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

  • Current lender: Haven
  • Outstanding mortgage balance : €275k at March 2022
  • Approximate current value of your property : €400k
  • The date you started your fixed-rate mortgage (month and year): March 2022
  • How many years you fixed for: 4
  • Your current mortgage interest rate : 2.0%
  • Your current monthly repayment : €2,767
  • Your property's BER (Building Energy Rating) – A
  • Are you due to get extra cashback from your current lender in the future: No

    My question is about fixing again with Haven. I have circa 3.5 years left on my current fix but I doubt I'll get as good as 2% again in the future. I assume I could just ring them now and break out for free and then fix again for 4 years at 2% - therefore extending my 2% rate for about another 6 months? Ideally, I'd do this just before their fixed rate is about to increase. Would I likely get much notice in advance before the new rates are effective? As in, could I wait to hear in the news of their intention to increase their fixed rates, and then do the 4yr break and refix before the new rates kick in?
 
Hi Paul
BAsed on your review we are looking at either i) switching to AIB and going for the 5 yr or 10 yr fixed or ii) fixing with KBC for 10 year (3.1%) as it will be quicker easier and by the time the approval comes through in AIB the rates may have gone up.

We were trying to work out what the level of the break fee would be if we fixed with KBC now and in parallel progressed the switch to AIB and then decided as soon as we have letter of offer from AIB based on the rates at that stage. I understand that no-one can give an exact figure on this but is there any way of working out what the ball park break fee might be based on todays market conditions - we are trying to work out the risk and have no idea if the break fee might be thousands or tens of thousands of euro? IS this something you can give an indication of?

Thanks again
 
I won't bother generating estimates for the savings you would make by switching to another lender, as I assume you are not interested in doing that. (But if you want such estimates, let me know.)

There is an element of "playing with fire" if re-fixing with your current lender at the moment. Let's say you send off the form to re-fix on the 4-year green fixed rate at 2.0%, but Haven increase their rates after you send the form but before they process it. They may well be within their rights to move you to the new, higher rate.

If you're thinking of re-fixing, ask them if they can guarantee that they won't increase their rates (for you) between the time that you post the form and the time they process it. Get any guarantee in writing (or in an email).

We know that Haven are very slow at processing switcher mortgage applications. It is not clear if this slowness is also a feature of re-fixing with them.

As for whether you'll get much notice that they are going to increase their rates, I wouldn't bet on it.
 
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Hi @SunnyOct8,
SunnyOct8 said:
BAsed on your review we are looking at either i) switching to AIB and going for the 5 yr or 10 yr fixed
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Normally I would say that I don't really see why you would go for AIB's 10-year rate (3.1%) when you could fix with KBC for 10 years at 2.85%.

But it is currently taking KBC a long time to process these 'fix' requests, and they might increase their interest rates before they process yours – see this thread. Then again, AIB will probably increase their rates before you complete any switch to them. (Switching to AIB seems to take about 3 months.)

SunnyOct8 said:
or ii) fixing with KBC for 10 year (3.1%) as it will be quicker easier and by the time the approval comes through in AIB the rates may have gone up.
Click to expand...
Note that KBC's 10-year fixed rate is currently 2.85%, not 3.1%.

All we can say is that if you fix with KBC and if wholesale interest rates decrease by X%, the break fee will be €Y. (If wholesale interest rates increase by any amount, the break fee will be zero.)

Unfortunately, fixing for a long period, e.g., 10 years, magnifies the effect of any decrease in wholesale interest rates, which can lead to very large break fees (thousands).

You might think of fixing for a shorter term, e.g., 5 years, with KBC in order to reduce the size of any potential break fee, but that isn't a great idea because you will be at the mercy of BOI's rates after that.

You should contact KBC and see if they will give you an estimate of how long it takes to fix with them. Overall, though, given that you are on a variable rate that will probably increase soon anyway, fixing with KBC might be the best idea.

At the same time, you can start the switch to AIB but abandon it if they increase their rates too much or if it looks like there will be a large break fee to leave KBC. Just be aware that you might be liable for solicitors' fees if you abandon the switch after having engaged the services of a solicitor.

Finally, if you think that there is a reasonable chance that you will move home in the next few years, you probably should not fix for 10 years (with any lender).
 
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Thanks Paul. Yes I think I'll stick with Haven, unless a better option jumps to mind? I know I'm rolling the dice for after the fix rate ends but the balance should be lower then.

I changed from 2.15% green to 2.0% green fixed with Haven in Feb/Mar. It was a call to confirm no break fee, then I emailed in a form - seems to have been applied about 2 weeks after I sent everything in.

As you suggest, I'll get onto them to see if I can get them to guarantee the rate during the refixing period.
 
  • BOI
  • EUR 225,000
  • EUR 480,000
  • August 2018
  • 5 years
  • 2.8%
  • EUR 1,040
  • A2
  • Yes I'm due to receive 1% (EUR 2,500) cashback from BOI in 12 months time when my fix rate is up
I rang BOI this morning and my break fee is zero and they offered me a rate of 3% fixed for 5 years. I'm currently paying 2.8% so my question is it worthwhile breaking out of a 2.8% rate with 12 months remaining in order to fix down a rate of 3% over 5 years. I'm currently due 1% cashback in 12 months and BOI advised I can get that even if I breakout of my fix onto another rate within BOI. I would be afraid to wait another 12 months then roll into god knows what rate where I can fix it down now @3%. It would only cost be 0.2% for 12 months. Is my best option breaking out of 2.8% and fixing for 3% for 5 years?
 
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Fire away said:
  • BOI
  • EUR 225,000
  • EUR 480,000
  • August 2018
  • 5 years
  • 2.8%
  • EUR 1,040
  • A2
  • Yes I'm due to receive 1% (EUR 2,500) cashback from BOI in 12 months time when my fix rate is up
Click to expand...
@Fire away
  • Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €6,240 over the next 4 years
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €5,380 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 Permanent TSB's 7-year fixed rate (3.0% with €4,500 initial cashback and 2% monthly cashback) will save you about €840 over the next 4 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 right now, 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 7-year fixed rate (2.65% with €2,000 cashback) will save you about €640 over the next 4 years – but with the longer security of 7 years on a fixed rate
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to Avant Money's 4-year fixed rate (2.45% with no cashback) will save you about €340 over the next 4 years

  • Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€2,500) cashback) will leave you worse off by about €440 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 Haven's 10-year fixed rate (2.85% with €2,000 cashback) will leave you worse off by about €1,080 over the next 4 years – but with the longer security of 10 years on a fixed rate
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to Avant Money's 5-year fixed rate (2.65% with no cashback) will leave you worse off by about €1,380 over the next 4 years

  • 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 €3,200 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 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €3,560 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 Avant Money's 7-year fixed rate (2.95% with no cashback) will leave you worse off by about €3,980 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Finance Ireland's 20-year fixed rate (3.0% with no cashback) will leave you worse off by about €4,420 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 €5,720 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

  • Switching immediately to Avant Money's 10-year fixed rate (3.4% with no cashback) will leave you worse off by about €7,900 over the next 4 years – but with the longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 3.5% fixed rate with no cashback) will leave you worse off by about €8,780 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 25 years)

The above Avant rates include their rate increases of 15 August 2022. While Avant's rates are not the lowest at present, it is possible that they will be amongst the lowest in the near future when other lenders increase their rates.

These savings estimates use for comparison the scenario of switching to a 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 August 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 (provided that at least 3 years have passed since you started the Finance Ireland fixed rate and subject to certain other conditions).

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).

Even though it is usually quick to re-fix with your current lender, it is still possible for rates to rise while you are in the middle of the process, which could potentially leave you worse off than if you had done nothing. Ask Bank of Ireland if they will guarantee the 3.0% rate for you if you start the process of re-fixing with them.

You can see that you will lose relatively little (€440) over the next 12 months by re-fixing now on the 5-year rate (3.0%). And you might save a lot over the next 5 years by doing so (versus doing nothing for 12 months).

You could potentially make bigger savings by switching to another lender but only if they have not increased their rates substantially by the time you complete the switch.
 
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Thank you Paul very detailed. My big fear is by time any switch is completed the rates will have gone up and i will be left high and dry. I'm thinking it will take 4-6 months by time any switch is complete. I also have option of staying with BOI for another 5 years with locked in rate of 3%. After i collect cashback in 12 months I can review it again with hopefully zero break cost. Worse case I can stay on the 3%, best case I have zero break costs and rates are still low elsewhere.
 
Thanks to @Paul F and the other posters on the forum for all the great information and guidance.

My switch from BOI to Avant is almost complete waiting on BOI and Solicitor to finalise a few things. Process was pretty slow, started in April, so 4-5 months in total. Some of this was due to missing the early July drawdown date (I didn't pushing things as much after this) plus I had a switch from contracting to perm (no probation period).
 
I have an Ulster bank tracker mortgage and am thinking of clearing it. Do you know if there is an Early Redemption Charge for doing this. The web side states there is for a fixed rate mortgage so assume not for a variable. Would a tracker be considered a variable? Thanks in advance.
 
Yes, a tracker is a variable-rate mortgage and so there will be no ERC if you clear it. See this thread if you want guidance on what to do (keep it, clear it, fix it, switch it, etc.).

Bear in mind that clearing 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; buying a car; childcare; adult children going to college, etc.)
  • Maxing out your pension contributions (very large tax relief is given)
  • Overpaying/clearing your mortgage
in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.
 
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Current lender BOI
Outstanding mortgage balance (how much you still owe) 210,000
Approximate current value of your property 300,000
The date you started your fixed-rate mortgage (month and year) Oct 2019
How many years you fixed for 5yrs
Your current mortgage interest rate 3%
Your current monthly repayment (excluding any overpayments) 940.00
Your property's BER (Building Energy Rating) – check it here or estimate it if necessary maybe 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 (monetary amount) and when? No


We've been quoted a nil breakage fee yesterday so we're trying to decide if we should break and refine for 5yrs @ 3% or attempt a switch to another provider.
 
@Emma123456
  • Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €6,380 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 right now, the best rate you would be able to switch to today is 3.0%
    • 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 5-year fixed rate (2.45% with €2,000 cashback) will save you about €4,640 over the next 4 years

  • Switching immediately to Haven's 5-year fixed rate (2.55% with €2,000 cashback) will save you about €3,820 over the next 4 years
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €3,020 over the next 4 years – but with the longer security of 7 years on a fixed rate
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to Avant Money's 4-year fixed rate (2.55% with no cashback) will save you about €1,800 over the next 4 years

  • Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will save you about €1,380 over the next 4 years – but with the longer security of 10 years on a fixed rate
    • Warning: it takes a long time to complete a switch to Haven, in the experience of some users of this site

  • Switching immediately to Avant Money's 5-year fixed rate (2.75% with no cashback) will save you about €160 over the next 4 years

  • Re-fixing immediately on Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €380 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).

  • Switching immediately to Avant Money's 7-year fixed rate (3.05% with no cashback) will leave you worse off by about €2,280 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Finance Ireland's 10- or 15-year fixed rate (3.05% with no cashback) will leave you worse off by about €2,280 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 3.05%) will fall to 2.9% in 5 years and 7 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). 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 €2,980 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 (3.15% with no cashback) will leave you worse off by about €3,100 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
    • And your interest rate (initially 3.15%) will fall to 3.0% in 5 years and 8 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). See the section "How we decide rate reductions" on this page.

  • Switching immediately to Finance Ireland's 25-year fixed rate (3.3% with no cashback) will leave you worse off by about €4,320 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
    • And your interest rate (initially 3.3%) will fall to 3.15% in 5 years and 9 months when you move into a lower loan-to-value bracket (or sooner if you make overpayments or your property increases in value and you get an updated valuation). See the section "How we decide rate reductions" on this page.

  • Switching immediately to Avant Money's 10-year fixed rate (3.5% with no cashback) will leave you worse off by about €5,960 over the next 4 years – but with the longer security of 10 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 3.65% fixed rate with no cashback) will leave you worse off by about €7,200 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 27 years)

The above Avant rates include their rate increases of 15 August 2022. While Avant's rates are not the lowest at present, it is possible that they will be amongst the lowest in the near future when other lenders increase their rates.

These savings estimates use for comparison the scenario of switching to a 2.9% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 2.9% rate in October 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.

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 70% or below so that you are eligible for some of the rates listed above (those from Avant and Finance Ireland). Your LTV estimate is 210.0k/300.0k = 70.0%. If you get a valuation of less than €300k, you will need to make a few more monthly mortgage payments and/or a lump sum overpayment to get the LTV below 70%. But that is not a reason to delay the switch – i.e., you can start the switch immediately. (Your LTV is not a concern if you decide to switch to any of the other lenders listed above.)

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).

Even though it is usually quick to re-fix with your current lender, it is still possible for rates to rise while you are in the middle of the process, which could potentially leave you worse off than if you had done nothing. Ask Bank of Ireland if they will guarantee today's rate for you if you start the process of re-fixing with them.

PS Can you confirm that you really are not due to get 1% cashback from Bank of Ireland in the future?
 
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My solicitor received the redemption statement a few days before my monthly mortgage payment, by the time funds were drawn down from AIB I had paid the monthly payment to Ulster bank. I presume now I have to chase Ulster bank to receive back that payment ? Is this a common thing to happen ?
 
It does happen fairly often. Ulster Bank will refund you automatically (though keep an eye out for the refund).
 
As an update here: Haven told me on the phone that they would give 1 month's notice before any rate increases. Of course, that's not in writing, and also no guarantee that they would process the break and refix in the month this time around.
 

Refixed with AIB just now - dropped the forms at the local branch and sent them same day via email at the 5th of September - received yesterday a letter dated the 9th of September which confirms the refix. I did refix already in June and it took a bit longer back then.

I consider redoing that perhaps again couple of times depending on further developments.

I did advise one of my colleagues to refix as well - she is with BOI and in no position to switch - she contacted the bank on Monday the 5th and had the mortgage refixed on the following Thursday.
It is a bit risky though and becomes riskier with passing time.
 
Paul F said:
The above Avant rates include their rate increases of 15 August 2022. While Avant's rates are not the lowest at present, it is possible that they will be amongst the lowest in the near future when other lenders increase their rates.
Click to expand...

I am not sure on that - Avant is a non bank mortgage lender who gets their cash from the money market- which already reflects now the higher interest rates...
AIB and other banks get their money from their high deposits for which hardly any interest is still paid to customers.
Also the banks will start to make some money now on their deposits with the ECB - in the recent past these deposits were a cost burden.
 
keensaver said:
As an update here: Haven told me on the phone that they would give 1 month's notice before any rate increases. Of course, that's not in writing, and also no guarantee that they would process the break and refix in the month this time around.
Click to expand...
Merowig said:
I did advise one of my colleagues to refix as well - she is with BOI and in no position to switch - she contacted the bank on Monday the 5th and had the mortgage refixed on the following Thursday.
Click to expand...
Very useful info on timelines for refixing. Thank you both.

Indeed – it's hard to see any justification for the banks increasing their mortgage interest rates if they don't increase their rates for savers at the same time.
 
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Hi Paul, very delayed in getting back...belated thanks for this detail, had meant to action this back in March but unfortunately life got in the way.

I've been in touch with BOI who have confirmed no breakage fee at present. Have updated my details below, would appreciate any guidance you could provide in light of the latest ECB rises. Thanks in advance.

Current lender: BOI
Outstanding mortgage balance: 275k
Approximate value of your property: c500k (bought for 420k in 2018, increase based on sales of similar houses on road recently)
The date you started your fixed-rate mortgage: Sep 2018
How many years you fixed for: 5 years
Your current mortgage interest rate: 2.9%
Your current monthly repayment: 1641 (paying over 20 years)
Your property's BER: C3
Are you due to get extra cashback from your current lender in the future: Yes, c3200 in Sep 2023
 
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