BourbonWithIce
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I've gone from negative break fees (i.e. zero) to nearly 2 thousand euro in the space of 2 weeks. Holy moly!
It's probably correct. I haven't found an error yet in ant KBC break fees I've checked.Any options to challenge them on this?
Thanks @RedOnion for quick reply. yes we can pay the 10% but unfortunately rate stays the same.It's probably correct. I haven't found an error yet in ant KBC break fees I've checked.
It's a function of interbank rates, and the number of years remaining on the fixed rate. The interbank market has dropped massively since last summer; rates could be down close to 1% on 10 year term. With 9 years left, the break fee would be 9% of your balance (really simple example).
However, don't forget with KBC you can pay off a lump sum, up to 10% of the balance, without any break fee.
The interbank market has dropped massively since last summer; rates could be down close to 1% on 10 year term.
Thanks so much Redonion.@MsCutha
You don't need to do a mortgage application to change rates. It's very straight forward.
Phone UB and ask for a break fee and rate options. They'll send you a letter. However, the letter takes ages so phone them again after 2 days and ask what the break fee is. Once the letter has generated they should be able to tell you.
Also, have a look at this thread from a few months ago when I looked at a few UB cases:
Case Study: Internal Mortgage Switch UB
Lender: UB Amount of mortgage balance outstanding: €303k Date you fixed: November 2018 Period for which you fixed: 4 years Fixed rate: 2.6 Term left: 3yrs Breakage fee: €2500 (worked out using ICE report data) Approx interest cost in next 3years (whilst on 2.6%) = €23.6k Approx Balance after...www.askaboutmoney.com
Hi All, I found post here very useful in my situation, wanted to give back my feedback. I have fixed rate with KBC since Jul/Aug last year, tried to figure out the rates that they are using for calcs, wasn't far off myself when I requested breakage fee quote in late Feb however was quoted nearly 2k to break the chain of my fixed mortgage ,they never send me the quotation though .. I kept an eye though as work in finance, requested quote last week and voila have now been quoted 0 to break free. I used the below to roughly follow rate changes, COVID impact has been huge even though rates are below zero. Perhaps someone will find it helpful: https://tradingeconomics.com/ireland/interbank-rate
You are at the mercy of the rates until you pay down the loan, if you go to a variable you'll need to time it well as your interest rate will likely increase and you'll be accruing interest daily. Know your daily interest amount on the new variable rate you'll be on so you can gauge the costs as the days pass by on the variable rate.is the risk here that its 0 today but by the time you switch it can be 2k again, or do you break out now onto variable until the switch goes through
Approximation of rate movements:
I don't have access to real bank funding rates, so I use corporate swap rates as an approximation when estimating break fees for posters.
Note: these are not the same as interbank rates, but they move in the same direction. I haven't found a material difference in any recalculation I've done for anyone yet.
The following has free access, and you can select date you want to see:
https://www.theice.com/marketdata/reports/180
Yes, exactly.And should I then select the "Tenor" that matches the period remaining in the fixed term? i.e. 10 years in June 2018, and then 8 years in June 2020?
A bank must provide a written breakage quote to the consumer, and list all assumptions used. All assumptions must be reasonable, and justified.
Yes, exactly.
I use the EUR 1100 report.
Yes, sorry. The link was somewhere earlier in the thread: https://www.theice.com/marketdata/reports/180Is this published ? A quick google didn’t yield anything
Typical Example
In the example below, a customer took out a 5 year fixed mortgage at a rate of 5.00% on 1st January 2014. On 4th January 2015, the mortgage outstanding was €100,000 and the customer opts to break out of the fixed rate. The breakage cost calculation is:
Redeemed Amount = €87,832.42
R (Market rate on 1st January 2014) = 2.849% (for a 5 year interbank deposit by Ulster Bank)
R1 (Market rate on 4th January 2015) = 1.713% (for a 4 year interbank deposit by Ulster Bank)
Time = 1,457 days
Breakage Calculation = (Redeemed Amount x (R-R1) x Time) divided by 360 = (€87,832.42 x (2.849% - 1.713%) x 1,457)/360 = €4,038.22
Six Months Interest = €2,500