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

  • Current lender KBC
  • Outstanding mortgage balance (how much you still owe) 261k
  • Approximate value of your property 900k
  • The date you started your fixed-rate mortgage (month and year) Mar 2018
  • How many years you fixed for: 10 year, end Mar 2028
  • Your current mortgage interest rate 2.95%
  • Your current monthly repayment (excluding any overpayments) €1550
  • Your property's BER (Building Energy Rating) – A3
  • Are you due to get extra cashback from your current lender: No
Thanks in advance. Much appreciated
 
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Hi Paul, thanks so much for your generosity of time and energy.

We are not on a fixed rate, but were going to change our rate with AIB to a lower LTV rate. But is there an obvious switch we could be missing?


  • Current lender AIB
  • Outstanding mortgage balance (how much you still owe) 86K
  • Approximate value of your property 510K (at September 2020 - would probably need updating)
  • The date you started your fixed-rate mortgage (month and year) variable rate - loan expiry April 2029
  • How many years you fixed for n/a
  • Your current mortgage interest rate 3.150%
  • Your current monthly repayment (excluding any overpayments) €1,097
  • Your property's BER (Building Energy Rating) – estimated if necessary - 1950s house, so lowest BER rating
  • 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? n/a
Many thanks again.
 
Hi Paul,

Thank you for any time you can put in having a look at the below.

  • Current lender – Ulster Bank
  • Outstanding mortgage balance - €158,570
  • Approximate value of your property - €265,993
  • The date you started your fixed-rate mortgage 31st March 2021
  • How many years you fixed for - 2
  • Your current mortgage interest rate – 2.25%
  • Your current monthly repayment - €702.06
  • Your property's BER (Building Energy Rating) – C1
  • 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
 
@riverrun Your break fee should be around €420 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it). In your case, it is extra volatile because there is so long left on your fixed rate.
  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €7,060 over the next 4 years
  • Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €5,780 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will save you about €4,500 over the next 4 years – but with the even longer security of 15 years on a fixed rate
  • Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you will get the 1% (€2,649) cashback next year) will save you about €2,020 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
These savings estimates use for comparison the scenario of doing nothing. You would get the Bank of Ireland €2,649 future cashback in such a scenario. The estimates also account for fees.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% so that you are eligible for the listed rates. Your LTV estimate is 230.0k/400.0k = 57.5%. If you get a valuation of less than €384k, you will need to make a few more monthly mortgage payments and/or a small 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.
 
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Because you are on a variable-rate mortgage, you do not have to pay a break fee.
  • Switching immediately to Haven 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €9,400 over the next 4 years
  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €7,820 over the next 4 years – but with the longer security of 7 years on a fixed rate
  • Switching immediately to AIB's 5-year green fixed rate (2.15% with no cashback) will save you about €7,300 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will save you about €6,440 over the next 4 years – but with the even longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will save you about €5,040 over the next 4 years – but with the even longer security of 15 years on a fixed rate
These savings estimates use for comparison the scenario of staying on the variable rate with AIB and assume that that rate doesn't change between now and April 2026 (which is unlikely). The estimates also account for fees and any cashback offered by the above lenders.

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% so that you are eligible for the listed Avant rates. (For AIB and Haven it doesn't matter.) Your LTV estimate is 242.0k/420.0k = 57.6%. If you get a valuation of less than €404k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 60%. But that is not a reason to delay the switch to Avant if that's what you decide on – i.e., you can start the switch immediately.

E46-Munster said:
Only other complication is that I'm considering selling the house in the next 18-24 months to renovate another house that I wouldn't be purchasing.
Click to expand...
In general, the longer you fix for the higher the break fee could potentially be in the future. That's because one of the factors in the break fee calculation is how long is left on the fixed-rate period. Of course, it's also possible for a future break fee to be small or zero. (It is zero if interbank rates rise after you fix.) So whether to consider the Avant rates or to rule them out mostly comes down to how likely you think it is that you will sell up in the next few years. But note that at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.

One further advantage of switching to AIB's 2.15% green rate (apart from the simplicity from an admin point of view) is that your future break fee is quite likely to be zero – because of a quirk in how they calculate break fees. See this thread for details.

Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

Moderator's note: Because of a quirk in how AIB calculate their break fee / early redemption charge, you can make unlimited overpayments on some of their fixed rates without penalty. Or you can break out of your existing AIB fixed rate and re-fix on a different rate, again without penalty. (You...
www.askaboutmoney.com
 
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My estimate of your break fee is zero at the moment – but take that with a big pinch of salt. It is difficult for me to accurately estimate KBC break fees because I don't know what reference rates they are using. And in general break fees are volatile because wholesale interest rates are volatile.
  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €180 over the next 4 years
  • Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will leave you worse off by about €640 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will leave you worse off by about €960 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates
  • Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will leave you worse off by about €1,480 over the next 4 years – but with the even longer security of 15 years on a fixed rate
These savings estimates use for comparison the scenario of switching to the 3-year 2.25% 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 2.25% rate in April 2023 – it could be higher (or lower). The estimates also account for fees.

It may seem like it is not worth switching to Avant but bear in mind that your mortgage will soon be owned by Bank of Ireland, whose rates are much higher than KBC's. So if you don't switch now, you might find that you really want to switch in a few years' time, at which point rates might be higher.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.

Jiblet-run said:
I am meant to be getting a phone call from them in the next 5 workings days but I wouldn’t hold my breath. This isn’t my first time getting shafted by KBC with its sub par customer service so unfortunately am accustomed to it.
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As for all the nonsense around getting the break fee letter, I would have thought that that was all the more reason to leave KBC.

It is perfectly possibly for a break fee to change by a few hundred quid in the space of a week or two.
 
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Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Ulster Bank (and please post it here when you receive it).

Note: you will receive two separate letters from Ulster Bank a few days apart, and their structure and wording can lead to confusion. Look for the line that says: "To break out of this fixed rate early, you would have to pay a fee of €X". That amount is your break fee. Ignore all other references to break fees.
  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €100 over the next 4 years
  • Switching immediately to Avant Money's 10-year fixed rate (2.1% with no cashback) will leave you worse off by about €800 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • Switching immediately to Ulster Bank's 5-year fixed rate (2.35% with no cashback) will leave you worse off by about €840 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Permanent TSB's books, at which point you will be subject to their (probably higher) interest rates
  • Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will leave you worse off by about €1,720 over the next 4 years – but with the even longer security of 15 years on a fixed rate
These savings estimates use for comparison the scenario of switching to the 2.20% rate with Ulster Bank when the current fixed rate ends. And that's assuming that Ulster Bank (or Permanent TSB, if they have taken over your mortgage by then) are even offering a 2.20% rate in April 2023 – it could be higher (or lower). The estimates also account for fees.

It may seem like it is not worth switching to Avant but bear in mind that your mortgage will soon be owned by Permanent TSB, whose rates are much higher than Ulster Bank's. So if you don't switch now, you might find that you really want to switch in a few years' time, at which point rates might be higher.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% so that you are eligible for the listed rates. Your LTV estimate is 158.6k/266.0k = 59.6%. If you get a valuation of less than €265k, you will need to make a few more monthly mortgage payments and/or a small 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.
 
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Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Permanent TSB (and please post it here when you receive it).
  • Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) will save you about €9,520 over the next 4 years
  • Switching immediately to AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €9,280 over the next 4 years
  • Switching immediately to Avant Money's 10-year fixed rate (2.2% with no cashback) will save you about €7,240 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.4% with no cashback) will save you about €4,200 over the next 4 years – but with the even longer security of 15 years on a fixed rate
  • Switching immediately to Permanent TSB's 5-year fixed rate (3.0% with 2% monthly cashback) will leave you worse off by about €2,400 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
These savings estimates use for comparison the scenario of switching to the 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 October 2024 – it could be higher (or lower). You would continue to get the Permanent TSB monthly cashback in such a scenario. The estimates also account for fees and any cashback offered by the above lenders.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.
 
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Because you are on a variable-rate mortgage, you do not have to pay a break fee.
  • Switching immediately to KBC's 5-year fixed rate (2.4% with €3,000 cashback) will save you about €3,520 over the next 4 years
    • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates
  • Switching immediately to AIB's 5-year fixed rate (2.35% with no cashback) will save you about €1,940 over the next 4 years. 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 (1.95% with no cashback) will save you about €1,660 over the next 4 years – but with the longer security of 7 years on a fixed rate
These savings estimates use for comparison the scenario of staying on the variable rate with AIB and assume that that rate doesn't change between now and April 2026 (which is unlikely). The estimates also account for fees and any cashback offered by the above lenders.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.

AIB's variable rate is 2.75%, and of course it could easily increase this year.

It's possible that KBC won't take you with such a low balance but there is no harm in trying – unless you find the simplicity of switching to AIB's 2.35% fixed rate more appealing.
 
Your break fee should be around €560 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with KBC (and please post it here when you receive it). In your case, it is extra volatile because there is so long left on your fixed rate.
  • Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €9,180 over the next 4 years
  • Switching immediately to Avant Money's 7-year fixed rate (1.95% with no cashback) will save you about €7,640 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 (2.1% with no cashback) will save you about €6,180 over the next 4 years – but with the even longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.25% with no cashback) will save you about €4,740 over the next 4 years – but with the even longer security of 15 years on a fixed rate
  • Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €4,620 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Bank of Ireland's books, at which point you will be subject to their (probably higher) interest rates
These savings estimates use for comparison the scenario of doing nothing. The estimates also account for fees and any cashback offered by the above lenders.

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 €12,180 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.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on the terms and conditions.
 
Hi Paul thank you for your time. I would be grateful if you could have a look at the below.
  • Current lender: Ulster Bank
  • Outstanding mortgage balance (how much you still owe): €278k
  • Approximate value of your property: €380K
  • The date you started your fixed-rate mortgage (month and year): Sept 2018
  • How many years you fixed for: 4 years
  • Your current mortgage interest rate: 2.85%
  • Your current monthly repayment (excluding any overpayments): €1255.78
  • Your property's BER (Building Energy Rating) – A2 (BER certificate dated November 2019)
  • 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? Not applicable
 
Thanks so much Paul, that's very helpful.
 
Your break fee should be around €300 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Ulster Bank (and please post it here when you receive it).

Note: you will receive two separate letters from Ulster Bank a few days apart, and their structure and wording can lead to confusion. Look for the line that says: "To break out of this fixed rate early, you would have to pay a fee of €X". That amount is your break fee. Ignore all other references to break fees.
  • Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €3,280 over the next 4 years
  • Switching immediately to Ulster Bank's 5-year fixed rate (2.2% with no cashback) will save you about €600 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
    • Of course, if you decide to do this, you will probably want to switch again in 5 years when your fixed rate expires and your mortgage moves onto Permanent TSB's books, at which point you will be subject to their (probably higher) interest rates
  • Switching immediately to Avant Money's 7-year fixed rate (2.15% with no cashback) will leave you worse off by about €360 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 (2.3% with no cashback) will leave you worse off by about €1,960 over the next 4 years – but with the even longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.5% with no cashback) will leave you worse off by about €4,100 over the next 4 years – but with the even longer security of 15 years on a fixed rate
These savings estimates use for comparison the scenario of switching to the 2.20% rate with Ulster Bank when the current fixed rate ends. And that's assuming that Ulster Bank (or Permanent TSB, if they have taken over your mortgage by then) are even offering a 2.20% rate in October 2022 – it could be higher (or lower). The estimates also account for fees and any cashback offered by the above lenders.

Note that the longer you fix for, the higher the break fee could potentially be in the future, which could be relevant if you want to move home. Of course, it's also possible for a future break fee to be small or zero. And at least some of Avant's fixed rates allow you to "take your mortgage with you" if you move home. It would be worth contacting them for clarification on which mortgages this applies to and on the terms and conditions.

Your LTV estimate is 278.0k/380.0k = 73.2%. A higher property valuation (€398k) and/or a few more monthly mortgage payments and/or a lump sum overpayment would get you below 70%. That would make you eligible for lower Avant rates. If you got your LTV below 70%:
  • Switching immediately to Avant Money's 7-year fixed rate (2.05% with no cashback) would save you about €720 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 (2.2% with no cashback) would leave you worse off by about €880 over the next 4 years – but with the even longer security of 10 years on a fixed rate
  • Switching immediately to Avant Money's 15-year fixed rate (2.4% with no cashback) would leave you worse off by about €3,020 over the next 4 years – but with the even longer security of 15 years on a fixed rate
But you'd first need a valuation from Avant to see if this is feasible, and that valuation fee (€185) would be wasted if it isn't. (And you don't want to overstretch yourself financially with any lump sum overpayment.)

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 €6,280 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.
 
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Hi Paul,

Just letting you know that I received the breakage fee amount today from Ulster Bank and it was indeed zero, as you said. Thanks very much for your help!
 
Hi Paul,

Thanks in advance for your help with this.

  • Current lender BOI
  • Outstanding mortgage balance (how much you still owe) €390,000
  • Approximate value of your property €750,000
  • The date you started your fixed-rate mortgage (month and year) Sep 2018
  • How many years you fixed for 10 years
  • Your current mortgage interest rate 3%
  • Your current monthly repayment (excluding any overpayments) €2,021
  • Your property's BER (Building Energy Rating) – estimated if necessary - not sure - guessing C ? - built in 1990 (all windows and doors upgraded 6 years ago)
  • 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? Yes, due 1% (€4,000) in Sep 2023
Also, we are planning to borrow an extra €150k for an extension/upgrade when we can find a builder not quoting telephone numbers

 
Thanks! Received the confirmation of zero this morning.
 
Thanks very much for this Paul. I did indeed take your advice and I requested a new break fee last Wednesday. I received a call this afternoon advising it was zero. It reduced by from 2.4k to 0 in less than two weeks!

I've talked to a broker and they reckon we should be able to switch to Avant so I'm going to just go ahead and chance breaking out of the fixed rate now.

Even in a negative scenario, if for some reason we couldn't change bank, KBC have better rates available now than our existing fixed rate.

Thanks again for your great advice. Much much appreciated
 
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