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

Hi this is a great thread.

My situation is
Current lender:BOI
Outstanding balance 282,000
Value of house: 750000
Switched to BOI from AIB in 2018
Interest rate 2.8%
Current repayments: 1650 p/m
Fixed rate due to expire 31/10/2023
Due 1% back approx 3000 in Jan 2023

Was quoted today a breakage fee of 502euro. Was thinking of switching to Avant 7yr fixed rate and keep my repayments the same and reduce the term of my mortgage. Any advice...should I do it now or wait till I get the cash back. Thinking interest rates are likely to rise???
 
@Kerry1234 When did you switch to BOI (year and month)? How long did you fix for? The 1% cashback date doesn't seem to make any sense.
 
Sorry I drew down in Jan 2018 at a rate of 3% fixed rate for 5yrs. I went back and renegotiated the rate to 2.8% in Oct 2018 and hence that's when the 5yr term expires
 
  • BOI
  • Outstanding mortgage balance: 195k
  • Approximate value of your property: c400k
  • The date you started your fixed-rate mortgage 07/21
  • How many years you fixed for: 1
  • Your current mortgage interest rate: 132k on a tracker at 1.95% over ECB, and 63k fixed at 2.9% (break fee is €6!)
  • Your current monthly repayment: €1085
  • Your property's BER (Building Energy Rating) – A3
  • Are you due to get extra cashback from your current lender in the future: No

Wondering should I fix in now for a good few years. Tracker increased to 1.95% when I moved house.
 
Kerry1234 said:
My situation is
Current lender:BOI
Outstanding balance 282,000
Value of house: 750000
Switched to BOI from AIB in 2018
Interest rate 2.8%
Current repayments: 1650 p/m
Fixed rate due to expire 31/10/2023
Due 1% back approx 3000 in Jan 2023
Click to expand...
Kerry1234 said:
Sorry I drew down in Jan 2018 at a rate of 3% fixed rate for 5yrs. I went back and renegotiated the rate to 2.8% in Oct 2018 and hence that's when the 5yr term expires
Click to expand...
Got it. Your break fee should be around €820 at the moment – but it is volatile because wholesale interest rates are volatile.

You could switch to Avant's 1.95% rate, fixed for 7 years. You would save about €10,600 over the next 7 years (versus staying with BOI and moving onto their 2.9% rate when the current fixed rate is up), and that's after accounting for fees and the €3,000 cashback from BOI. And that's assuming that BOI are even offering a 2.9% rate in one and a half years – it could be higher (or lower, but more likely higher).

As for whether or not to hang on until Jan 2023 for the €3,000 cashback, if Avant put up their rates by 0.15%, you will pay an extra €3,000 in interest over 7 years, which will wipe out the benefit of the cashback. Note that ICS put up their rates by a lot more than that just today.

@Kerry1234 What is your BER?
 
You could switch to Haven's 2.0% green rate, fixed for 4 years. You will get €2,000 cashback. You will be better off by about €7,200 in four years' time (versus staying with BOI and having all your borrowings at an average of 2.9%), and that's after accounting for fees and the €2k cashback.

If you're prepared to settle for smaller savings in exchange for a longer fixed rate, switching to Avant's 1.95% rate lets you fix for up to 7 years. You will be better off by about €5,500 in four years' time (versus staying with BOI and having all your borrowings at an average of 2.9%), and that's after accounting for fees.

The assumption that your borrowings with BOI will have an average interest rate of 2.9% over the next few years is just that: an assumption – nobody knows where tracker or fixed rates will go over that period.

Note that you may not be able to switch until you have been with BOI for 12 months – see this thread. Talk to some brokers and see if they know what Haven's and Avant's rules are. If you are in a rush to switch, you could try AIB (2.1% fixed for 5 years with €2,000 cashback).
 
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Thanks Paul. BOI quoted me 508 breakage fee yesterday but I know that may well change by time we are ready to switch.
It's an older house so the BER is probably C or D
 
  • Ulster Bank
  • Outstanding mortgage balance: 198k
  • Approximate value of your property: 370k
  • The date you started your fixed-rate mortgage: Late 2019 (possibly november)
  • How many years you fixed for: 3.25 (current rate ends 31-3-23)
  • Your current mortgage interest rate: 2.6%
  • Your current monthly repayment: €1140
  • Your property's BER (Building Energy Rating) – C1
  • Are you due to get extra cashback from your current lender in the future: No
I was quoted a break fee last week of e778. can't pretend to understand how they reached the figure.

I would like to fix for a few more years beyond '23 to reduce uncertainty. Will this break fee remain static for the next 2-3 months or is it possible that it could go down (or even up?)
 
@JohnMag Switching to Avant's 1.95% rate fixed for up to 7 years will save you about €3,600 over the next five years (versus switching immediately to Ulster Bank's 2.35% 5-year fixed rate), and that's after accounting for fees and cashback. Of course, if you decide to stay with UB and switch to their 2.35% rate, you will probably have to switch again in a few years when your fixed rate expires and your mortgage is on Permanent TSB's books, at which point interest rates might be higher.

The above assumes that you start the switch to Avant before the end of March and use a broker who is an Avant "Gold Partner", so that you are eligible for the €1,500 cashback.

All other things being equal, your break fee would fall by about €65 per month, but all other things are not equal at the moment, especially interbank interest rates and the deposit rates available to banks. Your break fee could fluctuate quite a bit in either direction over the next few months. But switching to Avant looks like a good choice.
 
@Kerry1234 To clarify, this comment of mine was meant to suggest that it is probably not worth waiting for the €3k cashback from BOI and that it is instead better to start the switch.
 
thanks a lot for the response
 
Great thread - thanks in advance
  • Current lender - ulster bank
  • Outstanding mortgage balance (how much you still owe) - 378,000
  • Approximate value of your property - 625,000
  • The date you started your fixed-rate mortgage : March 2020
  • How many years you fixed for : 5 years
  • Your current mortgage interest rate: 2.2
  • Your current monthly repayment (excluding any overpayments) - 1950
  • Your property's BER (Building Energy Rating) – D1
  • Are you due to get extra cashback from your current lender in the future: no
 
Very helpful, thanks for taking the time to do this

Current lender: Bank of Ireland
Outstanding mortgage balance: 329k
Approximate value of your property: 600k
The date you started your fixed-rate mortgage: April 2018
How many years you fixed for: 5
Your current mortgage interest rate: 3%
Your current monthly repayment: €1,777
Your property's BER: C2
Are you due to get extra cashback from your current lender in the future: Yes €3700 due April 2023
 
@Houseseeker16 Your break fee should be zero, but confirm it with Ulster Bank (and please post it here when you receive it).

Switching to Avant's 1.95% rate fixed for up to 7 years will save you about €4,300 over the next five years (versus breaking immediately and re-fixing with Ulster Bank so that you "reset the clock" and get another 5 years on UB's 2.2% rate), and that's after accounting for fees and cashback.

Of course, if you decide to stay with UB, you will probably have to switch again in 5 years when your fixed rate expires and your mortgage is on Permanent TSB's books, at which point interest rates might be higher.

The above savings estimate assumes that you start the switch to Avant before the end of March and use a broker who is an Avant "Gold Partner", so that you are eligible for the €1,500 cashback.

It also assumes that you get your loan-to-value ratio (LTV) below 60%. It is currently 378k/625k = 60.5%. A slightly higher property valuation (€630k) or a few more monthly mortgage payments or a small overpayment will get you there. But start the switch immediately.
 
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Your break fee should be around €1,920 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).

You could switch to Avant's 1.95% rate, fixed for 7 years. You would save about €9,020 over the next 5 years (versus staying with BOI and moving onto their 3.0% rate when the current fixed rate is up), and that's after accounting for fees and the €3,700 cashback from BOI. And that's assuming that BOI are even offering a 3.0% rate in a year from now – it could be higher (or lower, but more likely higher).

As for whether or not to hang on until April 2023 for the €3,700 cashback, you will save almost the same amount in interest over the next year by switching immediately to Avant, so there is no point in waiting for the cashback.
 
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Thank you Paul for this useful thread. Here’s my info which I would appreciate you looking over.

Current lender: Ulster Bank
Outstanding mortgage balance: €242k
Approximate value of your property: €500k
The date you started your fixed-rate mortgage: July 2016
How many years you fixed for: 7
Your current mortgage interest rate: 3.99%
Your current monthly repayment: €1,298
Your property's BER: A3
Are you due to get extra cashback from your current lender in the future: No
 
Hi Paul,

Very useful thread-thanks so much. Below are my details:

  • Current lender: KBC
  • Outstanding mortgage balance (how much you still owe): 112,000 euro
  • Approximate value of your property: 350,000 euro
  • The date you started your fixed-rate mortgage (month and year) 01 Oct 2021
  • How many years you fixed for: 3 years till Oct 2024
  • Your current mortgage interest rate: 2.25%
  • Your current monthly repayment (excluding any overpayments) 531 euro
  • Your property's BER (Building Energy Rating) – estimated if necessary C3
  • 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?NONE
I fixed in Oct 2021 with KBC for 3 years; should I now break the fixed rate and go with another lender. My concern is when I come out of the fixed rate in Oct 2024, that BOI and other banks' fixed rate will be much higher. I would meet criteria to change banks-permanent stable job etc.
 
@Isabel S 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).

How long have you had a mortgage with KBC (as opposed to when did you fix at 2.25%)? If you have had a mortgage with them for less than 12 months, your switching choices are limited.

But let's assume you have had a mortgage with KBC for at least 12 months.

Switching to Avant's 1.95% rate fixed for up to 7 years will save you about €1,000 over the next three years (versus breaking immediately and re-fixing with KBC so that you "reset the clock" and get another 3 years on KBC's 2.25% rate), and that's after accounting for fees and cashback.

Of course, if you decide to stay with KBC, you will probably have to switch again in 3 years when your fixed rate expires and your mortgage is on Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates.

The above savings estimate assumes that you start the switch to Avant before the end of March and use a broker who is an Avant "Gold Partner", so that you are eligible for the €1,500 cashback.

If you're prepared to settle for smaller savings in exchange for a longer fixed rate, consider Avant's 2.1% rate, fixed for 10 years.
 
Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with UB (and please post it here when you receive it).

Switching to Avant's 1.95% rate fixed for up to 7 years will save you about €2,700 over the next four years (versus switching immediately to Ulster Bank's 2.25% 4-year green fixed rate), and that's after accounting for fees and cashback. Of course, if you decide to stay with UB and switch to their 2.25% green rate, you will probably have to switch again in a few years when your fixed rate expires and your mortgage is on Permanent TSB's books, at which point you will be subject to their (probably higher) interest rates.

The above assumes that you start the switch to Avant before the end of March and use a broker who is an Avant "Gold Partner", so that you are eligible for the €1,500 cashback.

If you're prepared to settle for smaller savings in exchange for a longer fixed rate, consider Avant's 2.1% rate, fixed for 10 years.
 
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