €237,500 I borrowed. Due €2,375 cashback at the end of the fixed period.

I also confirmed with BOI today that the break fee is €835.

Questions:

• Does the break fee seem correct? I may call back for a breakdown of the figures.
• Assuming break fee is correct, is there more sensible options in the market to break and move to given the cost of €835 plus the opportunity cost to receive the 1% cashback (€2375)?

 

[Rockygal]

At @Brendan Burgess's suggestion, I am creating this thread as a place where people can request guidance on whether they should switch their mortgage and, if so, which lender and rate they should switch to.

You are allowed to switch even if you are in the middle of a fixed rate with your current lender. The savings can be very significant, even if you have to pay fees.

The guidance will include an estimated calculation of the break fee ("early breakage charge" / "breakage cost") if you are currently on a fixed-rate mortgage. (If you are currently on a variable-rate mortgage, you do not have to pay a break fee when switching.) I am not aware of an online mortgage break fee calculator for Ireland, but this is arguably the next best thing.

To request guidance, please provide the following information:

• Current lender
• Outstanding mortgage balance (how much you still owe)
• Approximate value of your property
• The date you started your fixed-rate mortgage (month and year)
• How many years you fixed for
• Your current mortgage interest rate
• Your current monthly repayment (excluding any overpayments)
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when?

If you are looking for information on something that is not directly related to break fees or which lender to switch to, first check the below links to see if your query has been answered before. Consider asking your question in one of those threads before asking it here.

Nothing in this thread should be considered financial advice.

Hi
Heres my details.

• Current lender KBC
• Outstanding mortgage balance (how much you still owe) 178K
• Approximate value of your property 400K
• The date you started your fixed-rate mortgage (month and year) SEPT 2017
• How many years you fixed for 10 YEARS
• Your current mortgage interest rate 2.99%
• Your current monthly repayment (excluding any overpayments) €954
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary B3
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when NO

 

[Paul F]

• Current lender: Bank of Ireland
• Outstanding mortgage balance (how much you still owe): €219,353.31 on 29 Apr 2022
• Approximate value of your property: Paid €285,000 in Jan 2018 off plans, conservative estimate €330,000 today, fair estimate worth €350,000 today,
• The date you started your fixed-rate mortgage (month and year): 26 Nov 2018. Rate expires on 26 Oct 2023.
• How many years you fixed for: 5
• Your current mortgage interest rate: 3.0%
• Your current monthly repayment (excluding any overpayments): €913.60 standard repayment, making the allowable 10% overpayment of €91.36 on top of this also.
• Your property's BER (Building Energy Rating): A3
• Are you due to get extra cashback from your current lender in the future: Yes, I confirmed today with BOI that I will receive 1% of the €237,500 I borrowed. Due €2,375 cashback at the end of the fixed period.

My estimate of your break fee is very similar to Bank of Ireland's quote (€835). Bear in mind that it is volatile because wholesale interest rates are volatile.

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €5,780 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) will save you about €3,320 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.2% with no cashback) will save you about €2,060 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.55% with no cashback) will leave you worse off by about €900 over the next 4 years – but with the even-longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  • And your interest rate (initially 2.55%) will automatically fall as time passes and you move into lower loan-to-value (LTV) brackets. See the section "How we decide rate reductions" on this page.
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with the 1% (€2,375) cashback) will leave you worse off by about €1,000 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

These savings estimates use for comparison the scenario of switching to the 3.0% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 3.0% rate in October 2023 – it could be higher (or lower). You would get the Bank of Ireland €2,375 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

The savings estimates also assume that you consider €1,005 to be your normal monthly payment to Bank of Ireland. This means that your mortgage (whether with Bank of Ireland or with one of the above lenders) will be paid off in about 26 years. If you want estimates based on a monthly repayment to Bank of Ireland of €913.60, let me know.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

The estimates also assume that your loan-to-value ratio (LTV) is currently 219.4k/350.0k = 62.7%. A slightly higher property valuation (€366k) and/or a few more monthly mortgage payments and/or a small overpayment would get you into a lower LTV bracket (< 60%), and you would be eligible for lower rates from Avant Money and Finance Ireland. But that is probably not a good reason to delay the switch – i.e., you can start the switch immediately.

Assuming break fee is correct, is there more sensible options in the market to break and move to given the cost of €835 plus the opportunity cost to receive the 1% cashback (€2375)?

The above savings estimates for switching to another lender compare the scenario of switching lender to the scenario in which you stayed with BOI and did collect the 1% cashback in late 2023 – i.e., the fact that you will miss out on the 1% cashback by switching is factored in to the estimates. It does not seem like it is worth waiting ~18 months for the 1% cashback.

 

[Paul F]

• Current lender KBC
• Outstanding mortgage balance (how much you still owe) 178K
• Approximate value of your property 400K
• The date you started your fixed-rate mortgage (month and year) SEPT 2017
• How many years you fixed for 10 YEARS
• Your current mortgage interest rate 2.99%
• Your current monthly repayment (excluding any overpayments) €954
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary B3
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when NO

Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with KBC (and please post it here when you receive it, including the date of the letter). In your case, the break fee is extra volatile because there is so long left on your fixed rate.

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €7,200 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €5,480 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €5,400 over the next 4 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 2.8%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €4,480 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €3,820 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Note that if you decide to do this, your mortgage move will soon move onto Bank of Ireland's books, and they discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Bank of Ireland customer, the best rate you would be able to switch to today is 3%
  • So if you switch to this KBC offer now, you will not be eligible to switch to one of Bank of Ireland's low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.4% with no cashback) will save you about €2,480 over the next 4 years – but with the even-longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of doing nothing. The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

If you are considering switching to another lender and you want information on "locking in" the current break fee, let me know.

 

[redwellies]

Your break fee should be around €340 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €7,120 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €5,420 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €4,400 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will save you about €3,380 over the next 4 years – but with the even-longer security of 15 years on a fixed rate
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.4% with no cashback) will save you about €2,360 over the next 4 years – but with the even-longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €420 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

These savings estimates use for comparison the scenario of switching to the 3.0% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 3.0% rate in July 2022 – it could be higher (or lower). The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

The savings estimates also assume that you consider €948 to be your normal monthly payment to Bank of Ireland. This means that your mortgage (whether with BOI or with one of the above lenders) will be paid off in about 22 years. If you want estimates based on a monthly repayment to BOI of €862, let me know.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland, if you are at least 3 years into your fixed rate you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move.

Thank you so much for this. I will have to get the ball rolling. Pricing solicitors before I engage their services.
To be honest, I would be erring towards making a slightly larger monthly repayment resulting in a shorter term. We initially took out a 35 year mortgage but I really want to reduce the term.
I was thinking of perhaps repaying over 17 years as opposed to 22. I’m guessing it would save us a huge amount in the long run.

 

[Panch18]

Hi all

Wondering if you can give me some advice on what the break clause would be for me in the below situation?

• Bank of Ireland
• 357,000 Outstanding balance
• 630,000 Approximate value of your property
• Nov 2015 start date of fixed rate mortgage
• 10 year fixed
• 4.2% interest
• 1865 currently monthly payment
• B1 BER
• No cash back due

Edit to say this is for a house sale and no repurchase

Many thanks

 

[Paul F]

Wondering if you can give me some advice on what the break clause would be for me in the below situation?

• Bank of Ireland
• 357,000 Outstanding balance
• 630,000 Approximate value of your property
• Nov 2015 start date of fixed rate mortgage
• 10 year fixed
• 4.2% interest
• 1865 currently monthly payment
• B1 BER
• No cash back due

Edit to say this is for a house sale and no repurchase

Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

You may want to consider "locking in" your low break fee in case it rises.

You can do this either by

• switching immediately to Bank of Ireland's variable rate (3.9% but it could rise at any time), or
• switching immediately to a relatively short fixed-term rate, e.g., 2.9% fixed for 1 or 2 years

ahead of the sale.

Or you could do nothing and hope that the break fee is still low when you sell.

Switching to a short-term fixed rate does not eliminate the possibility of a future break fee (when you sell) but on average it reduces the possible size of any break fee.

And of course switching to a lower rate will save you money. Your monthly repayment would drop to €1,612 on the 2.9% rate.

 

[Paul F]

To be honest, I would be erring towards making a slightly larger monthly repayment resulting in a shorter term. We initially took out a 35 year mortgage but I really want to reduce the term.
I was thinking of perhaps repaying over 17 years as opposed to 22. I’m guessing it would save us a huge amount in the long run.

First of all, I should mention another possible option, which I left out of the previous post:

• Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €6,440 over the next 4 years

The reason I mention it is because of the overpayment flexibility it offers.

You are correct that reducing the term of your mortgage will save you a huge amount in the long run, but the advice on this site is that you should almost always maintain the longer term but regularly overpay on your mortgage. (See this thread.) By doing so, you will still make the same very large savings but you will have the flexibility to stop the overpayments at any time. If you had instead signed a contract for a shorter term, you would be obliged to make the higher monthly payment every month, which could stretch you financially at some point in the future.

Of course, this approach requires you to choose a mortgage product that allows large overpayments without penalty. With regard to the lenders you may be considering:

• Haven do not allow any overpayments without penalty
  • Note that the penalty is calculated in the same way as the break fee but pro rata, so it is possible for the penalty to be low or even zero, but we can't know with certainty if that will be the case
• Because of a quirk in how they calculate their break fees, AIB's green rate will allow you to make unlimited overpayments without penalty for the foreseeable future (though if certain rates change, this benefit will go away)
• Avant and Finance Ireland allow you to overpay by 10% of the mortgage balance(not just 10% of the monthly payment) per year
  • This means that you could overpay by up to €18k in the first year, and slightly less in each successive year
  • Note that with Avant, you can only make up to two overpayments per calendar year, so you would have to save up your overpayments and pay them as lump sums

Here is a calculator showing your current mortgage (without any monthly overpayment). If you play around with the figures (interest rate and loan term), you can see how much you would save for a given regular overpayment. But remember the advice not to shorten your contractual mortgage term.

Remember also that overpaying your mortgage may not be the best use of your money. Your priorities should usually be:

• Paying off expensive debt
• Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
• Saving money for any expenses you will have over the next few years (kids; childcare; adult children going to college, etc.)
• Maxing out your pension contributions (very large tax relief is given)
• Overpaying your mortgage

in approximately that order.

 

[redwellies]

Thank you so much for that. I had noticed that AIB hadn’t featured in the initial response. I really appreciate the amount of time you have invested in this.
I think AIB is looking like the front runner. I need to get the ball rolling on gathering paperwork for our application. I will contact BOI for our breakout fee in the coming days.

 

[AndyDublin]

Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with KBC (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €1,340 over the next 4 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers. So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) will save you about €540 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.2% with no cashback) will leave you worse off by about €680 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to KBC's 5-year fixed rate (2.45% with no cashback) will leave you worse off by about €1,380 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates
  
  
• Switching immediately to Avant Money's 15-year fixed rate (2.4% with no cashback) will leave you worse off by about €2,300 over the next 4 years – but with the even-longer security of 15 years on a fixed rate
  
  
• Switching immediately to Finance Ireland's 10-year fixed rate (2.55% with no cashback) will leave you worse off by about €3,540 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
  
  
• Switching immediately to Finance Ireland's 15-year fixed rate (2.55% with no cashback) will leave you worse off by about €3,540 over the next 4 years – but with the even-longer security of 15 years on a fixed rate
  

These savings estimates use for comparison the scenario of switching to the 2.30% rate with KBC when the current fixed rate ends. And that's assuming that KBC (or Bank of Ireland, if they have taken over your mortgage by then) are even offering a 2.30% rate in April 2023 – it could be higher (or lower). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

It may seem like it is not worth switching to another lender but bear in mind that your mortgage will soon be owned by Bank of Ireland, whose rates are much higher than KBC's. So if you don't switch now, you might find that you really want to switch in a few years' time, at which point rates might be higher.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And Avant will waive or refund any break fee that might arise if you move home, provided you take out a new mortgage with them (subject to certain conditions). And in the case of Finance Ireland's 10-year and longer fixed rates, you can "take your mortgage with you" – meaning that you get to keep the same interest rate and avoid a break fee if you move home.

Hi Paul

Just recieved the Break Fee letter from KBC and it is zero.

Thanks
Andy

 

[Blackrock1]

Your break fee should be around €2,350 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with UB (and please post it here when you receive it).

• Switching immediately to Haven's 4-year fixed green rate (2.0% with €2,000 cashback) will save you about €1,850 over the next four years
• Switching immediately to Permanent TSB's 5-year fixed rate (2.55% with €6,600 cashback) will save you about €2,400 over the next four years – but their future rates may be higher than Haven's

These savings estimates use as a baseline the scenario of staying on UB's 2.5% fixed rate and then switching to their 2.2% fixed rate when that expires. (And that assumes that a 2.2% rate is even available in a year's time.) The estimates also account for fees and cashback.

If you're feeling brave, you could consider the strategy outlined in this thread: switch to Haven's 2.35% 3-year fixed rate and get the €5k cashback. Then quickly switch to Haven's 2.0% green rate. If it works, you will be better off by about €4,850 in four years' time. Nobody knows for sure if Haven will allow you to do this, so you might be stuck on the 2.35% rate, but at least you'd have got the €5k cashback.

There is a similar strategy with EBS (see @Brendan Burgess's third post in this thread), but it is higher risk in the sense that you will be stuck on a 2.9% rate if they don't allow the second switch.

If you're prepared to settle for smaller savings in exchange for a longer fixed rate, consider Avant's 1.95% rate, fixed for 7 years. You are probably too late to be eligible for the €1,500 cashback from Avant. To be eligible, the switch to Avant has to be underway before the end of March and you must use a broker who is an Avant "Gold Partner". I don't know what "underway" means but if you are inclined to try to beat the deadline you could talk to an Avant Gold Partner as soon as possible and see if it can be done.

Hi Paul

We are still looking at our options and i decided to get a fresh break free quote from UB, it has gone from nearly 2.5k to 758 euro in about 8 weeks.

I know its a crystal ball gazing exercise but it does seem like the trajectory is going only one way?

 

[ifonly]

Hi Paul
Heres my details.

• Current lender KBC
• Outstanding mortgage balance (how much you still owe) 139K
• Approximate value of your property 355K
• The date you started your fixed-rate mortgage (month and year) Nov 2018
• How many years you fixed for 10 YEARS
• Your current mortgage interest rate 2.99%
• Your current monthly repayment (excluding any overpayments) €718
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary C1
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when NO