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

@newbie1234 Your figures still don't add up. I don't think UB ever had a 6-year fixed rate (property 1).

And for both properties the interest rate and monthly repayment imply a different term remaining than the one you've given.

Check everything again and make sure not to include any regular overpayments in the monthly amounts.

Anyway, your break fee is likely to be zero in both cases (provided the start dates for the fixed-rate periods are approximately correct).
 
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  • Current lender : BOI
  • Outstanding mortgage balance : €112,500
  • Approximate current value of your property : €190,000
  • The date you started your fixed-rate mortgage (month and year) : October 2019
  • How many years you fixed for : 5
  • Your current mortgage interest rate : 3%
  • Your current monthly repayment : €526
  • Your property's BER (Building Energy Rating) – C1
  • Are you due to get extra cashback from your current lender in the future : Yes (€1,200) in October 2024
Any suggestions on possible savings would be greatly appreciated. Thanks in advance.
 
@bobthefish 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. If it is higher than zero, 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 €1,720 over the next 4 years

  • Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €860 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

  • Re-fixing immediately on Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€1,200) cashback) will not save you or cost you anything 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 Haven's 10-year fixed rate (2.85% with €2,000 cashback) will not save you or cost you anything 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 4-year fixed rate (2.45% with no cashback) will leave you worse off by about €320 over the next 4 years

  • Switching immediately to Avant Money's 5-year fixed rate (2.65% with no cashback) will leave you worse off by about €1,180 over the next 4 years

  • Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€1,200) cashback) will leave you worse off by about €1,460 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 AIB's 10-year fixed rate (3.2% with €2,000 cashback) will leave you worse off by about €1,540 over the next 4 years – but with the longer security of 10 years on a fixed rate

  • Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €2,260 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 €2,480 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 €2,700 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 €3,340 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 €4,440 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 €4,880 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 26 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. (That is not a major consideration if you decide to re-fix with Bank of Ireland, since re-fixing with your current lender is usually quick to do.)

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 October 2024 – it could be higher (or lower). You would get the Bank of Ireland €1,200 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% so that you are eligible for the Avant rates listed above. (You are comfortably eligible, from an LTV perspective, for all of the other rates listed above.) Your LTV estimate is 112.5k/190.0k = 59.2%. If you get a valuation of less than €188k, 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 to Avant (if that is what you decide to do) – i.e., you can start the switch immediately.

Bear in mind that interest rates are very likely to rise between now and the time that you complete any switch to another lender, 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.

If you use a broker and they tell you that your mortgage balance is too low to switch, find another broker.
 
Thanks @Paul F - we are applying to both Haven (seems slow) and Avant (seems a bit quicker) and potentially AIB for their 10 year at 3.10%. As a further update, UB sent us details of break and re-fix, i.e break our current 2 year fixed at 2.2% until Dec 2023 - so, no break fee to go from current fixed to a 10 year fixed at 2.8% BUT, if we break this new 10 year rate the break fee is €4,215. Why would we want to break again? Because our mortgage is being sold to PTSB and, apart from fact they are a disaster, we are looking for a topup and the topup rates are very high at about 3.9% AND we'd have to wait until the sale of the mortgage goes through.

So choices are:
1. easy sign up to UB 10 year fixed on €301,000 remaining at 2.80% with no top-up and wait for top up from PTSB at crappy rates (if they even give us one)
2. ignore the UB break and re-fix offer and continue with application to Haven 10 year (@2.85%) for a total of €331,000 i.e topped up) with the very likely scenario that this rate will not be at 2.85% at the end of a 14-week application period
3. signup for the UB 10 year to at least fix in the lower rate, continue with application to Haven 10 year (@2.85%) for a total of €331,000 i.e topped up) and pay €4,215 break fee to UB when Haven application is completed

The problem is that if we go for option 2 and it takes 14 weeks, interest rates are likely to jump again. I'd like to figure out what the Haven 10 year rate would need to go to to be more expensive in the long term than option 3 paying a break fee

Any assistance with figures on this would be most welcome.
Thanks
 
hi,

Great thread - i'll bite lol

  • Current lender: PTSB
  • Outstanding mortgage balance (how much you still owe): €215k
  • Approximate value of your property: €650k
  • The date you started your fixed-rate mortgage (month and year): June 2021
  • How many years you fixed for: 3
  • Your current mortgage interest rate: 2.95%
  • Your current monthly repayment (excluding any overpayments): €1,696 plus life cover of 138 total 1834.00 per month
  • Your property's BER (Building Energy Rating) – estimated if necessary: no idea.
  • 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
  • no break penalty applicable per p/call with PTSB today (valid only for 10 days apparently per PTSB)
  • term left is 12 years 9 months

NOTE - I want to up the monthtly repayment to 1,900 per month - how much would this reduce the term by?

Many thanks!
 
warrendublin said:
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
Click to expand...
Are you really not getting about €34 per month from PTSB into your Explore account (2% monthly cashback)?
 
Hi during July we switched to AIB 4year mortgage at 2.25 per cent.
The world is going crazy shud we ask them to fix for longer..
 
Shinny said:
Hi during July we switched to AIB 4year mortgage at 2.25 per cent.
Click to expand...
Are you sure that that is your rate? Is it not 2.2%?

Shinny said:
The world is going crazy shud we ask them to fix for longer..
Click to expand...
That question doesn't belong in this thread. Consider starting a new thread (and give all your mortgage details and any possible future plans for moving home if you do).
 
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JohnB1 said:
UB sent us details of break and re-fix, i.e break our current 2 year fixed at 2.2% until Dec 2023 - so, no break fee to go from current fixed to a 10 year fixed at 2.8%
Click to expand...
That's as expected.

JohnB1 said:
BUT, if we break this new 10 year rate the break fee is €4,215
Click to expand...
You are misunderstanding the form from UB that has the rates that you can switch to (which is not surprising since its structure and wording is confusing).

That figure (€4,215) is the maximum possible break fee if you switch to UB's 10-year fixed rate and break out of that rate at any point in the future. (UB cap their break fees at six months' interest, and PTSB will have to honour that cap.)

Your break fee would be anywhere from zero to €4,215.

Predicting future break fees is very difficult. All we can say is that if you fix now on UB's 10-year fixed rate and:
  • if this rate rises between now and when you break, the break fee will be zero
  • if this rate falls to 2.9% between now and when you break, the break fee will be about €2,590
  • if this rate falls to about 2.845% or lower between now and when you break, the break fee will be €4,215
You can see that break fees on long fixed rates are very sensitive to even small interest rate movements.

Regarding the following choice:
JohnB1 said:
1. easy sign up to UB 10 year fixed on €301,000 remaining at 2.80% with no top-up and wait for top up from PTSB at crappy rates (if they even give us one)
Click to expand...
bear in mind that PTSB's high rates would only apply to the topup amount (€30k), not the full €331k balance. So don't rule out this option.

JohnB1 said:
I'd like to figure out what the Haven 10 year rate would need to go to to be more expensive in the long term than option 3 paying a break fee
Click to expand...
If Haven's 10-year fixed rate increased by just 0.13%, it would cost you an extra €4,300 (approx) in interest over the next 10 years.

Be aware that you are very unlikely to get a topup (from any lender) if the topped-up (€331k) balance would be more than 3.5 times your combined gross salary.
 
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Paul F said:
Are you really not getting about €34 per month from PTSB into your Explore account (2% monthly cashback)?
Click to expand...
LOL not that i'm aware of!

I have a joint account for about 100 years...sorry about 30 anyway.
how do i find out if it's an explore account? whats the cashback thing about?

Thanks a mill
 
Hi Paul, thanks very much for this,
I don't have a fixed mortgage right now so couldn't fully follow the formula.
  • Current lender: Pepper Asset Management
  • Outstanding mortgage balance (how much you still owe): €140k
  • Approximate value of your property: €450k
  • The date you started your fixed-rate mortgage: N/A
  • How many years you fixed for: N/A
  • Your current mortgage interest rate: ECB+1.5% - 16 years left
  • Your current monthly repayment (excluding any overpayments): €813
  • Your property's BER (Building Energy Rating) – estimated if necessary: D2
  • Are you due to get extra cashback from your current lender in the future: No
 
@warrendublin
  • Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €5,080 over the next 4 years

  • Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €2,820 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 €2,300 over the next 4 years

  • Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will save you about €1,300 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 save you about €780 over the next 4 years

  • Switching immediately to Permanent TSB's 5- or 7-year fixed rate (3.0% with no cashback) will leave you worse off by about €400 over the next 4 years – but with the longer security of up to 7 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 AIB's 10-year fixed rate (3.1% with €2,000 cashback) will leave you worse off by about €600 over the next 4 years – but with the longer security of 10 years on a fixed rate

  • Switching immediately to Finance Ireland's 10-year fixed rate (2.9% with no cashback) will leave you worse off by about €1,120 over the next 4 years – but with the 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

  • Switching immediately to Avant Money's 7-year fixed rate (2.95% with no cashback) will leave you worse off by about €1,500 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's 10-year fixed rate (3.4% with no cashback) will leave you worse off by about €4,940 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 3.4% fixed rate with no cashback) will leave you worse off by about €4,940 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 13 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. (That is not a major consideration if you decide to re-fix with Permanent TSB, since re-fixing with your current lender is usually quick to do.)

These savings estimates use for comparison the scenario of switching to a 2.95% rate with Permanent TSB when the current fixed rate ends. And that's assuming that Permanent TSB are even offering a 2.95% rate in June 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.

You should call Permanent TSB and tell them that you have started the process of switching to another lender. Ask them what interest rates they will offer you to break and re-fix with them. Please post a summary of their response here.

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 are very likely to rise between now and the time that you complete any switch to another lender, 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 Permanent TSB if they will guarantee today's rate for you if you start the process of re-fixing with them.

Paul F said:
Are you really not getting about €34 per month from PTSB into your Explore account (2% monthly cashback)?
Click to expand...
warrendublin said:
LOL not that i'm aware of!

I have a joint account for about 100 years...sorry about 30 anyway.
how do i find out if it's an explore account? whats the cashback thing about?
Click to expand...
It's possible that the 2% monthly cashback was only available to new mortgage customers. But if you decide to re-fix with Permanent TSB, ask them if you are eligible to get this cashback from now on.

warrendublin said:
NOTE - I want to up the monthtly repayment to 1,900 per month - how much would this reduce the term by?
Click to expand...
In the above estimates I have assumed that you don't shorten your mortgage term or increase your monthly repayments. But if you went for PTSB's 3.0% rate and said to them that you wanted to increase your monthly repayment to €1,900 (as your normal monthly repayment), your term would shorten to about 11 years.

Note that doing so might not be a great idea (it could stretch you financially) or even necessary. Many lenders (including PTSB) allow you to make large overpayments without penalty – see this thread.

If you do switch to another lender, make sure that you do whatever is required to keep your life cover in place.
 
@mir2001 Because you are on a variable-rate (tracker) mortgage, you do not have to pay a break fee.
  • Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €2,580 over the next 4 years

  • Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €1,060 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 €40 over the next 4 years

  • Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will save you about €20 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 €980 over the next 4 years

  • Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €2,260 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 €2,520 over the next 4 years – but with the longer security of 7 years on a fixed rate

  • Switching immediately to Avant Money's "One Mortgage" (a 3.4% fixed rate with no cashback) will leave you worse off by about €4,820 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term
    • You would have to shorten your mortgage term to 15 years to be eligible for this rate
    • The monthly repayment would be €994

  • Switching immediately to Avant Money's 10-year fixed rate (3.4% with no cashback) will leave you worse off by about €4,860 over the next 4 years – but with the longer security of 10 years on a fixed rate
    • The monthly repayment would be €944

  • Switching immediately to Avant Money's "One Mortgage" (a 3.5% fixed rate with no cashback) will leave you worse off by about €5,360 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 16 years)
    • The monthly repayment would be €951

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.

The savings estimates assume that your tracker rate is currently 2.75% and that your monthly repayment (after the increase to 2.75%) is €900 – since you say that there are 16 years left on the mortgage. You mentioned elsewhere that AIB would require you to shorten the mortgage term to 14 years. (Other lenders may have similar restrictions.) The savings estimates do not account for that.

These savings estimates use for comparison the scenario of staying on your tracker rate and assume that that rate doesn't change between now and October 2026 (which is very unlikely). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

If you switch to any of the above rates you will lose your tracker and you will not get it back at the end of the fixed period. Of course, your other option is to keep your tracker.

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 are very likely to rise between now and the time that you complete any switch to another lender, so if you are thinking of switching you should apply simultaneously to two or more lenders for approval in principle (AIP).

If you use a broker and they tell you that your mortgage balance is too low to switch, find another broker.

You will only have to pay legal fees if you drop out of the switching process after you have engaged the services of a solicitor – so if you are thinking of switching you may as well start the process with a few lenders and get the early steps done without a solicitor.

When shopping around for a solicitor, you could ask them how much they would charge you if you abandoned the switch.
 
  • Current lender: Avant
  • Outstanding mortgage balance (how much you still owe): €125k
  • Approximate current value of your property: €350k
  • The date you started your fixed-rate mortgage (month and year): April 2022
  • How many years you fixed for: 5
  • Your current mortgage interest rate: 1.95%
  • Your current monthly repayment (excluding any overpayments): Approx. €865
  • Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: n/a
  • 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 have €50k to make an overpayment. I have already used the "free" 10% of the original loan amount.

I would like to compare a break fee vs 2% of €50k and also ask for opinions on whether it is worth waiting until 1st January 2023 in any way to use the €50k. Hold the full €50k until the new year or €50k minus 10% of an estimated balance at the end of the year?

Thank you in advace.
 
@iamaspinner Your break fee should be zero at the moment – but confirm it with Avant. If it is higher than zero, please post it here when you receive it, including the date of the letter.

Be aware that with Avant you can only make up to two overpayments per calendar year – see here.

Also note that overpaying your mortgage/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; buying a car; childcare; home renovations; 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 very much @Paul F. I think I have the other bases covered.

I will post here if Avant come back with a different number.

Regarding two overpayments per year, I thought that it was two without penalty, but more possible subject to break fee. That's why I asked above. Did I get it completely wrong, I wonder?
 
iamaspinner said:
Regarding two overpayments per year, I thought that it was two without penalty, but more possible subject to break fee. That's why I asked above. Did I get it completely wrong, I wonder?
Click to expand...
Looking at their Ts&Cs again, I suppose it does sound like they are saying that they will charge an early redemption fee if you make more than two overpayments per year. But they can't impose an arbitrary early redemption fee – e.g., in your case it's (probably) currently zero. I'd say the Ts&Cs are just badly worded and they won't let you make more than two overpayments per year full stop.
 
I'll call them tomorrow and ask them to clarify.
 
I just rang Avant and the person who answered had less of a clue than me! Apparently I can only overpay by a maximum of 10% of the balance. When I asked why there was an early redemption fee and 3 pages dedicated to it in their letter to me, I was told it was in case I wanted to clear the mortgage... maybe! They weren't really sure and they couldn't give me an early redemption fee either. I need to contact operations by email only with all my queries...

I'll report back when I get a reply.

Edit: email address is now customerservices@avantmoneymortgages.ie
 
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  • Current lender. Avant
  • Outstanding mortgage balance (how much you still owe) c 780,000
  • Approximate current value of your property 975,000
  • The date you started your fixed-rate mortgage (month and year) February 2022
  • How many years you fixed for Three
  • Your current mortgage interest rate 2.15%
  • Your current monthly repayment (excluding any overpayments) 2,942
  • Your property's BER (Building Energy Rating) – check it here or estimate it if necessary C1 (estimated)
  • 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
 
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