Key Post Switch or re-fix my mortgage? Breakage fee calculator and savings estimates for your case (Ireland)
- Thread starter Paul F
- Start date
No need to apologise I'm sure that's just forum lingo I'm not familiar with.
Spoke to BOI today and they confirmed zero break fee at the moment but that it "could change any time".
They confirmed, as I suspected from reading here, that I would NOT be eligible for their green mortgage rate if I get a B3 cert next week - as that's a new customer rate only.
My conservative working plan is to re-fix with them now (as I understand can be done quite quickly), and keep the ball rolling with a PTSB application.
If the rates go up before the PTSB application gets to a point where I have it locked in I'll simply drop it and stay on my newly fixed BOI rate.
In theory what kind of break fee would I expect if I re-fix with BOI now for, say 5 years, then in 7 weeks time I break to move to PTSB?
Is this a sensible plan? Idea being to not end up with worse options than what I am currently getting from BOI if rate rises are truly imminent
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It seems like a sensible plan.
If you decide to go this route, there are a couple of risks:
- You might become liable for brokers' fees and/or solicitors' fees if you abandon the switch after you have engaged their services (which you might want to do if rates increase too much). Check with some brokers and solicitors if you would be liable for fees in such a situation.
- If you re-fix with BOI now there might be a break fee when you finally leave BOI. You should contact BOI periodically during the switching process and ask for an updated estimate of your break fee. You could abandon the switch if the break fee is getting too high.
Bear in mind that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers. 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).
If you want to re-fix with BOI, time is short. You may be able to change your BOI rate online – see here:
Mortgage Rate Options - Manage My Mortgage - Bank of Ireland
View our competitive rates, calculate if you could save on a fixed rate & change your interest rate.
personalbanking.bankofireland.com
That's almost impossible to say, which is why you would need to check it with BOI periodically after you re-fix. But I would speculate that there is a reasonable chance that it will be modest or even zero.
If you want to re-fix with BOI, time is short. You may be able to change your BOI rate online – see here:
Mortgage Rate Options - Manage My Mortgage - Bank of Ireland
View our competitive rates, calculate if you could save on a fixed rate & change your interest rate.
Yep I've filled out that online rate change form and am waiting for them to contact me off the back of it! My understanding is they'll send out a "docusign" via email... Submitted this morning and no sign of the email as of now!
PolkaDotCabbage
New Member
- Messages
- 3
Got a break fee of zero on letter dated 13th October.
Tempted to switch for the lifetime of the mortgage, partly so I never have to do all of this again but mostly for the security of having an affordable price locked in but interest rates have increased since I started the process and now I'm wondering if I should stick for the remaining 3 years of the term and worry about it then.
Thanks so much for all the calculations- really appreciate all the work!
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What lenders have you started the switching process with?
Docusign arrived this afternoon, signed and submitted. Will update once re-fix locked in so others know how long that takes!
- Current lender kbc
- Outstanding mortgage balance (how much you still owe) €154k
- Approximate current value of your property €700k
- The date you started your fixed-rate mortgage (month and year) December 2018
- How many years you fixed for - 5yr
- Your current mortgage interest rate - 2.6%
- Your current monthly repayment (excluding any overpayments) €2k
- Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - D2
- 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
@jaykay Your break fee should be zero at the moment – but confirm it with KBC. If it is higher than zero, please post it here when you receive it, including the date of the letter.
- Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €3,820 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 Permanent TSB's 5- or 7-year fixed rate (3.0% with €3,080 initial cashback and 2% monthly cashback) will save you about €2,600 over the next 4 years – but with the longer security of 5 or 7 years on a fixed rate
- The same warnings as above regarding higher Permanent TSB rates in the future apply
- Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €1,920 over the next 4 years. And it is very simple to do (no bank statements, salary cert or solicitor, etc., needed). Be aware that it is currently taking KBC a long time to process these 'break and re-fix' requests, and they might increase their interest rates before they process yours – see this thread. So if you go this route you might want to simultaneously start the process of switching to another lender (and you can abandon that switch if your re-fix with KBC happens at a satisfactory interest rate).
- Note that if you decide to do this, your interest rate won't change for 5 years but 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 right now, 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 – although there will only be about two years left on your mortgage at that point.
- Switching immediately to AIB's 5-year fixed rate (2.85% with €2,000 cashback) will save you about €560 over the next 4 years
- Switching immediately to Avant Money's 4-year fixed rate (2.45% with no cashback) will save you about €360 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 €560 over the next 4 years
- Switching immediately to Haven's 7-year fixed rate (3.15% with €2,000 cashback) will leave you worse off by about €840 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 7-year fixed rate (2.95% with no cashback) will leave you worse off by about €1,940 over the next 4 years – but with the longer security of 7 years on a fixed rate
- Switching immediately to AIB's 7-year fixed rate (3.45% with €2,000 cashback) will leave you worse off by about €2,240 over the next 4 years – but with the longer security of 7 years on a fixed rate
The above AIB and Haven rates include their rate increases of 14 October 2022. Permanent TSB and Bank of Ireland are expected to increase their rates very soon.
These savings estimates use for comparison the scenario of switching to a 3% rate with KBC when the current fixed rate ends. And that's assuming that KBC (or Bank of Ireland, if they have taken over your mortgage by then) are even offering a 3% rate in December 2023 – 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 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).
Bear in mind that the interest rates of some lenders are very likely to 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).
If you use a broker and they tell you that your mortgage balance is too low to switch, find another broker.
Can you confirm that there is approximately 7 years left to run on your mortgage?
Thanks Paul. I appreciate the pointers. I'll probably stick with kbc if i can get the 2.4% rate from them. I have got the ball rolling on that. They are due to send me out a letter.
At my current monthly payment amount it would take about 7 years to pay it off all right.
delta_bravo
Registered User
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- 41
Hi @Paul F
I just wanted to pop in to send you a message of thanks. Without your voluntary time spent to calculate break fees for me I may not have gotten off of my backside to switch. Doing so have shaved a few years off my mortgage and reduced the monthly premium, plus I got in just before the recent rises. You've probably done similar for dozens more here.
If you had any particular charity you're interested in I'd love to make a donation just as a token of appreciation.
Thanks for all you do
I just wanted to pop in to send you a message of thanks. Without your voluntary time spent to calculate break fees for me I may not have gotten off of my backside to switch. Doing so have shaved a few years off my mortgage and reduced the monthly premium, plus I got in just before the recent rises. You've probably done similar for dozens more here.
If you had any particular charity you're interested in I'd love to make a donation just as a token of appreciation.
Thanks for all you do
Thanks @delta_bravo!
Cool! I like Jigsaw:
Donate Now | Your Donation Makes a Valuable Difference | Jigsaw
When you make a donation you become part of a movement of people in Ireland that cares for and values our young people’s mental health.
jigsaw.ie
Hi Paul, I don't see 2.4% listed on the KBC site. Is that a rate that is not advertised, but available for existing customers?
5 year <60% rate that is advertised is 2.6%:
Our Mortgage Rates - KBC
www.kbc.ie
EDIT: I can see you are using the 0.2% reduction for current account holders. I spoke to them and they are saying there will be no break fee for breaking out of the last year of the current fixed rate.
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That's right. Do you have a KBC current account?
Please post updates in the KBC re-fix thread so that others can see how long the process is taking.
Current lender: Bank of Ireland
Outstanding mortgage balance: 177,292.51
Approximate value of your property: 200,000
The date you started your fixed-rate mortgage (month and year): Dec 2021
How many years you fixed for: 3
Your current mortgage interest rate: 3%
Your current monthly repayment (excluding any overpayments): €716.63
Your property's BER (Building Energy Rating) – estimated if necessary: C2
Cashback: 1% after 5 years (€1,800) in Dec 2026
My preference is to not switch but instead re-set the clock with a longer fixed term.
I've already received a Mortgage form of Authorisation from BOI which is ready to be signed electronically.
The rates offered that I am considering are 3/5 years @ 3% and 10 years @ 3.5%.
BOI have advised that no break fee applies today but that can change before the new terms would come into effect, even if I was to sign immediately/electronically.
I know it's difficult to give an estimation, but how significant would a break fee be if one was suddenly to come into effect?
Thanks in advance
Outstanding mortgage balance: 177,292.51
Approximate value of your property: 200,000
The date you started your fixed-rate mortgage (month and year): Dec 2021
How many years you fixed for: 3
Your current mortgage interest rate: 3%
Your current monthly repayment (excluding any overpayments): €716.63
Your property's BER (Building Energy Rating) – estimated if necessary: C2
Cashback: 1% after 5 years (€1,800) in Dec 2026
My preference is to not switch but instead re-set the clock with a longer fixed term.
I've already received a Mortgage form of Authorisation from BOI which is ready to be signed electronically.
The rates offered that I am considering are 3/5 years @ 3% and 10 years @ 3.5%.
BOI have advised that no break fee applies today but that can change before the new terms would come into effect, even if I was to sign immediately/electronically.
I know it's difficult to give an estimation, but how significant would a break fee be if one was suddenly to come into effect?
Thanks in advance
I do indeed, I will update that thread when it goes through
Hi Paul,
This TSB rate (2.05% plus 2% cashback) is worth a look I think. If I was to switch, so I need to involve a third party like a lawyer? Or is it usually just a case of sending statements with forms etc to the new bank. ie. can I do it all myself?
And do you know if the rate requires me to open a current account with them?
The other option is re-fixing with KBC at a 3yr rate of 2.25%.
@Paul F - Got the letter today to chew on, valid for 30 days it seems which is excellent. I can see how things develop while I make my mind up. Given the 2% back in monthly payments, the fact I can avoid the solicitor and valuer fees, and the fact that I would like to trade up (how long that takes... who knows), I may well re-fix with PTSB.
Yes, you always need a solicitor to switch your mortgage to another lender. And you'll have to gather statements, get PTSB to do a property valuation, etc. The process takes anywhere from one to three months, and PTSB are likely to increase their rates quite soon – possibly as soon as this Friday. KBC might increase their rates soon as well.
I don't think so but check that for yourself.
Paul I've been mulling something over. You know with cashback lenders the trade-off is that you get higher interest rates? What if when you took out a mortgage with a cashback lender you were to borrow less money and then use the cash-back to essentially reimburse yourself for paying off part of the principal early. So like say you're getting 8 grand cashback on a switch and switching expenses = €1.5K. It might be a case of 3.2% for five years with a principal of €400,000 vs. 2.7% for five years with a principal of €406,500.
Edit: Of course assuming you might switch again (say at the end of the cashback period where there's another 1% due).
Edit: Of course assuming you might switch again (say at the end of the cashback period where there's another 1% due).
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