BOI break fee

S

Stevie Boy

Registered User
Messages
5
Hi There,

I have asked for a break on a fixed rate mortgage from Bank of Ireland.

I have been offered a tracker rate from AIB as part of a tracker settlement, so I need to switch.

Bank of Ireland have quoted me €9172.

I have around €383,000 outstanding on my mortgage, fixed at 2.8% for another 1042 days.

They calculated it as follows:

Average Balance = €365,517.11 (not sure why they bring that down by 18k)
Cost of Funds at Date of Funding = 0.31%
(Investment Rate) at date of breaking fixed term = -0.569%
Number of Days remaining on fixed = 1042

The difference in the original cost of funds (0.31) and investment rate (-0.569%) is 0.879%

Funding fee is calculated by:

€365,517.11 x 0.879 / 36500 x 1042 = €9172 Bank of Ireland Break Fee

The difference I have is in the Cost of Funds at Date of Funding, I have that @ -0.31%.

Please see my own calculation below

Mortgage balance outstanding:€383,000.
5 Year fixed rate started November 2018.
Breakage fee quoted today (31 December 2020) : €9158

By my calculation using example from previous thread on here.

R Interbank Market Rate Nov 2018 = -0.32% (Circa)
R1 Interbank Market Rate Jan 2021 = -0.52% (Circa)

The difference in the original cost of funds (-0.32) and investment rate (-0.52%) is 0.879%

Breakage Calculation = (Redeemed Amount x (R-R1) x Time) / 365 =

€383,000 x ( -0.32% - (-0.52%) x 1065) / 365 = €2,235.04 My Calculated Break Fee

Am I missing something or is my calculation incorrect?

I have already had a 3 year battle about a tracker mortgage which I won, but now Bank or Ireland seem to be overcharging me to get to my AIB tracker rate which I won in the settlement!

Is it ever over!! :rolleyes:

Thanks so much,


Stevie
 
Stephen Lannen said:
Am I missing something or is my calculation incorrect?
Click to expand...

I don't follow the rates but it's possible they got the sign on the coefficient wrong.

BoI once gave me a break fee calculation in writing that was complete garbage. Whoever drafted the letter just didn't understand the arithmetic.



Keep a note of these btw. If rates turn further against you due to error in their advice delaying your action you may be able to seek redress from Ombudsman.
 
RedOnion said:
Hi,
Where are you getting this rate from?
The 5 year rate in November 2018 was positive.
Click to expand...
Hi There,

I got rates from this website, tradingeconomics.com

Is that not the rate I should use?

If you feel this calculation is correct I may be in the wrong, but it does feel very high to me, considering most other exapmples on here come to far lower figures.

Thanks so much

Stephen
 
NoRegretsCoyote said:
I don't follow the rates but it's possible they got the sign on the coefficient wrong.

BoI once gave me a break fee calculation in writing that was complete garbage. Whoever drafted the letter just didn't understand the arithmetic.



Keep a note of these btw. If rates turn further against you due to error in their advice delaying your action you may be able to seek redress from Ombudsman.
Click to expand...
Thank You I will keep a copy of the letter, if that is the case, my problem is solved! Hopefully it is.
 
Brendan Burgess said:
Hi Stephen

I think you are doing an unnecessary calculation.

AIB should pay your break fee for you.

Brendan
Click to expand...
That is a great idea Brendan, and I think you are actually most likely correct!

Will be a battle as always though no doubt!

I will speak to Padraic K about this, he's been fantastic at every step.
 
Stephen Lannen said:
Will be a battle as always though no doubt!
Click to expand...

I am not sure of that.

I don't know what you have agreed with AIB but my understanding is that the lenders pay the cost of moving from AIB and moving back where a tracker was lost.

But if you are going to move anyway, just do it and fight about the fee afterwards.

Unless the fee is so large that it does not make the switch back worthwhile - which I doubt.

Brendan
 
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