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

Hi Paul,

Thanks a million for answering so many people's questions, you're very helpful. My details below, currently on a variable with AIB. It looks like Avant 3-year fixed might be my best option but any input would be much appreciated.


Current lender: AIB

Outstanding mortgage balance: €235k

Approximate value of your property: €400k

The date you started your fixed-rate mortgage: currently on variable 3.15%

How many years you fixed for: n/a

Your current mortgage interest rate: 3.15%

Your current monthly repayment: €1299

Your property's BER: unknown

Cashback?: No
 
Paul - Thank you in advance for your help. These are my details:

Current lender: Ulster Bank
Outstanding mortgage balance (how much you still owe): €130k
Approximate value of your property: €700k
The date you started your fixed-rate mortgage (month and year): September 2018
How many years you fixed for: 4
Your current mortgage interest rate: 2.6%
Your current monthly repayment (excluding any overpayments): €961
Your property's BER (Building Energy Rating): D
Are you due to get extra cashback from your current lender in the future? No

Our term is limited to 13 years due to our ages. We can afford to overpay a bit (say at least €5k/year) so would hope to clear the mortgage in 10 years max, hopefully a bit earlier.

There is a chance we may sell up and downsize in the next 5 years but that is still very much just an idea. In any case, it doesn't sound like that should be a factor when deciding how long to fix for, therefore I would be happy to fix for 5, 7 or 10 years.

I may be starting a new job in September so I'm keen to switch as soon as possible. I was looking at the AIB 5-year fixed because I believe the switching process is quicker and more straightforward than with Avant. If AIB overpayments are effectively fee free (as per the other thread) that would be great.

For some reason I had assumed that switching to another UB fixed deal wouldn't be an option but reading a few posts up just opened my eyes to the idea. Their 5-year fixed is 2.35%, same as AIB's. I'll give them a ring but we may have literally just missed the boat; their website has a notice saying they're not accepting any new mortgage applications as of today(!) except in limited situations.
 
Hi I hope you can help as I'm pretty clueless about all this.


Current lender: AIB

Outstanding mortgage balance: €112k

Approximate value of your property: €250k

The date you started your fixed-rate mortgage: currently on variable 2.95%

How many years you fixed for: n/a

Your current mortgage interest rate: 2.95%

Your current monthly repayment: €835

Your property's BER: unknown

Cashback?: No

So I have just submitted a mortgage amendment form to AIB to fix for 5 years at 2.45 (currently variable at 2.95) however on reflection I am considering fixing for 10 years at 3.20 but I am unsure of whether this is the best move for me. AIB have a 21 day cooling off period so I can resubmit amendment form to move to 10 year if that's what I decide. I would have thought at this stage moving to another lender would not be completed in time before significant rate hikes.

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

Note: you may receive two separate letters from Ulster Bank a few days apart, and their structure and wording can lead to confusion. Look for the line that says: "To break out of this fixed rate early, you would have to pay a fee of €X". That amount is your break fee. Ignore all other references to break fees.
  • Switching immediately to Avant Money's 4-year fixed rate (2.05% with no cashback) will save you about €1,260 over the next 4 years

  • Switching immediately to AIB's 5-year fixed rate (2.45% with €2,000 cashback) will leave you worse off by about €160 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.25% with no cashback) will leave you worse off by about €460 over the next 4 years

  • Switching immediately to Ulster Bank's 5-year fixed rate (2.45% with no cashback) will leave you worse off by about €720 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 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 probably 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 7-year fixed rate (2.35% with no cashback) will leave you worse off by about €1,340 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 (2.5% with no cashback) will leave you worse off by about €2,640 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 €3,060 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 Haven's 7-year fixed rate (2.65% with no cashback) will leave you worse off by about €3,900 over the next 4 years – but with the even-longer security of 7 years on a fixed rate

  • Switching immediately to Ulster Bank's 7- or 10-year fixed rate (2.95% with no cashback) will leave you worse off by about €5,060 over the next 4 years – but with the even-longer security of 7 or 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 same warnings as above regarding higher Permanent TSB rates in the future apply

These savings estimates use for comparison the scenario of switching to the 2.45% 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 2.45% rate in January 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.

It may seem like it is not worth switching to another lender but bear in mind that your mortgage will soon be owned by Permanent TSB, whose rates are much higher than Ulster Bank'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).

Some of the above lenders will only let you switch to them if you have had a mortgage with your current lender for at least 12 months. (I assume you have.) See this thread for more details.

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

Bear in mind that interest rates could rise between now and the time that you complete any switch.
 
@Dublinbay12 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 Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€6,800) cashback) will leave you worse off by about €1,710 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€6,800) cashback) will leave you worse off by about €8,850 over the next 4 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).

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 February 2023 – it could be higher (or lower). You would get the Bank of Ireland €6,800 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.

Nobody knows when Bank of Ireland will increase their rates and by how much, but the above estimates show the effect of re-fixing now versus re-fixing in February of next year – but the estimates require us to assume what BOI's interest rate will be in 7 months. If you think they will put up their rates even slightly before February, you should re-fix now. Ultimately, though, it's your call.

Any idea what your Building Energy Rating (BER) is? Check here to see if your property already has a BER cert.
 
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@mimes 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 Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €5,720 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 €4,960 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 €4,060 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €2,540 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €1,780 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 save you about €620 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 €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

  • Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €140 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 15 years)

  • Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€2,500) cashback) will not save you or cost you anything over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€2,500) cashback) will leave you worse off by about €2,330 over the next 4 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).

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 December 2023 – it could be higher (or lower). You would get the Bank of Ireland €2,500 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).

Bear in mind that interest rates could rise between now and the time that you complete any switch.
 
@DaveInDublin Because you are on a variable-rate mortgage, you do not have to pay a break fee.
  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €9,140 over the next 4 years

  • Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €9,120 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 5-year fixed rate (2.15% with no cashback) will save you about €7,380 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €6,500 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to AIB's 5-year fixed rate (2.45% with no cashback) will save you about €6,060 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €5,160 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 (2.4% with no cashback) will save you about €5,160 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 AIB's 7-year fixed rate (3.05% with no cashback) will save you about €740 over the next 4 years – but with the even-longer security of 7 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to AIB's 10-year fixed rate (3.2% with no cashback) will leave you worse off by about €600 over the next 4 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).

These savings estimates use for comparison the scenario of staying on the variable rate with AIB and assume that that rate doesn't change between now and June 2026 (which is unlikely). 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 below 60% so that you are eligible for some of the listed rates. Your LTV estimate is 235.0k/400.0k = 58.8%. If you get a valuation of less than €392k, 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 want savings estimates for longer-term fixed rates, let me know.

Bear in mind that interest rates could rise between now and the time that you complete any switch.

Any idea what your Building Energy Rating (BER) is? Check here to see if your property already has a BER cert.
 
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@Frasier Crane Your break fee should be around €180 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Ulster Bank (and please post it here when you receive it, including the date of the letter).

Note: you may receive two separate letters from Ulster Bank a few days apart, and their structure and wording can lead to confusion. Look for the line that says: "To break out of this fixed rate early, you would have to pay a fee of €X". That amount is your break fee. Ignore all other references to break fees.
  • Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €460 over the next 4 years

  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €260 over the next 4 years

  • Switching immediately to Ulster Bank's 4- or 5-year fixed rate (2.35% with no cashback) will leave you worse off by about €100 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 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 probably 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 5-year fixed rate (2.15% with no cashback) will leave you worse off by about €660 over the next 4 years

  • Switching immediately to AIB's 4-year fixed rate (2.65% with €2,000 cashback) will leave you worse off by about €920 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €1,120 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 leave you worse off by about €1,800 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-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,800 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

  • Switching immediately to Avant Money's "One Mortgage" (a 2.4% fixed rate with no cashback) will leave you worse off by about €1,800 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 13 years)

  • Switching immediately to Ulster Bank's 7- or 10-year fixed rate (2.8% with no cashback) will leave you worse off by about €2,180 over the next 4 years – but with the even-longer security of 7 or 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 same warnings as above regarding higher Permanent TSB rates in the future apply

These savings estimates use for comparison the scenario of switching to the 2.35% 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 2.35% rate in October 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.

It may seem like it is not worth switching to another lender but bear in mind that your mortgage will soon be owned by Permanent TSB, whose rates are much higher than Ulster Bank'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). N.B. You are only eligible for these benefits if you trade up, i.e., if your mortgage balance after you move is at least as big as your mortgage balance before you move.

Bear in mind that interest rates could rise between now and the time that you complete any switch.

If you are thinking of selling up in the next few years, that should be a factor in how long you fix for. Either fix for 4 or 5 years if you intend moving around then, or pick a mortgage that allows you to avoid a break fee when you move (any Avant mortgage or Finance Ireland's 10-year and longer fixed rates, provided you are trading up, i.e., taking out a bigger mortgage than before).

Frasier Crane said:
If AIB overpayments are effectively fee free (as per the other thread) that would be great.
Click to expand...
This benefit only applies to AIB's "green" mortgage, which you are not eligible for.

I don't believe that a simple rate change is classified by Ulster Bank as a new mortgage application. Therefore, you should still be able to switch to their 2.35% rate (if that is what you decide to do). Please post an update here based on what they tell you.
 
@Namrog Because you are on a variable-rate mortgage, you do not have to pay a break fee.
  • Switching immediately to KBC's 5-year fixed rate (2.4% with €3,000 cashback) will save you about €3,740 over the next 4 years
    • 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).
    • You must apply by 15 July 2022 if you wish to switch to KBC. You would also have to open a current account with them.

  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €2,500 over the next 4 years

  • Switching immediately to AIB's 5-year fixed rate (2.35% with no cashback) will save you about €2,240 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €1,700 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €1,300 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 €700 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-year fixed rate (2.4% with no cashback) will save you about €700 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

  • Switching immediately to Avant Money's "One Mortgage" (a 2.4% fixed rate with no cashback) will save you about €700 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 14 years)

  • Switching immediately to AIB's 7-year fixed rate (2.95% with no cashback) will leave you worse off by about €150 over the next 4 years – but with the even-longer security of 7 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

  • Switching immediately to AIB's 10-year fixed rate (3.1% with no cashback) will leave you worse off by about €760 over the next 4 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).

These savings estimates use for comparison the scenario of staying on the variable rate with AIB and assume that that rate doesn't change between now and June 2026 (which is very unlikely). 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 below 50% so that you are eligible for the listed rates. Your LTV estimate is 112.0k/250.0k = 44.8%. If you get a valuation of less than €224k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 50%. But that is not a reason to delay the switch – i.e., you can start the switch immediately.

Namrog said:
I would have thought at this stage moving to another lender would not be completed in time before significant rate hikes.
Click to expand...
You might well be right about that but nobody knows for certain the timing of the rate increases.

Any idea what your Building Energy Rating (BER) is? Check here to see if your property already has a BER cert.
 
@Paul F thank you so much for the detailed breakdown! Can I ask would much change or be available if I was to get my LTV down below 60%? I have the option to burn 10% of my outstanding capital and have just about enough saved to do it. It would bring my LTV to 58% I believe, which I think opens up some slightly lower interest rates
 
Hi,

Current lender: kbc

Outstanding mortgage balance: €152k

Approximate value of your property: €350k

The date you started your fixed-rate mortgage: April 2021

How many years you fixed for: 3

Your current mortgage interest rate: 2.4%

Your current monthly repayment: €885 including 10% extra payment.

Your property's BER: C2
No cash back due.

Kbc said breaking fund cost is zero.
They listed a client legal fee of 884 euro. This appears to be my legal fees that were discharged by the bank when the loan was first set up but has become due for payment on early redemption of the account... Is this typical?

I'm thinking of switching to Avant or even extending my kbc fix period.

Appreciate any advice.
Thanks
 
@Dathuil Let's assume you reduce your mortgage balance to €216k and you get a property valuation of €360k, which will bring you into the <60% LTV bracket. (You will have to get a valuation from the new lender during the switching process, and then you will know what size of lump sum overpayment you would need to make to get into the <60% LTV bracket.)
  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €1,480 over the next 4 years

  • Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €1,260 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 5-year fixed rate (2.15% with no cashback) will leave you worse off by about €180 over the next 4 years

  • Switching immediately to Ulster Bank's 4- or 5-year fixed rate (2.35% with no cashback) will leave you worse off by about €340 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 Permanent TSB's books, and they discriminate between new and existing customers, i.e., their best rates are not available to existing customers
    • The same warnings as above regarding higher Permanent TSB rates in the future apply

  • Switching immediately to AIB's 5-year fixed rate (2.45% with €2,000 cashback) will leave you worse off by about €620 over the next 4 years

  • Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €1,000 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 €2,240 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 €2,240 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 AIB's 4-year fixed rate (2.75% with €2,000 cashback) will leave you worse off by about €3,120 over the next 4 years

  • Switching immediately to Ulster Bank's 7- or 10-year fixed rate (2.8% with no cashback) will leave you worse off by about €4,080 over the next 4 years – but with the even-longer security of 7 or 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 same warnings as above regarding higher Permanent TSB rates in the future apply

These savings estimates use for comparison the scenario of making the lump sum overpayment now and switching to the 2.35% 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 2.35% rate in January 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.

Don't be fooled into thinking that the savings are bigger by staying in your current (60% to 70%) LTV bracket. Remember that this reply and my last reply use different baseline scenarios.

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.

Bear in mind that interest rates could rise between now and the time that you complete any switch.

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.
 
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Gabe77 said:
The date you started your fixed-rate mortgage: April 2021

How many years you fixed for: 3

Your current mortgage interest rate: 2.4%
Click to expand...
@Gabe77 Are you sure your current rate is fixed for only three years? The 2.4% rate is the rate for a five-year fix with KBC.
 
sabinalee said:
Paul, this 1400€ should be paid to my account anyway for being with them 5 years? No matter if I stay with them or not. Am I right?
My new term with BOI starts from 10th of August 2022.
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@sabinalee The point that I was making here is that if you closed (paid off) your mortgage with Bank of Ireland before 10th August 2022 as part of the switch, you would not be entitled to get the €1,400 cashback from them – because you would not have had a mortgage with them for 5 years.

In their terms and conditions, Bank of Ireland say that they will pay this 1% cashback "within 45 days of the 5th anniversary of your mortgage drawdown", i.e., around the end of September. In theory it should be OK to complete the switch after 10 August but before the end of September and still get the cashback, but double check that with them.

Cashback Plus | Mortgage | Bank of Ireland

Get 2% of your new mortgage back as cash upfront. Plus, we'll give you an additional 1% of your mortgage back in cash in five years’ time (subject to T&Cs)
personalbanking.bankofireland.com

Bank of Ireland's variable rate is 3.9%, so that is not a good idea.

If you were to re-fix with Bank of Ireland, you can agree any monthly repayment amount that you like with them. But the problem with agreeing to a monthly repayment of €1,100 is that you would be contractually obliged to make that €1,100 payment every month, and you would not have the right to drop back down to, e.g., €970 per month. That could leave you very financially stretched.

One of the advantages of switching to Avant or Finance Ireland (but not KBC or AIB) is that you have the right to make large overpayments without penalty – as much as 10% of your outstanding balance per year, which is about €10k in your case. You can only do this as a lump sum overpayment once or twice per year, not as a regular monthly overpayment. So you could overpay when you are able to but you would not be contractually obliged to do so.

There is one final option: if you re-fix with Bank of Ireland (or if you switch to KBC or AIB), it is possible that you will be able to make overpayments without penalty (or for a very small penalty). It all depends on interbank (wholesale) interest rates and how they change, and that is difficult to predict. You would need to ask the lender for a break fee quote before each overpayment and judge if it worth your while paying the penalty (if there is one).

Remember also that overpaying your mortgage may not be the best use of your money. 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; 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.
 
Paul F said:
@Newbie! I don't see how that is possible, unless they simply switched from one Avant rate to another. Are you sure they have completed the switch to Avant and are not still in the middle of the process? Please ask them for more info if you can.
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Haven't seen them since Paul but spoke with Avant and they said all switches need solicitors so there is either some very peculiar anomaly with this particular switch or the neighbours have made a mistake.
 
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@Gabe77
  • Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €240 over the next 3 years

  • Switching immediately to KBC's 3-year fixed rate (2.25% with no cashback) will leave you worse off by about €20 over the next 3 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed – just an updated valuation).
    • 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 4-year fixed rate (1.95% with no cashback) will leave you worse off by about €80 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 €660 over the next 3 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed – just an updated valuation).
    • The same warnings as above regarding higher Bank of Ireland rates in the future apply

  • Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will leave you worse off by about €920 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 €1,360 over the next 3 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 €2,000 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- or 15-year fixed rate (2.4% with no cashback) will leave you worse off by about €2,000 over the next 3 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 Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €2,440 over the next 3 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 17 years)

  • Switching immediately to KBC's 10-year fixed rate (2.85% with no cashback) will leave you worse off by about €2,600 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 – just an updated valuation).
    • The same warnings as above regarding higher Bank of Ireland rates in the future apply

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 April 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.

If you consider a "horizon" of 4 years or longer, the savings from switching to another lender become bigger (compared to staying with KBC).

The savings estimates also assume that you consider €885 to be your normal monthly payment to KBC. This means that your mortgage (whether with KBC or with one of the above lenders) will be paid off in about 17 years.

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).

Bear in mind that interest rates could rise between now and the time that you complete any switch.

Gabe77 said:
They listed a client legal fee of 884 euro. This appears to be my legal fees that were discharged by the bank when the loan was first set up but has become due for payment on early redemption of the account... Is this typical?
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I haven't heard of that before. Note that the above savings estimates do not account for that fee.

Edit: Can you confirm that you mean that KBC paid your solicitor's fees when you took out the mortgage?
 
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