Break now or wait

C

Coldwarrior

Registered User
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I'm in the latter stages of a mortgage switch (see here - https://www.askaboutmoney.com/threads/double-switch.208796/) but fixed with BOI for 5 years at 2.8% in early April as I was planning to stay long term with them to collect the extra 1% cash back. The rate reductions from the other banks since then have convinced me to switch, but I've checked the break fee multiple times since April and it has varied from 600 up to around 3500 at its peak when the interbank rates must have dropped. I checked again today and the break fee is currently 0, so wondering would I be wise to break out now and go to their 4.2% variable until I switch? Expecting to have switched by the end of August at the latest (all things going well). Should I take the certainty of a few hundred quid extra in interest while on variable rate or take the chance to stay on the cheaper fixed rate until I close the mortgage and hope the break fee stays zero?
 
Hi,
Is the break fee actually zero, or have they negotiated to waive it in your case to keep you as a customer?

Edit: sorry ignore. I mixed you up with another poster.
 
It's 0 today, on Monday this week it was around 2400! Has there been that much of a change in the interbank rates?
 
The more I think about it the more I think I'd be mad not to break now, wonder if I can do it over the phone. If I have to send a letter etc that's another 4 or 5 days and there's been some change in the fee over the 5 days this week!
 
some quick calculations.

If you're definitely switching, and even if it took 2 months, switch to variable for certainty.

For 2 months the extra interest works out as 0.23% of your balance.

Because you've 5 years left to run, it'd only take a 0.05% move in interest rates to be more than that. The 5 year rate is up 0.05% in the last week.

I'm not sure at what point they start using 4 year instead of 5 year rates.
 
Thanks, breaking now definitely seems the way to go. Just rang and have to send them a letter, hopefully there isn't much change between now and when they enact the breakage.
 
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