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


This is exactly what I did recently. A quick and painless process.
 
@Paul F incredibly helpful advice here.
You basically got my financial future-focus sorted. Thank you so so much!
 


I'm 9 months in to a five year fixed rate with Ulster Bank at 2.2%. Just to be clear, i can call them and basically reset the clock on this by doing the above steps? As it appears to be extremely painless, this is something I should probably keep doing every few months until the 2.2% rate is scrapped.
 
smndly said:
I'm 9 months in to a five year fixed rate with Ulster Bank at 2.2%. Just to be clear, i can call them and basically reset the clock on this by doing the above steps?
Click to expand...
Yes – provided they are still allowing existing mortgage customers to break and re-fix (which I believe they are). And in your case provided your mortgage is still above €250k.

As I said:
Maybe add a note to [the rate sheet where you have ticked the 2.2% 5-year fixed rate] telling UB not to carry out this re-fix if the rate has increased by the time they get the completed form from you.
Click to expand...
 
Last edited:
Hi Paul, fair play, amazing work.

Wondering if you could crunch the numbers for me.

Current lender: KBC

Outstanding mortgage balance: €391,000

Approximate value of your property: €570,000

The date you started your fixed-rate mortgage: April 2022

How many years you fixed for: 3

Your current mortgage interest rate: 2.3%

Your current monthly repayment: €1444.19

Your property's BER: D1

Cashback?: None
 
@Bronsontb 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 (2.45% with €2,000 cashback) will save you about €680 over the next 3 years

  • Switching immediately to KBC's 3-year fixed rate (2.3% with no cashback) will save you about €380 over the next 3 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 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 KBC's 5-year fixed rate (2.45% 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).
    • The same warnings as above regarding higher Bank of Ireland rates in the future apply

  • Switching immediately to Permanent TSB's 7-year fixed rate (3.0% with €1,939 initial cashback and 2% monthly cashback) will leave you worse off by about €600 over the next 3 years – but with the longer security of 7 years on a fixed rate
    • 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 7-year fixed rate (3.05% with €2,000 cashback) will leave you worse off by about €960 over the next 3 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to AIB's 10-year fixed rate (3.2% with €2,000 cashback) will leave you worse off by about €1,360 over the next 3 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to KBC's 10-year fixed rate (2.99% with no cashback) will leave you worse off by about €1,480 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 same warnings as above regarding higher Bank of Ireland rates in the future apply

  • Switching immediately to Avant Money's 10-year fixed rate (2.5% with no cashback) will leave you worse off by about €1,500 over the next 3 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 2.55% fixed rate with no cashback) will leave you worse off by about €1,640 over the next 3 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 15 years)

  • Switching immediately to Finance Ireland's 10-year fixed rate (3.05% with no cashback) will leave you worse off by about €2,980 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
    • And your interest rate (initially 3.05%) 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 2.5% 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 2.5% rate in May 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 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).

The estimates also assume that your loan-to-value ratio (LTV) is currently 97.0k/150.0k = 64.7%. A slightly higher property valuation (€162k) and/or a few more monthly mortgage payments and/or a small overpayment would get you into a lower LTV bracket (< 60%), and you would be eligible for lower rates from KBC, Avant and Finance Ireland. But that is probably not a good reason to delay the switch – i.e., you can start the switch immediately. Let me know if you want savings estimates for the <60% LTV bracket.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

Because your outstanding mortgage balance is less than €100k, it may not be possible to switch to Avant. But you should check this with more than one broker.
 
@nivakr 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 €11,340 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 €9,640 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 Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €6,940 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Haven's 10-year fixed rate (2.85% with €5,000 cashback) will save you about €4,660 over the next 4 years – but with the even-longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's 7-year fixed rate (2.45% with no cashback) will save you about €4,180 over the next 4 years

  • Switching immediately to Avant Money's 10-year fixed rate (2.6% with no cashback) will save you about €2,480 over the next 4 years

  • Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €760 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 Finance Ireland's 10- or 15-year fixed rate (3.15% with no cashback) will leave you worse off by 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
    • And your interest rate (initially 3.15%) 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 10-year fixed rate (3.3% with no cashback) will leave you worse off by about €4,220 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 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 estimates also assume that your house is currently worth €375k. This means that your loan-to-value ratio (LTV) below 80% (293.7k/375.0k = 78.3%) and you are eligible for the listed rates. If you get a valuation of less than €368k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 80%. 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 €14,340 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.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

nivakr said:
In addition to finding the best rate, my main concern is if I need to stay with the first lender for at least an year before other banks take me on as a customer.
Click to expand...
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. See this thread for more details.

nivakr said:
Also, will the increase in house value accounted for and will I get a favourale LTV?
Click to expand...
Yes, as explained above.
 

Many thanks for the detailed analysis.


Probably bad wording on my part. What I meant is that, as the plan to sell up is still not very well defined, it is probably better to hedge against interest rate increases than to try and time the fixed rate period to perfection. We would be looking to downsize and repay the mortgage so a break fee is likely to apply unless the timing is spot on.

Paul F said:
This benefit only applies to AIB's "green" mortgage, which you are not eligible for.
Click to expand...

Ah ... thanks for the clarification.


I called UB on Monday. Switching to another UB fixed rate is still available to us. If switching right now there would be a break fee, which they can't provide over the phone but will receive by post in the next few days. (I'll update the thread once I get the letter.) They advised that the break fee quoted will be valid for 2 weeks; if we wish to proceed we just need to return a form they'll send and the switch will be processed in a few days. If switching within the last 60 days of the existing fixed rate period (i.e. as of 1st August) then a break fee wouldn't apply.

One thing I learned is that the break fee they'll quote is only valid to transfer to another UB product. If we wanted to transfer to another provider then they would calculate an early redemption charge, different to the break fee, which they would also advise by post and would be valid for 4 weeks.

If the break fee to switch to the UB 5-year fixed is in the order of €180 as you suggested I think we'll just go with that option. Mainly because it's a very easy process, but also we keep T&Cs like the ability to overpay up to 10% of the outstanding balance every year and an ERC capped at 6 months interest on the outstanding amount. Also, based on your analysis, switching to another provider wouldn't deliver any significant savings over the fixed rate period. We may be stuck on a slightly higher PTSB rate at the end of the 5 years but, if we manage to overpay a bit every year as planned, the mortgage would be down to about €50k at that point. If UB's rate for the 7-year or 10-year fixed were a bit lower I would be tempted to fix for longer.
 
Hi Paul. Can you please provide guidance for the following.
  • Current lender: PTSB
  • Outstanding mortgage balance (how much you still owe): 292k
  • Approximate value of your property: 700k
  • The date you started your fixed-rate mortgage (month and year): Mar 2021
  • How many years you fixed for: 3
  • Your current mortgage interest rate: 2.5%
  • Your current monthly repayment (excluding any overpayments): €1,867
  • Your property's BER : A2
  • Are you due to get extra cashback? No.
 
We have fixed for three years last summer (so two years left) at 2.45% with AIB. Didn’t want to fix for longer as we’d like to move in the next few years. Just thinking with interest rates rising should we fix for say 5 years, if rates are going to rise would there be a big break fee if we moved in say two years? Or if we moved and stayed with AIB would they waive the break fee as the next mortgage would be bigger? Just looking to lock in a good rate but the intention to move is holding me back.
 
  • Current lender - KBC
  • Outstanding mortgage balance (how much you still owe) - 198K
  • Approximate value of your property - 450K
  • The date you started your fixed-rate mortgage (month and year) August 2020
  • How many years you fixed for - 2 Years, about to come off the fixed rate
  • Your current mortgage interest rate - 2.25%
  • Your current monthly repayment (excluding any overpayments) - €1,103 - 18 years remaining
  • Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - A3
  • Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? No
As above, about to come off our Fixed Term, looking to to fix for 5 years based on the impending rate increases. I have completed the following calculations; just looking to verify and make sure I am not missing anything. I used Switcher.ie to see the monthly repayments. Based on the below, it looks like it would not be worth switching based on the potential savings (€1,691 over 5 years to switch to AIB green mortgage)/time involved in process with the risk of further increases during the application process, would welcome thoughts/comments.

ProviderFixed TermInterest RateMonthly RepaymentTotal Repayments Over Fixed Term PeriodDifference to Most CompetitiveDifference to Remain with KBCComments
KBC (Current)5 Year
2.40%​
€1,130​
67,787​
1,691​
0​
Negligible breakage fee, will then switch to BOI at prevailing rate
AIB Green5 Year
2.10%​
€1,102​
66,096​
Most Competitive
1,691​
€2K cashback, would be absorbed by solicitor costs
Bank of Ireland5 Year
2.70%​
€1,158​
69,504​
3,408​
-1,717​
PTSB5 Year
2.80%​
€1,168​
70,082​
3,986​
-2,296​
EBS5 Year
2.75%​
€1,163​
69,793​
3,697​
-2,006​
Finance Ireland5 Year
2.30%​
€1,120​
67,220​
1,124​
566​
Avant Money5 Year
2.15%​
€1,106​
66,376​
280​
1,411​
No cashback available
 
Thank you very much for the reply @Paul F , plenty to think about. Will start by getting my break fund fee from KBC.
I tried Avant (using broker) recently before but the don't currently cover where the house is located (North west) so they are out of the running.
 
Paul F said:
@FANTANA Please post your mortgage details in the format shown in the first post of this thread.
Click to expand...
  • Current lender - AIB
  • Outstanding mortgage balance (how much you still owe) - 170k
  • Approximate value of your property - 300k
  • The date you started your fixed-rate mortgage (month and year) July 2021
  • How many years you fixed for - 3 Years
  • Your current mortgage interest rate - 2.45%
  • Your current monthly repayment (excluding any overpayments) - €616 - 34 years remaining
  • Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - C1
  • Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? No
 
Hi Paul,

  • Current lender: Bank of Ireland
  • Outstanding mortgage balance (how much you still owe): €240,875 on 16 Jun 2022
  • Approximate value of your property: €400,000
  • The date you started your fixed-rate mortgage (month and year): 21 Sep 2018.
  • How many years you fixed for: 5
  • Your current mortgage interest rate: 3.0%
  • Your current monthly repayment (excluding any overpayments): €1107 standard repayment, making the allowable 10% overpayment of €123 on top of this also (€1230 total).
  • Your property's BER (Building Energy Rating): A3
  • Are you due to get extra cashback from your current lender in the future: Yes, I confirmed today with BOI that I will receive 1% of the €265,500 I borrowed. Due €2,655 cashback at the end of the fixed period.
I also confirmed with BOI today that there is no break fee.

Questions:
  • Assuming no break fee, is there more sensible options in the market to break and move to given the cost of foregoing the 1% cashback (€2655)?
  • I’ve been looking at Avant 20 year fixed and the ‘One Mortgage, lifetime’ fixed, would be great if you could run the exact numbers on those please.
 
Apologies if this has been asked earlier but has anyone had much of a delay in receiving the break fee letter from UB? Requested it well over a week ago and it hasn't arrived yet. I just want to move rates with them to lock in a new fixed rate term and eager to get it done before any rate changes!
 

I requested my break fee on the 7th of June. I received the break fee letter on the 10th and the rate options form on the 15th.

My fee was valid until the 20th.
 
You must log in or register to reply here.
Menu
Log in
Register