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

blue_steel said:
We are currently on the AIB variable rate of 3.15%. With interest rates likely to go up we are considering fixing for 3 years at 2.55%.
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What is your loan-to-value (LTV) ratio? If you think it could be <80%, the 3-year fixed rate is 2.45%.

And if your outstanding mortgage balance is €250k or higher, you are eligible for the 4-year high-value fixed rate, which is 2.3% or 2.2% depending on your LTV bracket.

If you think your LTV could be less than 80%, you should consider getting a valuation done through AIB. It costs €150.

Yes, you have to pay the break fee if you sell (because you are paying off your fixed-rate mortgage early). But of course the break fee could be low or zero, depending on interest rates at the time.

blue_steel said:
IE is D% value 2.55% because we are paying off the mortgage early and effectively moving to an interest rate of 0%?
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No, D is the lower of:
  • retail_rate_you_fixed_at – applicable_retail_rate_when_you_break
  • applicable_wholesale_rate_when_you_fixed – applicable_wholesale_rate_when_you_break
"Retail rates" are the mortgage interest rates available to customers. "Wholesale rates" are typically interbank interest rates.

Thanks to AIB's weird break fee calculation methodology (which they were forced into due to their previous unfairness), you have a reasonable or good chance of a zero break in the future, especially if you fix at a low rate now.
 
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  • Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €3,460 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 €2,340 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 4-year fixed rate (1.95% with no cashback) will save you about €1,780 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €300 over the next 4 years

  • Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will leave you worse off by about €220 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 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 probably 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 Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €440 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 (2.4% with no cashback) will leave you worse off by about €1,560 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 (2.4% with no cashback) will leave you worse off by about €1,560 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 2.40% 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 2.40% rate in September 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).

If you want savings estimates for longer-term fixed rates, let me know.
 

Thanks a lot. This is what I was hoping would happen. So if we fix for 3 years at 2.55% then effectively the 1 and 2 year fixed rates would need to drop below that over the next 3 years for us to incur a fee.
 
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blue_steel said:
Thanks a lot. This is what I was hoping would happen. So if we fix for 3 years at 2.55% then effectively the 1 and 2 year fixed rates would need to drop below that over the next 3 years for us to occur a fee.
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That's right.
 
Your break fee should be around €20 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 Permanent TSB's 5-year green fixed rate (2.35% with €6,339 initial cashback and 2% monthly cashback) will save you about €13,560 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 €12,160 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 €10,360 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 4-year fixed rate (2.05% with no cashback) will save you about €9,520 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.25% with no cashback) will save you about €7,140 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.35% with no cashback) will save you about €5,940 over the next 4 years – but with the even-longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's 10-year fixed rate (2.5% with no cashback) will save you about €4,160 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 save you about €3,560 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 no cashback) will leave you worse off by about €520 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 September 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.

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 you get your loan-to-value ratio (LTV) below 70% so that you are eligible for the listed rates. Your LTV is currently 317k/450k = 70.4%. A slightly higher property valuation (€453k) and/or a few more monthly mortgage payments and/or a small overpayment will get you below 70%. But that is not a reason to delay the switch – i.e., you can start the switch immediately.

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 €15,160 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.

Some of the above lenders will only let you switch to them if you have had a mortgage with Bank of Ireland for at least 12 months. And in the case of switching to Permanent TSB it is two years. See this thread for more details.

If you want savings estimates for longer-term fixed rates, let me know.

PS How did you manage to fix with Bank of Ireland at 2.7% last year? I don't think that was their one-year fixed rate back then.
 
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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).
  • Switching immediately to Permanent TSB's 5-year green fixed rate (2.35% with €6,460 initial cashback and 2% monthly cashback) will save you about €9,920 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 €8,720 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 €6,860 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 4-year fixed rate (2.05% with no cashback) will save you about €6,060 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.25% with no cashback) will save you about €3,600 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.35% with no cashback) will save you about €2,360 over the next 4 years – but with the even-longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's 10-year fixed rate (2.5% with no cashback) will save you about €500 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 €120 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% and you would get the 1% (€3,500) cashback) will leave you worse off by about €900 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 2.90% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 2.90% rate in December 2023 – it could be higher (or lower). You would get the Bank of Ireland €3,500 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.

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 you get your loan-to-value ratio (LTV) below 70% so that you are eligible for the listed rates. Your LTV is currently 322.97k/460k = 70.2%. A slightly higher property valuation (€462k) and/or a few more monthly mortgage payments and/or a small overpayment will get you below 70%. But that is not a reason to delay the switch – i.e., you can start the switch immediately.

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 €11,720 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.

razor842 said:
As i have only 18 months left on my 5 years fixed with 3,500 cashback should i hold on for the cashback or move and re-fix for another 5+ plus years to get the lower interest rate?
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The above estimates show that you can make big savings by switching immediately to another lender, and they account for the fact that you'll be missing out on the 1% (€3,500) future cashback from BOI by doing so.
 
Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Permanent TSB (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 €10,920 over the next 4 years

  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €9,760 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 €8,320 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 5-year fixed rate (2.15% with no cashback) will save you about €6,300 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €4,560 over the next 4 years – but with the even-longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €1,940 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 (2.4% with no cashback) will save you about €1,940 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 Permanent TSB's 5-year green fixed rate (2.8% with 2% monthly cashback) will leave you worse off by about €2,220 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 2.80% rate with Permanent TSB when the current fixed rate ends. And that's assuming that Permanent TSB are even offering a 2.80% rate in November 2023 – it could be higher (or lower). You would continue to get the Permanent TSB monthly cashback in such a scenario. 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 estimates also assume that your loan-to-value ratio (LTV) really is 60% or less so that you are eligible for the listed rates. Your LTV estimate is 450.0k/750.0k = 60.0%. If you get a valuation of less than €750k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 60%. But that is not a reason to delay the switch – i.e., you can start the switch immediately.

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 €13,920 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.

If you want savings estimates for longer-term fixed rates, let me know.
 
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 AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €100 over the next 3 years

  • Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €20 over the next 3 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).
    • As you know, Permanent TSB will only let you switch to them if you have been with your current lender for at least 2 years. But give them a call and see if there is any flexibility around this.

  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will leave you worse off by about €180 over the next 3 years

  • Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will leave you worse off by about €670 over the next 3 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 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 probably 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 Avant Money's 5-year fixed rate (2.15% with no cashback) will leave you worse off by about €1,060 over the next 3 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €1,500 over the next 3 years – but with the even-longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €2,160 over the next 3 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to Finance Ireland's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €2,160 over the next 3 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

  • Switching immediately to Avant Money's "One Mortgage" (a 2.4% fixed rate with no cashback) will leave you worse off by about €2,160 over the next 3 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 13 years)

  • Switching immediately to KBC's 10-year fixed rate (2.85% with no cashback) will leave you worse off by about €2,800 over the next 3 years – but with the even-longer security of 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • The monthly repayment would be €1,205
    • The same warnings as above regarding higher Bank of Ireland rates in the future apply

These savings estimates use for comparison the scenario of immediately breaking and re-fixing with KBC at the 2.25% 3-year rate in order to "reset the clock". 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 (and it might be impossible to switch if your financial situation has deteriorated).

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).

Note that over a four-year horizon (as opposed to the three years used in the above estimates), Avant's 4-year rate becomes better value than AIB's 5-year rate – because the lower interest rate more than offsets the AIB cashback.
 
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Thanks Paul, this is amazing review - appreciate it. Break fee last week was confirmed by BOI to be €0 - will check again this week (am aware that it can change every day).

Regarding the 2.7% 1 year fixed - the original rate quoted to us by BOI was 2.9% for 1 year fixed, with a 0.2% green discount based on BER. Just checked the mortgage account online and it states

Current rate
1 year fixed 2.70% rate
 
alanalanalan said:
Regarding the 2.7% 1 year fixed - the original rate quoted to us by BOI was 2.9% for 1 year fixed, with a 0.2% green discount based on BER. Just checked the mortgage account online and it states

Current rate
1 year fixed 2.70% rate
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Ah, right! Makes sense.
 
Paul F said:
Ah, right! Makes sense.
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To confirm on your other question - just spoke with BOI and break fee today (16th May 22) is €0. Thanks again!

Unfortunately, the best option (with PTSB) looks to be a non-runner as just rang them and they stated they won't consider a mortgage application if <12 months to the day with previous lender. I have been with BOI only since 1st Sept 2021.

Will have to try Option 2 with Haven and see if they will consider with <1 year with previous lender. Looks from the thread on this topic that no-one has established yet if Haven will accept those circumstances.
 
That's excellent, Paul. Thanks so much for your help.
 
alanalanalan said:
Unfortunately, the best option (with PTSB) looks to be a non-runner as just rang them and they stated they won't consider a mortgage application if <12 months to the day with previous lender. I have been with BOI only since 1st Sept 2021.
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So PTSB said you only need to be with your current lender for at least 12 months (not 2 years)? That seems to be a change.
 


Thanks a million Paul, I confirmed over the phone with BOI on friday that my break fee would be 0.
 
Thanks Paul, appreciate it. I confirmed with PTSB about the break fee and it's zero today.

I also found that BOI provides 4 Year Fixed LTV <=60% for 2.2% and its green rate also has a discount of 0.3% off any fixed rate, so it's 1.9% for 4 years and also has 2% cashback. Is it a good choice compared to the ones above?

Regarding the valuation, it should be 750k or above, so the LTV will be 60% or less
 
shaoye said:
I also found that BOI provides 4 Year Fixed LTV <=60% for 2.2% and its green rate also has a discount of 0.3% off any fixed rate, so it's 1.9% for 4 years and also has 2% cashback. Is it a good choice compared to the ones above?
Click to expand...
A few points about this 1.9% BOI rate. Firstly, it does not come with cashback. That's because none of BOI's "high-value" (>€250k) mortgages offer cashback.

The savings from switching to this rate are comparable to (but slightly lower than) the savings from switching to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) – but only over the next four years. After that, you will only be eligible to move to one of BOI's high interest rates, since you will be an existing customer. And you won't even be eligible for the 0.3% green discount – that is also reserved for new customers.
 
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Current lender: UB
Outstanding mortgage balance: 151k
Approximate value of your property: 365k
The date you started your fixed-rate mortgage: November 2019
How many years you fixed for: 4
Your current mortgage interest rate: 2.6%
Your current monthly repayment: €1238
Your property's BER: A2
Are you due to get extra cashback from your current lender in the future: N/A

Any advice would be great Paul Thanks.
Would like to fix for maybe 5/7 years.
 
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Thanks for the clarification Paul. I didn't realize that there is no cashback with the high-value mortgage.
 
€335k loan with EBS.

2.1% 4 years: Cost after 4 years €60,080.64, €15k per year.

2.75% 3 years 2% cashback: Cost after 3 years €49,016.52 - €6700 -> €14.1k per year

2.75% 5 years 2% cashback + 1% after 5 years: Cost after 5 years €81,694.2 - €10,050 -> €14,328.8 per year

Then switch mortgage at the end of each term. 3 years seems cheapest with the cashback, anything else to think about?
5 Years locking seems nice with rates increasing too. The first one seems nicest just from a monthly pay perspective.
 
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