Mortgage - low fee for breaking fixed rate

TakeTheVeil · 14-02-2020 12:47pm

If you're in the position to switch without breakage fees/penalties and can afford solicitor fees before the cashback - you should probably get it done before you have a new loan to account for during your remortgage application.

The lower interest rate and monthly repayments on the mortgage will also probably make you more suitable for a large loan.

Belfunk · 14-02-2020 12:57pm

BBMcQ wrote: »

Folks, I think it’s super important to highlight because 9 out of 10 ppl don’t know this

ALOT of the times it will make sense for you to break out of a bad fixed rate deal. Some people thing you are stuck in a fixed rate deal no matter what.

We got AIB down from a near 5k breakage fee down to near 900! Now Ulster bank aren’t charging us anything to switch from their 2.6% fixed to 2.2% fixed. EU rules mean that a bank can only charge you a break fee based on what it would cost them to finance the remaining principle plus admin costs. AIB in particular weren’t following this until approx July 2019.

It’s staggering to think of the amount of money out there being overpaid to banks on mortgages....

Also 1500 all-in is the target price for a solicitor to switch. You don’t even need to meet them so I wouldn’t pay more for one just because their office is in D4.

Can i ask how you got this deal from Ulster Bank. I am with them on a 2.6% fixed rate with two years left. I wanted to switch to 2.2% with them but they are trying to charge me over 3K break fee?

Cyrus · 14-02-2020 1:06pm

Belfunk wrote: »

Can i ask how you got this deal from Ulster Bank. I am with them on a 2.6% fixed rate with two years left. I wanted to switch to 2.2% with them but they are trying to charge me over 3K break fee?

its not a deal its a formula

they arent trying to charge you anything they are applying the formula to your circumstances so thats the cost for you to break the contract you entered into

fuse · 15-02-2020 1:36am

Belfunk wrote: »

Can i ask how you got this deal from Ulster Bank. I am with them on a 2.6% fixed rate with two years left. I wanted to switch to 2.2% with them but they are trying to charge me over 3K break fee?

Do Ulster bank even do 2.2%?
Thought their lowest was 2.3

3k seems very high, how long into the fixed rate are you? Banks have a habit of quoting a scary figure to deter you, but when you question them or go ahead, you’ll see the real regulated figure which can be much less. Ask them for a breakdown of the breakage fee.

mrcheez · 15-02-2020 10:40am

fuse wrote: »

Do Ulster bank even do 2.2%?
Thought their lowest was 2.3

3k seems very high, how long into the fixed rate are you? Banks have a habit of quoting a scary figure to deter you, but when you question them or go ahead, you’ll see the real regulated figure which can be much less. Ask them for a breakdown of the breakage fee.

2.2 when borrowing over 300k

Cyrus · 15-02-2020 1:46pm

fuse wrote: »

Do Ulster bank even do 2.2%?
Thought their lowest was 2.3

3k seems very high, how long into the fixed rate are you? Banks have a habit of quoting a scary figure to deter you, but when you question them or go ahead, you’ll see the real regulated figure which can be much less. Ask them for a breakdown of the breakage fee.

ulster bank send you a letter, there is no scary figure to deter you, there is one figure thats it

BigAl81 · 15-02-2020 5:29pm

BullBauld wrote:

Sent off a change of interest rate request with BOI.

Do you know what the break fee is with BOI. I'm currently with them and looking to move to my 3rd mortgage provider (and cash back) in three years.

I managed to leave PTSB with no break fee at all

devil-80 · 15-02-2020 8:21pm

I'm with Ptsb with 3.7% LTV. Have 12 years left on mortgage about 46k. Would it be any good savings if I switch after all fees. House it worth around 190k. Thanks

mrcheez · 15-02-2020 9:17pm

devil-80 wrote: »

I'm with Ptsb with 3.7% LTV. Have 12 years left on mortgage about 46k. Would it be any good savings if I switch after all fees. House it worth around 190k. Thanks

Shouldn't be any fees if you go with KBC or Ulster Bank

With KBC you may even end up ~€1500 better off too as they give you €3000 if switching before June toward fees (which are less than 1,500).
Although the caveat is that you need to open an account with KBC and move your salary into it which has to be at least €2K/month.

Ulster Bank give you €1,500 toward fees but no requirement for current account.

devil-80 · 15-02-2020 9:19pm

Any idea how much i could save more less?
My salary would be less than 2k.

mrcheez · 15-02-2020 9:24pm

devil-80 wrote: »

Any idea how much i could save more less?
My salary would be less than 2k.

Ulster Bank probably best option then.

Use the form on
https://www.ccpc.ie/consumers/financial-comparisons/mortgage-comparisons/
to get rough estimate on savings

Ask PTSB for a summary of the interest you paid in 2019

jack in the box · 15-02-2020 9:50pm

devil-80 wrote: »

I'm with Ptsb with 3.7% LTV. Have 12 years left on mortgage about 46k. Would it be any good savings if I switch after all fees. House it worth around 190k. Thanks

You need to contact your provider to send you out an interest rate options letter, as there are better rates available. That's if you don't wish to switch providers.

fungie · 16-02-2020 9:24am

mrcheez wrote: »

2.2 when borrowing over 300k

And if loan to value is 80% or less

Cypher_sounds · 19-02-2020 10:31am

https://amp.independent.ie/business/personal-finance/kbc-cuts-mortgage-rates-with-more-banks-expected-to-follow-38968397.html

Might be of interest to some in here.

KilOit · 19-02-2020 10:50am

So expecting much bigger cuts from that article. I'm in the process of moving to 2.2. I'd say it'll go below that within a year or 2"but I'm not waiting around, I'll switch after 5 years with UB

ando · 24-02-2020 11:48am

https://www.rte.ie/news/business/2020/0224/1117221-aib-mortgage-rates/

I switched to AIB a few months ago and fixed at 2.85% for 5 years. Am I wasting my time ringing them up and request to move to the 2.5%? I presume moving from one offer to another within the same bank will not mean solicitor fees and re-evaluation of finances?

gmisk · 24-02-2020 1:27pm

ando wrote: »

https://www.rte.ie/news/business/2020/0224/1117221-aib-mortgage-rates/

I switched to AIB a few months ago and fixed at 2.85% for 5 years. Am I wasting my time ringing them up and request to move to the 2.5%? I presume moving from one offer to another within the same bank will not mean solicitor fees and re-evaluation of finances?

I wonder if ebs will do same rate change?
No solicitors fees if same bank as far as I know just a breakage fee though if you on a fixed rate

listermint · 24-02-2020 1:28pm

ando wrote: »

https://www.rte.ie/news/business/2020/0224/1117221-aib-mortgage-rates/

I switched to AIB a few months ago and fixed at 2.85% for 5 years. Am I wasting my time ringing them up and request to move to the 2.5%? I presume moving from one offer to another within the same bank will not mean solicitor fees and re-evaluation of finances?

prob be a break fee. be prepared for whatever they say that is.

Sync · 24-02-2020 3:21pm

ando wrote: »

https://www.rte.ie/news/business/2020/0224/1117221-aib-mortgage-rates/

I switched to AIB a few months ago and fixed at 2.85% for 5 years. Am I wasting my time ringing them up and request to move to the 2.5%? I presume moving from one offer to another within the same bank will not mean solicitor fees and re-evaluation of finances?

I was also on the 5 year fixed @ 2.85%. I called AIB and requested information on switching, they sent me a letter confirming the proposed changes and what fees would be involved. There was no cost to move to the 2.5% green, I just had to provide them with the BER cert.

I think it's now changing to 2.45% also so you may want to query that - but there's no harm ringing to get this letter confirming any costs.

Becks610 · 24-02-2020 3:23pm

Sync wrote: »

I was also on the 5 year fixed @ 2.85%. I called AIB and requested information on switching, they sent me a letter confirming the proposed changes and what fees would be involved. There was no cost to move to the 2.5% green, I just had to provide them with the BER cert.

I think it's now changing to 2.45% also so you may want to query that - but there's no harm ringing to get this letter confirming any costs.

How much did your BER cert cost? I got an initial one done to ensure the BER would be what we wanted ( it’s more BER guidance) before the House was built but not at the end!

Sync · 24-02-2020 3:50pm

Becks610 wrote: »

How much did your BER cert cost? I got an initial one done to ensure the BER would be what we wanted ( it’s more BER guidance) before the House was built but not at the end!

It was a new build in 2019 so our solicitor had a copy of the BER cert. Just a heads up to anyone looking at this, I initially provided AIB with a screenshot of the details from the BER register on SEAI.ie but this wasn't accepted. It has to be the cert itself.

Cee-Jay-Cee · 24-02-2020 5:08pm

Cee-Jay-Cee wrote: »

I had 6 months left on a 3yr fixed term at 3.2%. I fixed again for 3yrs at 3.0% saving me €10 a month (better than nothing I guess) I could have fixed for 2yrs at 2.9% and saved €20 a month but rather have the slightly longer fixed term.

It cost zero to break the fixed term.

As can be seen above, I came out of fixed term and changed to a new rate and fixed again for 3 years last April. I'm with BOI and I realise they haven't reduced their rates like AIB, KBC etc but I'm sure they probably will at some stage in the near future. Can I do the same again?

Davexirl · 24-02-2020 6:30pm

I have 3 years left on a 4 year fixed rate at 2.6%, my breakage cost was €2.4k with UB. I'll stay put.

devil-80 · 24-02-2020 6:42pm

Ptsb still very expensive &#55357;&#56853;

Darc19 · 24-02-2020 11:56pm

The funding rate that banks pay have dropped about 0.5% in the last few months.

This is what they use to work out breakage fees. A lower rate unfortunately means a higher breakage fee.

Millem · 25-02-2020 1:24am

Darc19 wrote: »

The funding rate that banks pay have dropped about 0.5% in the last few months.

This is what they use to work out breakage fees. A lower rate unfortunately means a higher breakage fee.

AIB don’t use this formula

Cyrus · 25-02-2020 9:51am

Millem wrote: »

AIB don’t use this formula

i believe they do now.

check on askaboutmoney

Millem · 25-02-2020 2:28pm

Cyrus wrote: »

i believe they do now.

check on askaboutmoney

They use the old way. I got my breakage fee yesterday.

Salary Negotiator · 25-02-2020 3:26pm

Darc19 wrote: »

The funding rate that banks pay have dropped about 0.5% in the last few months.

This is what they use to work out breakage fees. A lower rate unfortunately means a higher breakage fee.

Where could one track this rate? Is it released publicly?

pp_me · 25-02-2020 3:45pm

AIB's formula is here:

https://aib.ie/our-products/mortgages/Home-Mortgages-Regulatory-Information

Cyrus · 25-02-2020 4:12pm

Millem wrote: »

They use the old way. I got my breakage fee yesterday.

ah ok i was misunderstood

cant believe they are still doing this.

Millem · 25-02-2020 4:16pm

Cyrus wrote: »

ah ok i was misunderstood

cant believe they are still doing this.

They are some shower! At one stage they quoted €8k when I queried it they said they made a mistake and quoted €5k.

Anyway at this stage my fixed period is up in September of this year. They will waive breakage if I stay with them but want €1k if I move.
I think half the time they make up the figures.

chases0102 · 26-02-2020 10:37am

Does the length you're into an fixed term impact the breakage fee?

18 months into 5 year fixed here.

Sync · 26-02-2020 10:47am

I really don't know how the breakage fee works. I was only 9 months into my 5 year fixed with AIB - and to switch to the 5 year green had €0 breakage costs.

chases0102 · 26-02-2020 10:57am

Ha, that's exactly what I mean! I asked previously and was quoted over 10k.

Does really seem like there are inconsistencies in what the fee can be.

Cyrus · 26-02-2020 11:28am

well aib have their own formula but for everyone else its based on a proscribed one and changes with the borrowing rates of the banks

have a read

https://www.askaboutmoney.com/threads/how-to-evaluate-if-its-worth-breaking-out-of-a-fixed-rate.208964/

nephster · 26-02-2020 11:42am

chases0102 wrote: »

Ha, that's exactly what I mean! I asked previously and was quoted over 10k.

Does really seem like there are inconsistencies in what the fee can be.

Not so much inconsistencies, as variables.

For example, with Ulster Bank, some of those variables would be how much it would cost the bank to lend you how much you owe today, for the amount of time you have left on your fixed part of the mortgage. So depending on the market the difference between the interest rates back when you fixed and today can be positive or negative. If negative then the break fee, for UB, is zero. This is gleaned from the very helpful folk in the Switcher Forum on Askaboutmoney.

chases0102 · 26-02-2020 12:32pm

Great info, makes it a bit clearer, cheers!

aomh · 26-02-2020 2:03pm

Half way through a 5 year fixed rate of 3.4% with UB, they've quoted me
1666 breakage fee to change to a 2.3% 2 year fixed
1883 breakage fee to change to a 2.6% 4 year or 5 year fixed

fjon · 26-02-2020 2:59pm

I rang KBC to get my fee on the 7th of Jan and was given a quote of around €250. I wasn't quite ready to move on it so this expired. Rang again today to get a new fee, and it's not €2300! Shocked there was such a huge difference. Is it worth waiting another 2 weeks to see what the rates are like then?

Millem · 26-02-2020 3:11pm

Sync wrote: »

I really don't know how the breakage fee works. I was only 9 months into my 5 year fixed with AIB - and to switch to the 5 year green had €0 breakage costs.

AIB told us they will waive it if we stay with them!

nephster · 27-02-2020 3:11pm

aomh wrote: »

Half way through a 5 year fixed rate of 3.4% with UB, they've quoted me
1666 breakage fee to change to a 2.3% 2 year fixed
1883 breakage fee to change to a 2.6% 4 year or 5 year fixed

Are you sure about this?? Those look more like new repayments at those rates rather than the breakage fee. The break fee should be one figure and doesn't depend on what you are moving to - it's not part of the formula to calculate it - and is contained in a different letter to the rates letter which sets out repayments under various rates.

aomh · 27-02-2020 4:16pm

Sorry, that's the breakage fee if I leave the new rate early. So the breakage fee for my current one is 1927.88, approximately the saving I would make if I switched, and they won't waive the breakage fee if I stay with them.

levi · 01-03-2020 10:59pm

I’m a bit confused about the cost of breaking our fixed rate mortgage in order to switch to a better rate. We’d like to change from a 4 yr fixed term with Ulster Bank which we’re halfway through to UBs 5 year fixed.

My husband phoned the bank to enquire and they sent us out a letter advising us that the cost of breaking the fixed term is the lesser of 6 months interest and another calculation which equals (the amount left on the mortgage) x (the difference in the money market rate at the date of drawdown and the money market rate at the date of breakage) x the number of days left on the fixed rate/360.

The letter we got from the bank just gives the 6 months interest cost which is €5.5kish but by my calculations, the other calculation should give a much lower break cost if I use the 12m euribor rates for a loose approximation. I would expect the break cost to be about €1k which would make changing interest rate worth our while.

So my question is, is the letter we received from UB just outlining the 6 months interest as a break cost very misleading?

Darc19 · 01-03-2020 11:22pm

Salary Negotiator wrote: »

Where could one track this rate? Is it released publicly?

Usually its on the business rate pages.

Google Bank Cost of Funds rate and the bank name.

It differs from bank to bank. Ulster bank is currently 0.37:, bank of Ireland is 0.43%

It can change daily.

Aib do use the new method, but with a big drop in cost of funds, break fees have jumped.

Previously, banks were simply taking a bigger margin and as they reduced fixed rates, the margin fell as cost of funds did not change much, therefore the break fee was low.

But with cost of funds dropping by over 0.5%, break fees for most fixed rates have jumped

Q&A · 02-03-2020 10:42am

levi wrote: »

I

So my question is, is the letter we received from UB just outlining the 6 months interest as a break cost very misleading?

UB do make it unnecessarily complicated.

Letter one is the maximum you would have to pay. I.e., they cap the fee at 6 months interest. That's all the letter really tells you.

Letter 2 will work out what the break fee will actually be based on changes in the cost of bank funding and the association of the 6 month interest cap.

Lucky you is you get the second letter. I periodically check to see what the break fee would be and is say half the time the letter never arrives.

nephster · 02-03-2020 2:12pm

levi wrote: »

I’m a bit confused about the cost of breaking our fixed rate mortgage in order to switch to a better rate. We’d like to change from a 4 yr fixed term with Ulster Bank which we’re halfway through to UBs 5 year fixed.
<snip>

So my question is, is the letter we received from UB just outlining the 6 months interest as a break cost very misleading?

I'm doing exactly the same, but am only six months into the 4-year fixed...

As Q&A says, Letter 1 (which you have got) is useful as it states the max you would have to pay on one of those new rates if you decide to break again in the future, say if the rates come down again or you want to move to a different bank. This seems to be confusing a lot of people, but TBH it's only of interest if you want to switch again in the future.
The more important bit in the letter is the future repayments on those variety of different products, one of which you will now presumably switch to. BUT you have no idea how much the current break fee is, as you are missing Letter 2 which states it - I haven't got this either, asked for the cost to break last Monday and got Letter 1 today.

HOWEVER, as Letter 2 has been generated, UB can now tell you over the phone what the break fee is. They couldn't before if you requested the figure by phone as they hadn't crunched the numbers. So if it is worth your while - and look at the Askaboutmoney thread, it's NOT just about how much your repayments are reduced, it's also about how much extra you will have paid off the capital - you can then decide whether to accept the break fee over the phone and pay it then and there. I was lucky enough to have a break fee of zero

Q&A · 02-03-2020 4:52pm

nephster wrote: »

HOWEVER, as Letter 2 has been generated, UB can now tell you over the phone what the break fee is. They couldn't before if you requested the figure by phone as they hadn't crunched the numbers.

Can I check if they've done this for you? Over the last 2 years I've probably called 4 times and each time they give me the talk of generating the letter and it taking 5-10 working days etc.

nephster · 02-03-2020 6:58pm

Q&A wrote: »

Can I check if they've done this for you? Over the last 2 years I've probably called 4 times and each time they give me the talk of generating the letter and it taking 5-10 working days etc.

Yes, they did. In fact the first lady I spoke to last Monday specifically told me to ring again nearer the end of the week if the letter hadn't arrived, as the quote is only good for about 10 days but once the letter is on file they can see the details. She said I'd then be able to pay any fee by card over the phone, or arrange a transfer if it was above my card limit.
So I rang again on Thursday, was put on hold for a minute, the lady told me the break fee of zero and I happily accepted to pay nothing

Just had to wait till Letter 1 arrived so we could sign it and accept a specific rate.

Darc19 · 02-03-2020 7:05pm

fjon wrote: »

I rang KBC to get my fee on the 7th of Jan and was given a quote of around €250. I wasn't quite ready to move on it so this expired. Rang again today to get a new fee, and it's not €2300! Shocked there was such a huge difference. Is it worth waiting another 2 weeks to see what the rates are like then?

Cost of funds has dropped substantially (0.5% or thereabouts) in the last couple of months for Irish banks which has allowed for these new rates - problem is, it increases the break fee and probably doesn't make it worthwhile

Mortgage - low fee for breaking fixed rate

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