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Mortgage - low fee for breaking fixed rate

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  • 04-04-2019 2:26pm
    #1
    Registered Users Posts: 929 ✭✭✭


    To summarise what I talk about below, it cost me €16 to save me over €50 a month in interest repayments by breaking from my fixed rate 3.2% to a new fixed rate term of 2.9%.

    I'm not sure if this is the right place or not....but I'm currently with BOI and on a 3 year fixed rate mortgage at 3.2%, with still another year or so to go. I always understood they would charge you ridiculous fees for breaking your fixed rate mortgage (i.e. overpaying / moving to a different fixed rate product / moving to a variable rate / moving banks).

    I was speaking to the bank today, and I have now moved my mortgage from the 3.2% fixed rate (with still around 1 year to go on the fixed rate + 30 odd years on variable) to the 2.9% fixed rate. The break charge for my fixed rate mortgage term (or funding fee as they call it) was only €16... and my monthly repayments are now going to be over €50 cheaper per month vs what I was previously on! So I'm now on a new 2 year fixed rate term for my mortgage but at 2.9%. I honestly didn't know it would cost me so little to move within a fixed rate. I understood that fees were very high when breaking out of a fixed rate. Another point to note, the same low fees apply if you want to do a bulk payment or switch provider (but additional legal fees for switching banks etc.. still apply).

    This break fee / funding fee is different depending on term of mortgage and amount, but anyone who is on a fixed rate and their current bank is offering a lower fixed rate, investigate how much it will cost you to change by contacting your bank.

    Hopefully this will save people with mortgages a few bob.

    Steps for those that want to consider moving a better fixed interest rate product in their existing bank
    Step 1: Get your mortgage account number, details of your current fixed interest rate
    Step 2: Check out existing fixed rate mortgage interest rates (most have decreased in the last 6-12 months) and see if there are better rates than what you are currently paying.
    Step 3: Contact the mortgages department of your bank and ask what your funding fee / break fee is if you want to exit your current fixed rate mortgage
    Step 4: They will send out a letter containing the offer for you to sign and send back to them


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Comments

  • Registered Users Posts: 1,016 ✭✭✭JJJackal


    sternn wrote: »
    To summarise what I talk about below, it cost me €16 to save me over €50 a month in interest repayments by breaking from my fixed rate 3.2% to a new fixed rate term of 2.9%.

    I'm not sure if this is the right place or not....but I'm currently with BOI and on a 3 year fixed rate mortgage at 3.2%, with still another year or so to go. I always understood they would charge you ridiculous fees for breaking your fixed rate mortgage (i.e. overpaying / moving to a different fixed rate product / moving to a variable rate / moving banks).

    I was speaking to the bank today, and I have now moved my mortgage from the 3.2% fixed rate (with still around 1 year to go on the fixed rate + 30 odd years on variable) to the 2.9% fixed rate. The break charge for my fixed rate mortgage term (or funding fee as they call it) was only €16... and my monthly repayments are now going to be over €50 cheaper per month vs what I was previously on! So I'm now on a new 2 year fixed rate term for my mortgage but at 2.9%. I honestly didn't know it would cost me so little to move within a fixed rate. I understood that fees were very high when breaking out of a fixed rate. Another point to note, the same low fees apply if you want to do a bulk payment or switch provider (but additional legal fees for switching banks etc.. still apply).

    This break fee / funding fee is different depending on term of mortgage and amount, but anyone who is on a fixed rate and their current bank is offering a lower fixed rate, investigate how much it will cost you to change by contacting your bank.

    Hopefully this will save people with mortgages a few bob.

    I wonder if its changing your mortgage from bank to bank thats expensive?


  • Registered Users Posts: 929 ✭✭✭sternn


    JJJackal wrote: »
    I wonder if its changing your mortgage from bank to bank thats expensive?

    From my understanding, fees involved in switching are a house revaluation (€150 - €300 + VAT) and legal fees (€1,200 - €2,000). Some banks offer to pay for some / all of those fees for switchers but should probably get financial advice for those.

    Main point is, even without incurring all that, you can still potentially break a fixed rate term and move to a cheaper fixed rate / variable rate within the same bank for minimal fee.


  • Registered Users Posts: 1,065 ✭✭✭jakdublin


    JJJackal wrote: »
    I wonder if its changing your mortgage from bank to bank thats expensive?

    That is expensive. But the OP is right, people should check the cost of moving from a fixed to a better fixed rate. New EU rules were brought in a couple of years ago so banks can't screw you like they could before, but they are entitled to charge for moving. Every bank is different and it depends on the rate you're moving from, like how long you've had it, how long is left etc. Costs nothing to ask. Too many people just leave their mortgage when keeping an eye on rates can save a lot, even in the short term. Mortgage insurance is another thing worth checking, especially if you still have the original policy you took out when you first got your mortgage.


  • Registered Users Posts: 39 ygaurav


    sternn wrote: »
    To summarise what I talk about below, it cost me €16 to save me over €50 a month in interest repayments by breaking from my fixed rate 3.2% to a new fixed rate term of 2.9%.

    I'm not sure if this is the right place or not....but I'm currently with BOI and on a 3 year fixed rate mortgage at 3.2%, with still another year or so to go. I always understood they would charge you ridiculous fees for breaking your fixed rate mortgage (i.e. overpaying / moving to a different fixed rate product / moving to a variable rate / moving banks).

    I was speaking to the bank today, and I have now moved my mortgage from the 3.2% fixed rate (with still around 1 year to go on the fixed rate + 30 odd years on variable) to the 2.9% fixed rate. The break charge for my fixed rate mortgage term (or funding fee as they call it) was only €16... and my monthly repayments are now going to be over €50 cheaper per month vs what I was previously on! So I'm now on a new 2 year fixed rate term for my mortgage but at 2.9%. I honestly didn't know it would cost me so little to move within a fixed rate. I understood that fees were very high when breaking out of a fixed rate. Another point to note, the same low fees apply if you want to do a bulk payment or switch provider (but additional legal fees for switching banks etc.. still apply).

    This break fee / funding fee is different depending on term of mortgage and amount, but anyone who is on a fixed rate and their current bank is offering a lower fixed rate, investigate how much it will cost you to change by contacting your bank.

    Hopefully this will save people with mortgages a few bob.

    Did you call their call center and they did that for you? What did your say? I am with BOI as well that's why I am asking this question


  • Registered Users Posts: 1,857 ✭✭✭Atlas_IRL


    The point about moving is that some banks can give you around 5k cash back for taking a mortgage out with them and that includes leaving. With fees around 2-2.5k for solicitor and legal fees that will leave you with around 2.5-3k for moving your mortgage.

    My friend works in mortages and said one guy done it with 4 banks and pocketed around 10k for himself, maybe more.


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  • Registered Users Posts: 14,336 ✭✭✭✭jimmycrackcorm


    Atlas_IRL wrote: »
    The point about moving is that some banks can give you around 5k cash back for taking a mortgage out with them and that includes leaving. With fees around 2-2.5k for solicitor and legal fees that will leave you with around 2.5-3k for moving your mortgage.

    My friend works in mortages and said one guy done it with 4 banks and pocketed around 10k for himself, maybe more.

    I'd like to see actual examples of that because I think most give very little more than the costs involved in switching.


  • Registered Users Posts: 929 ✭✭✭sternn


    ygaurav wrote: »
    Did you call their call center and they did that for you? What did your say? I am with BOI as well that's why I am asking this question

    I called their mortgages department - 01 611 3333 and said I'd like to investigate moving my mortgage to a better interest rate product. I asked how much it would cost me to break my fixed rate and move to the better rate. They are sending me out a letter with the details of my options, and I have to then sign and send back as far as I know.


  • Registered Users Posts: 5,510 ✭✭✭Wheety


    I'm with KBC and it cost nothing to break out of the fixed rate.


  • Registered Users Posts: 699 ✭✭✭tommythecat


    I'd like to see actual examples of that because I think most give very little more than the costs involved in switching.

    Well KBC give you 3k for switching. Most solicters do the switch for 1.5k and the valuation is around 150 euro so that leaves you with well over 1k for switching. I am in the middle of the process myself.

    Look at this thread where some people are switching between a load of banks in a short period and making a lot of money. It's tricky but it seems to work for some people.

    https://www.askaboutmoney.com/threads/advice-on-making-the-most-of-switcher-offers-what-order.208709/

    4kwp South East facing PV System. 5.3kwh Weco battery. South Dublin City.



  • Registered Users Posts: 24,321 ✭✭✭✭lawred2


    JJJackal wrote: »
    I wonder if its changing your mortgage from bank to bank thats expensive?

    broke out of a BOI fixed rate to go to PTSB for the 2% cashback - cost me €200


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  • Registered Users Posts: 24,321 ✭✭✭✭lawred2


    jakdublin wrote: »
    That is expensive. But the OP is right, people should check the cost of moving from a fixed to a better fixed rate. New EU rules were brought in a couple of years ago so banks can't screw you like they could before, but they are entitled to charge for moving. Every bank is different and it depends on the rate you're moving from, like how long you've had it, how long is left etc. Costs nothing to ask. Too many people just leave their mortgage when keeping an eye on rates can save a lot, even in the short term. Mortgage insurance is another thing worth checking, especially if you still have the original policy you took out when you first got your mortgage.

    not necessarily

    it's no longer at the discretion of the bank - it's a fixed calculation based on funding costs


  • Registered Users Posts: 5,755 ✭✭✭masterboy123


    What about solicitors fees?
    lawred2 wrote: »
    broke out of a BOI fixed rate to go to PTSB for the 2% cashback - cost me €200


  • Registered Users Posts: 4,495 ✭✭✭VW 1


    I'd like to see actual examples of that because I think most give very little more than the costs involved in switching.


    I switched from EBS to BOI to get 2% cash back, plus an extra 1% at the end of a 3 year fixed period. Solicitor fees plus VAT were 950 as well as 80 quid to pay the valuation agent. Safe to say that it was worth the effort of the forms and document gathering.


    Will be doing the same at the end of the fixed period also.


  • Registered Users Posts: 24,321 ✭✭✭✭lawred2


    What about solicitors fees?

    Well that's a separate concern. That's got nothing to do with the cost of breaking out of a fixed rate mortgage.


  • Registered Users Posts: 1,667 ✭✭✭Klonker


    VW 1 wrote:
    I switched from EBS to BOI to get 2% cash back, plus an extra 1% at the end of a 3 year fixed period. Solicitor fees plus VAT were 950 as well as 80 quid to pay the valuation agent. Safe to say that it was worth the effort of the forms and document gathering.


    pretty sure the 1% is after 5 years with BOI.


  • Registered Users Posts: 3,205 ✭✭✭cruizer101


    lawred2 wrote: »
    Well that's a separate concern. That's got nothing to do with the cost of breaking out of a fixed rate mortgage.

    Its not separate at all, if moving bank it has to be taken into account. Generally the bigger saving will be by moving bank, and any cashback type offers will require moving bank also.


  • Registered Users Posts: 24,321 ✭✭✭✭lawred2


    cruizer101 wrote: »
    Its not separate at all, if moving bank it has to be taken into account. Generally the bigger saving will be by moving bank, and any cashback type offers will require moving bank also.

    That's a total cost question. And every solicitor will charge differently.

    This thread is about the fee banks charge for breaking fixed interest mortgages.

    Solicitor would charge the same regardless of whether you switched from a variable rate or broke a fixed rate.

    So while it's relevant to total cost of switching. It's not relevant to this thread.


  • Registered Users Posts: 3,214 ✭✭✭cojomo2


    Wheety wrote: »
    I'm with KBC and it cost nothing to break out of the fixed rate.

    So am I..I was quouted €240 this week. That was to break a fixed mortgage of 145k with 18 months remaining. When were you told it would be free?


  • Registered Users Posts: 45,361 ✭✭✭✭Bobeagleburger


    cojomo2 wrote: »
    So am I..I was quouted €240 this week. That was to break a fixed mortgage of 145k with 18 months remaining. When were you told it would be free?

    How did they calculate the 240?

    Sounds excessive


  • Registered Users Posts: 3,214 ✭✭✭cojomo2


    RoboKlopp wrote: »
    How did they calculate the 240?

    Sounds excessive

    Using some formula that they all use based on guidance from the central bank I believe.


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  • Registered Users Posts: 3,205 ✭✭✭cruizer101


    CPCC have a good mortgage comparison tool for checking different rates.
    Although it doesn't detail cashback offers.
    Also good to check what your ltv is, as there are better rates for lower ltv,
    generally the change of bands are 80%, 60%, 50%,


  • Registered Users Posts: 3,205 ✭✭✭cruizer101


    lawred2 wrote: »

    This thread is about the fee banks charge for breaking fixed interest mortgages.
    The thread is about the savings that can be made by breaking a fixed rate mortgage, in particular the fact that breaking fees are a lot less than many think.

    However the other costs are not irrelevant. That's like saying alcohol is cheap in another country and the cost of getting it here is irrelevant.

    For overall savings, which is what people are going to be interested in, the whole picture of all costs is important


  • Registered Users Posts: 7,861 ✭✭✭The_B_Man


    I'm with BoI as well.
    If I do this, do I have to go thru the whole mortgage application process again? Bank statements and all the rest?


  • Registered Users Posts: 24,321 ✭✭✭✭lawred2


    cruizer101 wrote: »
    The thread is about the savings that can be made by breaking a fixed rate mortgage, in particular the fact that breaking fees are a lot less than many think.

    However the other costs are not irrelevant. That's like saying alcohol is cheap in another country and the cost of getting it here is irrelevant.

    For overall savings, which is what people are going to be interested in, the whole picture of all costs is important

    Mortgage - low fee for breaking fixed rate


  • Registered Users Posts: 1,548 ✭✭✭mayota


    The_B_Man wrote: »
    I'm with BoI as well.
    If I do this, do I have to go thru the whole mortgage application process again? Bank statements and all the rest?

    No, not if you’re staying with BOI.


  • Registered Users Posts: 475 ✭✭flugel


    This is how I understand it

    Under a fixed rate contract but break it to avail of newer lower rates to stay with same mortgage provider, you have a breakage fee to pay. This fee changes and is recalculated every day

    If you break within a fixed rate contract to switch mortgage providers you have the above breakage fee plus you also have a redemption fee to pay

    Ive been told by my mortgage provider, bank of Ireland, that the breakage fee can be as low a zero

    I don't know how the redemption fee is calculated and if that can also potentially be as low as zero


  • Registered Users Posts: 51,203 ✭✭✭✭bazz26


    To my knowledge a redemption fee is when you are settling the mortgage in full or moving to another lender before your current fixed term finishes. I don't think that applies where you are just moving to a different interest rate and staying with the same lender.

    Another tip for paying less interest over the term of the mortgage is to look at paying a little extra every month off the capital amount borrowed, on top of your normal mortgage payment. Even if your in a fixed rate term you can still pay upto 10% extra of your monthly repayment without penalty. With a variable rate you can pay as much off as you want or can afford. As mortgage interest is normally calculated on a daily basis, paying a small amount every month off the amount borrowed actually reduces the amount of interest you are paying over the entire term of the mortgage.

    So for example with the OP, that €50 per month saved by switching to a lower interest rate could be put towards reducing the amount borrowed every month instead meaning less interest paid over the entire term of the mortgage. Doesn't seem like much but over time it does add up.


  • Posts: 14,344 ✭✭✭✭ [Deleted User]


    cojomo2 wrote: »
    So am I..I was quouted €240 this week. That was to break a fixed mortgage of 145k with 18 months remaining. When were you told it would be free?




    Am I reading that right? You've got a €145,000 mortgage, and 18 months left on it (ie: about €8,000 per month?).


    Surely, if you're doing such massive payments, you wouldn't care what the interest rate was, because you'll be paying a trivial amount anyway, at the speed with which you'd be blowing through the mortgage? :confused:


  • Registered Users Posts: 51,203 ✭✭✭✭bazz26


    I assume the original amount borrowed was 145k rather than the amount owing with 18 months to go.


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  • Posts: 14,344 ✭✭✭✭ [Deleted User]


    bazz26 wrote: »
    I assume the original amount borrowed was 145k rather than the amount owing with 18 months to go.




    I re-read it again, and I think he means 18 months remaining of his fixed term? I'm not sure, to be honest. Would make more sense than my initial thought process of it.


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