Fixed Rate Breakage Costs

anonymousjunkie

Contacted my bank to determine the breakage cost for moving from fixed to standard variable rate and received the cost by letter. Basically the fixed was 5.05% and the variable 4.5% so figured I'd make back the costs over the next 3/4 months and save each month after that on the repayments.

Was about to go ahead with it today, quickly checked the bank rates and realised that they'd dropped the standard variable by .75% yesterday, now wondering if this will increase the breakage cost as I would think the bank would now effectively lose out more over the year than if the rate was still at 4.5%.

Hope that makes sense, I've already contacted them to resend the breakage cost, just wondering if it will be more.

Ozziej

I'm in same boat. Fixed my mortgage 21 Jun 07 for 3 years at 5.05%. I borrowed 345,000 in 2006 for 35 years. I will call Permenant TSB to see how much it will cost to change to variable and what variable is.

Hunchback

Ozziej wrote: »

I'm in same boat. Fixed my mortgage 21 Jun 07 for 3 years at 5.05%. I borrowed 345,000 in 2006 for 35 years. I will call Permenant TSB to see how much it will cost to change to variable and what variable is.

how did you get on? what did they tell you?

anonymousjunkie

I was given a pretty low figure of a couple of hundred to change and then when I went to change early Jan they sent a letter out saying that the breakage cost had changed and was now a couple of grand.

I don't know who they had working for them in the office before christmas but whoever it was was calculating and sending out incorrect figures! I checked it myself when I saw the hike in breakage cost and the recent figure was more correct than the previous 2 costs I'd received in December.

ZYX

Most banks charge the difference between your current brate and their standard variable rate as their "breakage fee". So as the variable rate goes down (as it has by 2.25% over last few months), then the breakage fee goes up.

Feng Shui

My breakage fee was just over 10k so I emailed them to see if they could lower the breakage fee and pointed out to them that my financial situation has changed for the worst and it would make financial sense for them to lower the breakage fee and allow me to revert back to the variable rate.

I've been told it's been referred to management and I'm still waiting for a reply. Not holding my breath though..................

B1977

my fee to break out of mortgage went from €66 in December to €800 by the end of December.it is calculated on a daily basis and changes once daily at a certain time during working hours.Every time the ECB drops the rate the fee will rise

Hunchback

anonymousjunkie wrote: »

I was given a pretty low figure of a couple of hundred to change and then when I went to change early Jan they sent a letter out saying that the breakage cost had changed and was now a couple of grand.

I don't know who they had working for them in the office before christmas but whoever it was was calculating and sending out incorrect figures! I checked it myself when I saw the hike in breakage cost and the recent figure was more correct than the previous 2 costs I'd received in December.

My God OP, thats really weird!!!

I'm sure there's a 'logical' reason for it, but what do you think of the following..

I also have a mortgage with Permanent TSB. Only fourteen months through my thirty year mortgage of 30 years ( in the middle of last February ), I changed the terms of my mortgage from fixed to variable AT NO EXTRA COST! Not one penny. Nada. Zip. Permanent TSB. No charge. Payments gone down about 10%, but further cuts were made to the interest rate during the week, and more are expected in the coming months, so hoping to save about E150a month on what were originally repayments of 1100 p.m.

I have read on the internet that permanent TSB were considering disallowing people to change the terms of their mortgage from fixed to variable without incurring an extra charge, but I didn't have to pay it, and as I understand it, you enquired before me..

Have you learned more since your original post?

Hunchback

Sorry, just to clarify, when I say " have you learnt any more since your original post", I mean from your mortgage provider of course, just in case

anonymousjunkie

CKonetheonlyone wrote: »

Sorry, just to clarify, when I say " have you learnt any more since your original post", I mean from your mortgage provider of course, just in case

Nope. My guess at the time was that they had someone working in the office preparing these figures who didn't really know what they were doing. I'd called up irate and complained to a customer service rep, told them I wanted someone from that office to call me the next working day to explain the initial figures they'd sent out.

Didn't get a call, and had intended to chase it up but had a busy week in work so never got around to it. Knew I wouldn't get any satisfaction and never bothered to revisit it.

Hunchback

Janey. It could save you wads of dough!!!