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04-04-2019, 14:26   #1
sternn
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Mortgage - low fee for breaking fixed rate

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

Last edited by sternn; 05-04-2019 at 13:45. Reason: Adding further information
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04-04-2019, 14:28   #2
JJJackal
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Quote:
Originally Posted by sternn View Post
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?
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04-04-2019, 14:37   #3
sternn
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Originally Posted by JJJackal View Post
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.
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04-04-2019, 14:39   #4
jakdublin
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Originally Posted by JJJackal View Post
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.
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04-04-2019, 16:11   #5
ygaurav
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Quote:
Originally Posted by sternn View Post
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
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04-04-2019, 16:12   #6
Atlas_IRL
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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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04-04-2019, 16:17   #7
jimmycrackcorm
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Originally Posted by Atlas_IRL View Post
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.
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04-04-2019, 16:25   #8
sternn
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Originally Posted by ygaurav View Post
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.
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04-04-2019, 16:30   #9
Wheety
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I'm with KBC and it cost nothing to break out of the fixed rate.
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04-04-2019, 16:39   #10
tommythecat
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Originally Posted by jimmycrackcorm View Post
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/thread...-order.208709/
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04-04-2019, 16:41   #11
lawred2
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Originally Posted by JJJackal View Post
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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04-04-2019, 16:42   #12
lawred2
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Originally Posted by jakdublin View Post
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
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04-04-2019, 16:43   #13
masterboy123
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What about solicitors fees?

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Originally Posted by lawred2 View Post
broke out of a BOI fixed rate to go to PTSB for the 2% cashback - cost me €200
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04-04-2019, 16:47   #14
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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.
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04-04-2019, 16:48   #15
lawred2
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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.
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