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

Paul F said:
The thing is, Bank of Ireland's rate is 2.9% at the moment. Who knows what it will be in two years' time.

And 2.9% is BOI's two-year fixed rate – their ten-year fixed rate is currently 3.3! And who knows what that will be in two years' time.
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I hear ya thanks Paul
 
  • Current lender BOI
  • Outstanding mortgage balance (how much you still owe) 306,347
  • Approximate current value of your property €530,000
  • The date you started your fixed-rate mortgage (month and year) October 2020 (following a 3 year BOI fixed term 3%)
  • How many years you fixed for 2
  • Your current mortgage interest rate 2.9%
  • Your current monthly repayment (excluding any overpayments) €1425
  • 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 (monetary amount) and when? Yes, 1% (€3,370) after 5 years (due 45 days after 5 year ends on 12 October 2022). No break fee currently. ( I would not break)
 
@BusyAtMaths In reply to this post and your other thread:
  • Switching immediately to Permanent TSB's 5-year green fixed rate (2.35% with €6,127 initial cashback and 2% monthly cashback) will save you about €9,900 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 2.8%
    • 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 €8,860 over the next 4 years

  • Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €7,420 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 €7,120 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 7-year fixed rate (2.25% with no cashback) will save you about €3,900 over the next 4 years – but with the longer security of 7 years on a fixed rate
    • If Avant won't let you switch to them and you really want to fix for 7 years for some reason, you could consider Haven's 7-year fixed rate (2.65% with €5,000 cashback)

  • Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €2,140 over the next 4 years – but with the longer security of 10 years on a fixed rate
    • If Avant won't let you switch to them and you really want to fix for 10 years for some reason, you could consider Haven's 10-year fixed rate (2.85% with €5,000 cashback)

  • Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will save you about €980 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 25 years)

  • Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€3,370) cashback) will leave you worse off by about €80 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 (2.9% with no cashback) will leave you worse off by about €3,740 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

  • Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€3,370) cashback) will leave you worse off by about €3,780 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).

  • Switching immediately to Finance Ireland's 20-year fixed rate (3.0% with no cashback) will leave you worse off by about €4,920 over the next 4 years – but with the longer security of 20 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 Finance Ireland's 25-year fixed rate (3.15% with no cashback) will leave you worse off by about €6,700 over the next 4 years – but with the longer security of 25 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 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 October 2022 – it could be higher (or lower). You would get the Bank of Ireland €3,370 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 (provided that at least 3 years have passed since you started the Finance Ireland fixed rate and subject to certain other conditions).

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% in order to be eligible for some of the listed rates. Your LTV estimate is 306.4k/530.0k = 57.8%. If you get a valuation of less than €511k, you will need to make a few more monthly mortgage payments and/or a lump sum 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 €11,860 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.

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 apply simultaneously to two or more lenders for approval in principle (AIP).

In reality it will be October or later before you complete any switch, so will get the 1% cashback from BOI and the savings will be €3,370 higher than the estimates given above.
 
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  • Current lender KBC
  • Outstanding mortgage balance (how much you still owe) €258,486.31
  • Approximate current value of your property €445,000
  • The date you started your fixed-rate mortgage (month and year) October 2021
  • How many years you fixed for 5 year
  • Your current mortgage interest rate 2.4%
  • Your current monthly repayment (excluding any overpayments) €1,175.53
  • 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 (monetary amount) and when? No
I checked with KBC and my current break rate is €0.
 
@faketales
  • Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €4,480 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 €3,000 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 €2,940 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 €20 over the next 4 years – but with the longer security of 7 years on a fixed rate
    • If Avant won't let you switch to them and you really want to fix for 7 years for some reason, you could consider Bank of Ireland's 7-year green fixed rate (2.25% with no cashback)

  • Re-fixing immediately on KBC's 5-year fixed rate (2.4% with no cashback) will leave you worse off by about €150 over the next 4 years, but it will "reset the clock" on the fixed-rate period. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • Or you could switch to KBC's 3-year fixed rate (2.25% with no cashback)
    • Note that if you decide to do stay with KBC, 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 3.0%
    • 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 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,500 over the next 4 years – but with the longer security of 10 years on a fixed rate
    • If Avant won't let you switch to them and you really want to fix for 10 years for some reason, you could consider Haven's 10-year fixed rate (2.85% with €5,000 cashback)

  • Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €2,480 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 24 years)

  • Switching immediately to KBC's 10-year fixed rate (2.85% with no cashback) will leave you worse off by about €4,620 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).
    • The same warnings as above regarding higher Bank of Ireland rates in the future apply

  • Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €6,440 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

  • Switching immediately to Finance Ireland's 20-year fixed rate (3.0% with no cashback) will leave you worse off by about €7,440 over the next 4 years – but with the longer security of 20 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 2.9% rate with Bank of Ireland (who will probably own your mortgage) when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 2.9% rate in October 2026 – 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 (provided that at least 3 years have passed since you started the Finance Ireland fixed rate and subject to certain other conditions).

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% in order to be eligible for some of the listed rates. Your LTV estimate is 258.5k/445.0k = 58.1%. If you get a valuation of less than €431k, you will need to make a few more monthly mortgage payments and/or a lump sum 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 €7,480 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 your current lender for at least 12 months. See this thread for more details.

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 apply simultaneously to two or more lenders for approval in principle (AIP).
 
Current lender: AIB Green Rate
Outstanding mortgage balance (how much you still owe) €162,000.
Approximate current value of your property €265,000.
The date you started your fixed-rate mortgage (month and year): April 2022
How many years you fixed for: 5 year
Your current mortgage interest rate 2.15%
Your current monthly repayment (excluding any overpayments) €840.
Your property's BER (Building Energy Rating) – 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 (monetary amount) and when? No.
Mortgage fixed for: 20 years

If I pay a lumpsump of €40,000. How much would be my monthly mortgage?
 
It would be about €632 – see this calculator.

And you would be eligible to refix on AIB's 2.1% green rate, since your loan-to-value (LTV) ratio would be under 50%.

Bear in mind that reducing your balance 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. Consider posting a thread about your situation in the Money Makeover forum.
 
Thank you once again.

You mentioned "refix". Does it mean I have start all over again and involve solicitor, arrange documents, etc?

I was hoping once the break fee is zero, I would transfer the money using the AIB mobile app and the current 5 year fixed mortgage will continue without the need for going through the documents again.
 
masterboy123 said:
You mentioned "refix". Does it mean I have start all over again and involve solicitor, arrange documents, etc?
Click to expand...
No.

masterboy123 said:
I was hoping once the break fee is zero, I would transfer the money using the AIB mobile app and the current 5 year fixed mortgage will continue without the need for going through the documents again.
Click to expand...
Once you get the break fee quote, transfer the money – if you think that is the best use of your €40k (you may be better by putting it into your pension if you haven't maxed out your tax relief, for example).

When that has gone through and you get a confirmation letter, you could consider switching to the 2.1% green rate using the mortgage amendment form.
 
I have explored other options to utilise the lump sump cash. It appears pension and mortgage are the best options for me. However, I am not keen for the pension option (personal choice).

Could I please clarify the steps of refixing my AIB mortgage?
1. Get a break fee quote (hopefully zero).
2. Transfer €40,000 using the AIB bank app. (maybe it has to be done over 4 days, if max limit is €10,000 per day).
3. I will receive a confirmation stating the deposit of €40k and that I am on variable rate now.
4. I want to stay on AIB's 2.1 fixed rate. So I will complete the mortgage amendment form (option 2: Amend loan rate).

Did I miss any step?

And what's the average time frame after depositing and refixing mortgage?

Thank you and have a lovely evening
 
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masterboy123 said:
I have explored other options to utilise the lump sump cash. It appears pension and mortgage are the best options for me. However, I am not keen for the pension option (personal choice).
Click to expand...
Make sure you understand the very generous tax break you get by contributing to a pension.

masterboy123 said:
Could I please clarify the steps of refixing my AIB mortgage?
1. Get a break fee quote (hopefully zero).
2. Transfer €40,000 using the AIB bank app. (maybe it has to be done over 4 days, if max limit is €10,000 per day).
Click to expand...
Correct.

masterboy123 said:
3. I will receive a confirmation stating the deposit of €40k and that I am on variable rate now.
Click to expand...
You will receive a confirmation letter but you will not be put on the variable rate – you will remain on the 2.15% fixed rate.

masterboy123 said:
4. I want to stay on AIB's 2.1 fixed rate. So I will complete the mortgage amendment form (option 2: Amend loan rate).
Click to expand...
Correct. There is a slight risk that AIB could put up their rates between the time you send the form and the time they process it. If that worries you, don't send the amendment form.

masterboy123 said:
And what's the average time frame after depositing and refixing mortgage?
Click to expand...
Not sure.
 
Thanks Paul

Could you please explain the dramatically different APRC rates listed by the lenders? Are APRC rates the most important to pay attention to when Comparing?

Also, some bankd mention that APRC rates include setup charges e.g. Valuation fee, - I had thought that I pay the Valuation fee etc myself separately ?
 
@BusyAtMaths Make sure you are looking at the savings estimates that I generated for you – you quoted the estimates that I generated for user faketales.

APRC is pretty much irrelevant when it comes to mortgages – your main concern is the interest rate and whether or not the lender discriminates between new and existing customers (and to a lesser extent the cashback).

You do pay the valuation fee yourself.

See @skrooge's explanation of APRC here:

Switch mortgage calculations based on Interest Rate or APRC multiplier?

Hi lads, Struggling with the basics here. I'm looking at AIB and Avant's 5 year fixed options. I've an LTV of < 50% AIB 5 Year LTV Fixed
www.askaboutmoney.com
 
Thanks Paul. I'm confused.

On the other thread, you said "You cannot make accurate estimates of the savings by looking at the monthly repayments."

How did you calculate the savings above?
 
BusyAtMaths said:
Thanks Paul. I'm confused.

On the other thread, you said "You cannot make accurate estimates of the savings by looking at the monthly repayments."

How did you calculate the savings above?
Click to expand...
By looking at the amount of interest you would have to pay on each rate and factoring in the fees and any cashback.

Have a look at this thread:

Key Post - How to evaluate if it's worth fixing, switching or breaking out of a fixed rate

Almost every post on this topic is wrong. No matter how often it is pointed out, people look at the wrong figures. They use mortgage calculators when they don't need them. Most of the time, you can do the figures in your head. Do not look at the monthly repayments – they are misleading. Do not...
www.askaboutmoney.com
 
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Hi,
I'm currently looking to switch from KBC to BOI. I called KBC who advised there would be no breakage fee and they issued me with some documentation stating so. But its only valid for something like a week from the date of the letter.
They mentioned if i wish to go ahead, I need to sign and return the document. But I dont want to break out of the fixed rate with KBC just yet. I want the breakage to coincide with the switch.
I've just started the switching process and have my AIP with BOI. Just submitting all the documentation now.
I understand its possible that a month from now for example, the breakage fee could be actually something very different to zero.
Can I sign the breakage document to be effective from a certain date or how best do I go about maintaining the zero breakage fee, but also delaying the actual breakage date to coincide with the switch?

On a side note, I see my BER cert expired this year. Presumably I will need to get an updated cert for the switch?

Thanks
 
  • KBC (Current Mortgage)
  • Outstanding mortgage balance : 240k
  • Approximate current value of your property : 350k
  • 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 : 2.1%
  • Your current monthly repayment (excluding any overpayments) : € 973.25
  • Your property's BER (Building Energy Rating) – B3 (cert expired in February 2022)
  • Are you due to get extra cashback from your current lender in the future : NO
thanks
 

Ptsb may save me

So ob, the only clear winner is Avant 1.95% since its the lowest interest rate. Ptsb cash

"Switching immediately to Permanent TSB's 5-year green fixed rate (2.35% with €6,127 initial cashback and 2% monthly cashback) will save you about €9,900 over the next 4 years"

So PTSB might save me €9,900 (compared to continuing my current/BOI path), but ultimately Avant 1.95% would be the best option since IT would result in the least interest being paid over the four years, and thus more capital paid, correct?
 
Money is money, whether it is money you save from having a lower interest rate or money you get as cashback.

There is nothing wrong with cashback per se but the problem with PTSB (as you know) is that you would face higher rates with them when your initial fixed-rate period expires.

BusyAtMaths said:
So ob, the only clear winner is Avant 1.95% since its the lowest interest rate.
Click to expand...
That's too simplistic. You seem to be overlooking Haven's 4-year green fixed rate (2.0% with €2,000 cashback) – it will save you about €8,860 over the next 4 years (which is more than Avant would save you).

And "over the next 4 years" is only one way of looking at it. Maybe you would accept lower savings in exchange for the certainty of a longer period on a fixed rate.
 
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