Mortgage breakage fee after BOI takes over KBC Mortgage

Manion

Hi,

I currently have a mortgage with KBC on fixed rate (2.6%). Looking at the terms and conditions for breaking https://www.kbc.ie/interest-rates it seems that if my mortgage provider doesn't have a fixed rate lower than my current fixed rate I can break for free (See scenario 1 from link). Looking through BOI they have nothing close to what I have with KBC, the closest rate would be 4.9%.

Does this mean as soon as BOI take over the mortgage I could break with no fee and move to whomever?

Thanks.

Browney7

https://www.boards.ie/discussion/2058242811/mortgage-breakage-fee-after-boi-takes-over-kbc-mortgage

Whats your current outstanding term? The way market swap rates have gone the past few months I expect your break fee under the contractual terms of your mortgage would be near zero. It's worth ringing KBC and get in writing what the current break fee would be. I'd get talking to a broker as soon as you can and start shopping around for a fixed rate before the inevitable interest rate increases arrive

Manion

About 420 days left in the fixed term. How does the market swap rate factor in?

Browney7

The formula to calculate the break fee is dependent on the current market rates so broadly if interest rates rise in the period and you look to cash in your loan, it's nearly in the bank's interest to allow you to cash in. I'd be surprised if their formula results in a break fee if you asked for a quote

Manion

Ah right, so when it says "the market interest rate" thats not the rate they offer, that some other Market interest rate. Interesting.

The J Stands for Jay

https://www.boards.ie/discussion/comment/118965558#Comment_118965558

Got a quote about 4 weeks ago, the break fee was zero

TheChizler

I'm in the same situation, is the current fixed rate not part of the contract terms which BoI are taking on?

I talked to our broker recently about moving and increasing the principal for renovations, even though they're was no breakage fee he thought any savings would be eaten up by solicitor's fees and stamp duty, granted I haven't done the maths, seems I should.

Californeeway

I have 2 years left out of 5 at 2.65% and KBC quoted over a grand as the break fee. I must ask them again and find out the 'market interest rate' / market swap rates they are using to calculate this.

Manion

Yeah, the current fixed rate would come with me but expires next year, at which point (I guess?) BoI will offer me whatever their rates are at a time. If it happened today I've be looking at a significant increase. Why would you be paying stamp duty on moving between mortgage providers? We've a pretty small mortgage but the difference between between the our current fixed rate and what BoI now offer works out just shy of 22K over the next five years. Obviously this is totally dependent on your circumstances but costs for switching are generally relatively low (In and around 1K) and can lead to massive savings. Some lenders are even offering a lump sum to cover the costs.

Manion

They just quoted me 720 breakage. They couldn't tell me if the formulate for breakage fee is part of the terms and conditions. Really unsure if I should just jump now versus getting stung with BoI down the road.

christy c

https://www.boards.ie/discussion/comment/118973461#Comment_118973461

There's a thread on askaboutmoney.com called something like "mortgage switching.." where one of the posters will provide you detailed recommendations on what to do.

My tuppence: you will not pay stamp duty on a mortgage switch. You mention your mortgage is "small", if under 100k Avant would not accept it for example. Other lenders could be less.

Without knowing any figures, an option may be to break now and re fix for a longer period with KBC. That fixed rate will carry over to BOI

JimmyVik

I believe if you have a KBC mortgage and a KBC account that you get an extra 0.2% off yourt mortgage and that carries over if you change to a BOI current account too.

Paul_Mc1988

I just switched to avant from ulster bank. 2.6 to 1.95%, 7 years fixed. Savings of €100 per month. No break fee and avant gave €1500 for solicitors fees and the solicitor coincidentally cost €1500. Only thing I had to pay for was a valuation for €180.

Switching when rates are so cheap is a no brainer.

Manion

I've more than a 100K mortgage, but the thing that worries me now is the reference to having to be with your current lender a year for Avant Money. If I allow BoI take over the mortgage would I have to stay with them a year.

TheChizler

https://www.boards.ie/discussion/comment/118973305#Comment_118973305

I'm probably remembering wrong, that's reassuring, I was totally put off. Only 2.5 years into the term but now's the time to look into it.

Paul_Mc1988

https://www.boards.ie/discussion/comment/118974775#Comment_118974775

Just do it now is my advice. Its an 8-12 week process and a slight pain in the arse but in the end its worth it

Manion

Just an FYI, our break fee was zero as of the start of the month. We broke out of the fix rate and refixed on 2.25 for 3 years. Bit of a rigmarole having to break into variable for a month before the new fixed rate kicks in.

Wheety

https://www.boards.ie/discussion/comment/119184206#Comment_119184206

A few years ago I broke out of a fixed rate with KBC and refixed with them. I sent the form to cancel one fixed rate and the form to start the new one together and there was no switching to variable at all.

Manion

I think it was timing. The break fee forum makes the transition to variable clear but I'd missed the window to refix for July.