@fixedratenovice Your break fee should be around €40 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 AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €6,900 over the next 4 years
- Switching immediately to Haven's 5-year fixed rate (2.55% with €5,000 cashback) will save you about €5,680 over the next 4 years
- Switching immediately to Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €4,460 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 €2,040 over the next 4 years – but with the 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 €1,820 over the next 4 years – but with the longer security of 7 years on a fixed rate
- You would have to shorten your mortgage term to 30 years to be eligible for this rate
- The monthly repayment would be €1,217
- Switching immediately to Avant Money's 10-year fixed rate (2.6% with no cashback) will save you about €20 over the next 4 years – but with the longer security of 10 years on a fixed rate
- You would have to shorten your mortgage term to 30 years to be eligible for this rate
- The monthly repayment would be €1,241
- Switching immediately to Bank of Ireland's 5-year fixed rate (2.8%and you would get the 1% (€3,270) cashback) will save you about €2,370 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
- This accounts for the interest rate discount offered by Bank of Ireland
- Switching immediately to Bank of Ireland's 10-year fixed rate (3.1% and you would get the 1% (€3,270) cashback) will leave you worse off by about €1,270 over the next 4 years – but with the 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).
- This accounts for the interest rate discount offered by Bank of Ireland
- Switching immediately to Finance Ireland's 10- or 15-year fixed rate (3.15% with no cashback) will leave you worse off by about €6,640 over the next 4 years – but with the 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.
These savings estimates use for comparison the scenario of switching to the 3% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 3% rate in July 2022 – it could be higher (or lower). You would get the Bank of Ireland €3,270 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.
It is unlikely that you will be able to switch to another lender while you are on probation. But there is no harm in talking to AIB or to a broker who works with Haven to see what their attitude to your situation is.
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 80% so that you are eligible for the listed rates. Your LTV estimate is 310.0k/400.0k = 77.5%. If you get a valuation of less than €388k, 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 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).
The break fee depends on:
- Your outstanding balance
- Notional interest doesn't come into it
- How long is left on the fixed-rate period
- The change in interbank interest rates (notmortgage interest rates) from when you fixed to now
- BOI don't use the deposit rate in their calculations
The day that you fix, your break fee is zero. If interbank interest rates fall, your break fee rises; if interbank interest rates rise, your break fee falls (all other things being equal).
If you fix with BOI for 5 years, their cost of funding will be similar to
this rate. If you fix with BOI for 10 years, their cost of funding will be similar to
this rate.
If the relevant interbank rate (e.g., the 3-year rate when there are 3 years left on your fixed period) on the day you break is higher than BOI's cost of funding, your break fee will be zero. If it is lower, you will have a break fee.
Because the time left on the fixed-rate period is a factor in the break fee calculation, fixing for ten years can lead to higher break fee quotes, on average, than fixing for five years. But, as mentioned, break fees can also be low or even zero – it all depends on the change in interbank interest rates.
Bank of Ireland do not allow you to "take your mortgage with you" – only Finance Ireland offer this feature.