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

Paul,

Thank you very much for taking the time to do this, it is extremely informative and I am very grateful.

The Ulster Bank Breakage fee was €1924.02 as at 29/04/22 so you were very close.

We hadn't considered PTSB to be honest as I would be generally wary of 'cash-back' offers, but that is quite the difference. That would be fixing for 5 years. When compared though to Avant 7 yr 2.15% rate though, my concern would be where would we be in 5 years. If the best rate we could get then was 3 or 3.5%, our balance would be about 800k at that stage so even 1% difference would add up to a lot. This is where the crystal ball comes in...

Separately, you mentioned that Avant allow you to take the mortgage with you if you move/take out another mortgage with them for the longer term mortgages (10yrs +). Do you know if this is an option with the 7 year rate?

Many thanks.
 
Thank you very much. Yes, that is what it boils down to in 5 years what will interest rates be? At best they will be the same. I can't see them being lower. Most likely they will be higher.
 
Even if interbank rates don't move again for the next few months, your break fee will fall by about €70 per month (but interbank rates could fall and your break fee would rise).

But you should realise that there is a risk that the banks will put up mortgage interest rates – nobody can say when but it will happen, possibly quite soon. The extra costs from that could easily outweigh a €750 break fee.

Here are your updated options and saving estimates in light of the lower break fee. Note that you are eligible for Permanent TSB's new green rate.
  • Switching immediately to Permanent TSB's 5-year green fixed rate (2.35% with €6,547 initial cashback and 2% monthly cashback) will save you about €5,700 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 Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €2,920 over the next 4 years

  • Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €1,800 over the next 4 years
    • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)

  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €1,460 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Ulster Bank's 5-year fixed rate (2.2% with no cashback) will save you about €100 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 Permanent TSB'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 Permanent TSB customer, the best rate you would be able to switch to today is 2.95%
    • So if you switch to this Ulster Bank offer now, you will not be eligible to switch to one of Permanent TSB'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 Avant Money's 10-year fixed rate (2.1% with no cashback) will leave you worse off by about €240 over the next 4 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 2.25% fixed rate with no cashback) will leave you worse off by about €1,940 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 12 years)

  • Switching immediately to Finance Ireland's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €3,660 over the next 4 years – but with the even-longer security of 10 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 2.20% rate with Ulster Bank when the current fixed rate ends. And that's assuming that Ulster Bank (or Permanent TSB, if they have taken over your mortgage by then) are even offering a 2.20% rate in April 2023 – 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.

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'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 €5,920 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.
 
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Hi Paul,

Details below. Many thanks in advance. Much appreciated.

  • Current lender: Bank of Ireland
  • Outstanding mortgage balance: €252,000
  • Approximate value of your property €550,000
  • The date you started your fixed-rate mortgage: August 2018
  • How many years you fixed for: 10 years
  • Your current mortgage interest rate: 3.3%
  • Your current monthly repayment: €1,709.21
  • Your property's BER: C1
  • Are you due to get extra cashback from your current lender: Yes, 1% after 5 years which is €3,000 due to be paid August 2023.
 
@ifonly 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 Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €3,980 over the next 4 years

  • Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €3,920 over the next 4 years

  • Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €3,200 over the next 4 years – but with the 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 €2,960 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 €1,620 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.

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.

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 want savings estimates for longer-term fixed rates, or information about "locking in" the low break fee ahead of switching to another lender, let me know.
 
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Hillwalker123 said:
Separately, you mentioned that Avant allow you to take the mortgage with you if you move/take out another mortgage with them for the longer term mortgages (10yrs +). Do you know if this is an option with the 7 year rate?
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@Hillwalker123 Yes, I believe that this is an option with all of Avant's fixed rates (see here, "Do I have to pay an early redemption fee if I decide to move home?"). But you should confirm it with them.

Bear in mind that the benefit is that Avant will waive/refund any break fee, but they will not let you keep the same interest rate that you had initially if rates have risen in the meantime. In contrast, Finance Ireland (on their 10+ years fixed rates) will waive/refund any break fee and let you keep the same interest rate that you had initially.

PS Please disregard the savings estimate I gave for the Avant 15-year rate.
 
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@Mez! 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). In your case, the break fee is extra volatile because there is so long left on your fixed rate.
  • Switching immediately to Permanent TSB's 5-year fixed rate (2.55% with €5,040 initial cashback and 2% monthly cashback) will save you about €8,780 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 (2.15% with €2,000 cashback) will save you about €8,140 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €7,940 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 €6,560 over the next 4 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 2.25% fixed rate with no cashback) will save you about €5,120 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term
    • You would have to shorten your mortgage term to 15 years to be eligible for this rate
    • The monthly repayment would be €1,651

  • Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.4% with no cashback) will save you about €3,820 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 the 1% (€3,000) cashback in August 2023) will save you about €2,620 over the next 4 years. And 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 doing nothing. You would get the Bank of Ireland €3,000 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

You must draw down a mortgage of at least €250k to be eligible for the Permanent TSB and AIB rates listed above. Bear that in mind if you are considering switching to one of them, since your mortgage balance will soon be below €250k.

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 want information about "locking in" the low break fee ahead of switching to another lender, let me know.
 
@Mez! You could lock in the current low/zero break fee either by
  • switching to Bank of Ireland's variable rate (3.9% but it could rise at any time), or
  • switching to a relatively short fixed-term rate, e.g., 2.9% fixed for 1 or 2 years
ahead of the move to another lender.

Or you could do nothing and hope that the break fee is still low when you complete the switch (in perhaps two or three months' time).

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.

And of course switching to a lower rate will save you money. Your monthly repayment would drop to €1,660 on the 2.9% rate.

Mez! said:
Finance Ireland 15 year rate sounds ideal.
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By going for the long-term fixed rate with Finance Ireland, you are trading the bigger savings available with another lender for the longer security of fixing for 15 years, and the benefit offered in relation to "taking your mortgage with you" if you move. Make sure to read all of the terms and conditions in relation to this benefit so that you understand it fully.
 
Hi Paul - thanks for this. It's very helpful

  • Current lender: KBC
  • Outstanding mortgage balance: €332,000
  • Approximate value of your property €460,000
  • The date you started your fixed-rate mortgage: December 2019
  • How many years you fixed for: 3 years
  • Your current mortgage interest rate: 2.65%
  • Your current monthly repayment: €1,285
  • Your property's BER: A3
  • Are you due to get extra cashback from your current lender: No

I hadn't really considered switching until the end of fixed period at the end of this year but with the KBC withdrawal I'm looking to move my current account and think this may be a good time to switch mortgage before it is transferred to BOI depending on the breakage fees.

I should add - I'm considering PTSBs new 5 year fixed green mortgage at 2.35% which gives 2% cashback on monthly payments and 2% cashback lump.
 
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Hi Paul, I requested it yesterday. I didn't receive a quote over the phone and they send the fee in the post. Hopefully, it's good news. Thanks
 
Paul F said:
@Mez! 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).
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I called BOI Paul and they said the break fee is €0.00 if I switched today.

I advised I intend to switch to the 2.4% 15 year with Finance Ireland. I asked if they wished to offer a lower, more competitive rate than 3.3% on their 10 year fixed, I would consider it. They undertook to come back to me soon.
 
@Mail2017 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 green fixed rate (2.35% with €6,640 initial cashback and 2% monthly cashback) will save you about €6,160 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 Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €5,140 over the next 4 years

  • Switching immediately to AIB's 5-year green fixed rate (2.15% with €2,000 cashback) will save you about €3,200 over the next 4 years
    • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)

  • Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) will save you about €2,460 over the next 4 years – but with the longer security of 7 years on a fixed rate
    • You would have to shorten your mortgage term to 30 years to be eligible for this rate
    • The monthly repayment would be €1,235

  • Switching immediately to Avant Money's 10-year fixed rate (2.2% with no cashback) will save you about €520 over the next 4 years – but with the even-longer security of 10 years on a fixed rate
    • You would have to shorten your mortgage term to 30 years to be eligible for this rate
    • The monthly repayment would be €1,261

  • Switching immediately to KBC's 5-year fixed rate (2.45% with no cashback) will leave you worse off by about €1,360 over the next 4 years. But 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 (2.55% with no cashback) will leave you worse off by about €4,000 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.

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 December 2022 – 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 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 Avant and Finance Ireland estimates also assume that you get your loan-to-value ratio (LTV) below 70% so that you are eligible for their listed rates. Your LTV is currently 332k/460k = 72.2%. A slightly higher property valuation (€475k) and/or a few more monthly mortgage payments and/or a small overpayment will get you below 70%. Your LTV is already low enough for the other rates listed.

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 €8,140 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.

If you want savings estimates for longer-term fixed rates, let me know.
 
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Thank you so much - that's extremely helpful. I'll request the breakage fee today from KBC and will post back here.

Some great options there and very significant savings. Thanks again.
 

Just had the valuer out, and they put the house value at 450k (paid 375k for it in 2019!), which makes my LTV 59.33%!! Delighted to be under 60% LTV for the better rates. Feel a bit iffy about it being because of a poor market, but I have also paid off lump sums to get it to this LTV so quickly, so just gonna be grateful I can get the lower rates. Gonna go for 1.95% Fixed rate with Avant based on that, for seven years. Looks like the only better market rate is 1.90% Green Rate with BOI, and the BER assessor said I'm likely a C but could get to B with some (potentially) minor upgrades, but doesnt feel worth the hassle for a 0.05% interest difference, especially as my 3% fixed rate with EBS ends in June.

Avant are taking 10-15 days to return on mortgages, if that's useful to anyone. That's according to Doddl.

Can someone explain to me briefly what would happen if I wanted to pay off 100k lump sum with Avant? There's a medium sized chance some shares I have will be worth some money, in 12-18 months, and I'd love to use a chunk of it to further pay off my mortgage. I _think_ I pay a price (some %?) to make the lump sum, and then there might be a fee/price because I will clear my mortgage sooner?
 
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HonestlyTho said:
Looks like the only better market rate is 1.90% Green Rate with BOI
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Bear in mind that it seems that BOI won't let you stay on a green rate when the 1.9% fixed rate ends in 4 years, so I'd have to pick one of their higher rates or switch again to another lender.

HonestlyTho said:
Can someone explain to me briefly what would happen if I wanted to pay off 100k lump sum with Avant?
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See this thread. You can overpay up to 10% of the outstanding balance per calendar year without penalty. So that would be about €26k next year and about €23k the following year. (You can only make up to two overpayments per year.)

If you want to overpay by more than this, you'll have to pay a break fee, which is calculated pro rata – i.e., if you are paying off 20% of the outstanding balance, the break fee is only 20% of what the break fee would for paying off the full mortgage. Remember also that break fees can be low or even zero, depending on the change in interbank interest rates, but this can't be predicted with certainty.

HonestlyTho said:
There's a medium sized chance some shares I have will be worth some money, in 12-18 months
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You'll have to pay a chunk of that in tax. (That's a discussion for another sub-forum.)

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; adult children going to college, etc.)
  • Maxing out your pension contributions (very large tax relief is given)
  • Overpaying your mortgage
in approximately that order.
 
Great to know that about BOI, further reaffirms my preference for 7 years fixed rate. Thanks!

Really helpful on overpaying, I didnt realise it was only two overpayments a year, so that's good to know. My plan now is to create a new savings account and send to it monthly, and then do one overpayment at the end of each year.

The amount I quoted for the lump sum is after tax and conversion to euro. It's all very potential and variable, with the markets and what not. Is there a specific forum for advice on those things? Fwiw, I have no debt, I have an emergency fund (though I would definitely add to it), I dont plan to have kids. Most likely I would help my mam in retirement (moving her closer to me, probably giving her in the region of 50k depending). I already send 8% of salary to pension (and company matches 4%) so I dont know how to figure out how to give more, or do it in lump sums.
 
HonestlyTho said:
The amount I quoted for the lump sum is after tax and conversion to euro. It's all very potential and variable, with the markets and what not. Is there a specific forum for advice on those things?
Click to expand...
Have a browse around the subforums on Askaboutmoney. Here is the money makeover subforum, for example.

HonestlyTho said:
I already send 8% of salary to pension (and company matches 4%) so I dont know how to figure out how to give more, or do it in lump sums.
Click to expand...
Read about PRSAs and the tax relief that is available.
 
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