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Cost of breaking a fixed rate

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  • 27-05-2016 4:14pm
    #1
    dar100
    Registered Users Posts: 1,735 ✭✭✭


    Hi,

    Has anyone got an idea of the cost of breaking a fixed rate mortgage with AIB?

    Cheers


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    #2
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    The banking forum might be a more helpful place, or the talk to AIB forum?


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    #3
    Piligrim333
    Registered Users Posts: 20 ✭Piligrim333


    dar100 wrote:
    Has anyone got an idea of the cost of breaking a fixed rate mortgage with AIB?


    If you check your mortgage contract carefully, the terms and condition section - it should be there. Usually, there is a formula there using which you could calculate the exact amount. In practice it is the amount equal to the discount the bank gave you in fixed rate in comparison to their variable rate.


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    #4
    dar100
    Registered Users Posts: 1,735 ✭✭✭dar100


    Piligrim333 wrote: »
    If you check your mortgage contract carefully, the terms and condition section - it should be there. Usually, there is a formula there using which you could calculate the exact amount. In practice it is the amount equal to the discount the bank gave you in fixed rate in comparison to their variable rate.

    So let's say my fixed rate is 1000 per month, and the variable rate works out at 900 per month. And I have 12 months left on fixed rate, would that mean I'd have to pay 1200 to break? I.e 12 x 100

    Is it the present variable rate or the one when I originally fixed?


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    #5
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    dar100 wrote: »
    So let's say my fixed rate is 1000 per month, and the variable rate works out at 900 per month. And I have 12 months left on fixed rate, would that mean I'd have to pay 1200 to break? I.e 12 x 100

    Is it the present variable rate or the one when I originally fixed?

    The penalty and equation for calculating it will be stated in your contract. I know there is a lot in the news at the moment about the Government trying to get the banks to lower interest rates or going so far as to introduce legislation to make them do so, but bare in mind the ECB rate is at an all time low, interest rates cannot go any lower and will eventually rise, when that happens (albeit unlikely in the next year) your fixed rate will look very good if it is only €100 above the variable rate now.


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    #6
    dar100
    Registered Users Posts: 1,735 ✭✭✭dar100


    davo10 wrote: »
    The penalty and equation for calculating it will be stated in your contract. I know there is a lot in the news at the moment about the Government trying to get the banks to lower interest rates or going so far as to introduce legislation to make them do so, but bare in mind the ECB rate is at an all time low, interest rates cannot go any lower and will eventually rise, when that happens (albeit unlikely in the next year) your fixed rate will look very good if it is only €100 above the variable rate now.

    Thanks for reply. The numbers are not my own mortgage. My present interest rate is 5.2. I believe the present variable rate is 3.6? Do you foresee the interest rate gaining almost 2 %?.

    I'm still fixed for another 3 years, however, My LTV has reduced somewhat, so would be seeking a further drop in rate.


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    #7
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    dar100 wrote: »
    Thanks for reply. The numbers are not my own mortgage. My present interest rate is 5.2. I believe the present variable rate is 3.6? Do you foresee the interest rate gaining almost 2 %?.

    I'm still fixed for another 3 years, however, My LTV has reduced somewhat, so would be seeking a further drop in rate.

    Wow, thats very high. I fixed at 3.6% about a year ago, with 2 years more to run.

    When did you fix at that rate and how long for? Are you self employed or are there other risk factors that caused you to have such a high rate?

    In reality it might cost you quite a bit of money to get out of that situation, but you really need to consult your contract/lender.

    Also are you trying to switch to the current standard variable at your existing bank, or are you looking to switch banks? Just to point out that there are considerable legal fees to switch your mortgage, maybe €1.5-2k.


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    #8
    dar100
    Registered Users Posts: 1,735 ✭✭✭dar100


    SarahMollie wrote: »
    Wow, thats very high. I fixed at 3.6% about a year ago, with 2 years more to run.

    When did you fix at that rate and how long for? Are you self employed or are there other risk factors that caused you to have such a high rate?

    In reality it might cost you quite a bit of money to get out of that situation, but you really need to consult your contract/lender.

    Also are you trying to switch to the current standard variable at your existing bank, or are you looking to switch banks? Just to point out that there are considerable legal fees to switch your mortgage, maybe €1.5-2k.

    No that was the rate at the time for everyone. This was before the rate drops, I'd imagine the banks knew what was coming and had them high. In reality my mortgage is low, so just looking about.


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