# Calling AIB customers who fixed before the latest fixed rate cuts in September 2020

#### Brendan Burgess

##### Founder
Any customer currently on their 3 or 5 year fixed rates can break for free, and refix now at the lower rates. This is because of an extra calculation that AIB do looking at their own interest rates, so because they provide 2 & 4 years rates higher than the existing 3 & 5 year rates, they cannot charge a break fee to existing customers in those rates.

This applies to all customers that fixed since the latest rate reduction in Feb this year.

It should also be possible for the majority of AIB customers who fixed since April 2019 to break now with zero break fee, regardless of the duration they fixed for (with a few exceptions - I think the 4 year rate fixed more than a year ago might be one) and avail of one of the lower rates now available.

This was explained more fully the last time that they cut their fixed rates

#### Brendan Burgess

##### Founder
Here is how AIB calculates the break fee - it looks complicated, but it's not. Focus on D% (This is how Red Onion explained it to me )

• How do we calculate the early repayment charge?

We calculate the early repayment charge using the following formula: (A) X (U) X (D %) = € ERC [early repayment charge], where:

(A): Amount of your mortgage loan being repaid early, or converted to another interest rate.

(U): Number of months remaining before the fixed interest rate is due to expire, divided by 12.

(D%): Difference between your original fixed interest rate at the start of the fixed interest rate term, for the full fixed interest rate term, and the applicable fixed interest rate offered by the Bank at the time the mortgage loan is repaid or converted, for the period of (U).

2. When the remaining term does not exactly match a term for which there is a rate available, we will use the two closest rates and apply the most beneficial to you. For example, if you have 18 months remaining on your fixed term, we will use the more beneficial of the 12 and 24 month rates in our calculations.

##### Registered User
Yep. @RedOnion was the provider of this good news last time and the quirk still exists. I alerted my friend last time and he followed through and I have alerted him again this time.
I think originally he felt it a bit sneaky - breaking and (re)entering just to avail of a lacuna in the AIB algorithm. Not at all. And there was no issue in carrying out the procedure.

#### selfbuilder

##### Registered User
I rang AIB yesterday and am awaiting the break fee letter. I fixed on their Green rate in February at 2.45 and am hoping to fix again at the lower 2.25 rate. Hopefully it will work out that way. Will update either way.

#### selfbuilder

##### Registered User
Received my breakage quote from AIB today which was €0.00 to break from my fixed 5 year rate. The 5 business day turnaround is a bit tight to get the instruction back to AIB but can be done.

#### Reflections

##### Registered User
Received my breakage quote from AIB today which was €0.00 to break from my fixed 5 year rate. The 5 business day turnaround is a bit tight to get the instruction back to AIB but can be done.

I got mine in the post as well today and confirmed no break out fee involved. I just rang them to inform them that the turnaround to get this back is too short and the guy confirmed that i could email it to the address on the letter instead of posting it.

#### Introuble83

##### Registered User
fixed at 2.55 2 months ago . Rang to enquire about breakage fee with a view of moving to 2.45 which is the current rate . They advised me for Ltv greater that 80 the rate is still 2.55 but I can’t see this advertisement to verify

#### selfbuilder

##### Registered User
fixed at 2.55 2 months ago . Rang to enquire about breakage fee with a view of moving to 2.45 which is the current rate . They advised me for Ltv greater that 80 the rate is still 2.55 but I can’t see this advertisement to verify

The rates AIB have sent to me today show the 5 Year fixed greater than 80% is 2.55%.

#### Introuble83

##### Registered User
The rates AIB have sent to me today show the 5 Year fixed greater than 80% is 2.55%.
Thanks for that much appreciated

#### selfbuilder

##### Registered User
Just saw that my rate has changed to 2.25% as requested. I have to say that AIB treat their current customers fairly and it was very easy to break out of my old fixed rate and move to the lower rate.

#### Brendan Burgess

##### Founder
Selfbuilder that is excellent

I have to say that AIB treat their current customers fairly

Yes, but it was only after a long campaign by me (briefed by Red Onion) that their methodology was wrong which caused them to change the calculation.

And they were the last of the banks to allow existing customers avail of the rates on offer to new customers. And that was only as a result of the Chief Executive telling Michael McGrath in error that they did allow people whose LTV had reduced to move to a lower LTV band.

#### Jazz01

##### Registered User
Just saw that my rate has changed to 2.25% as requested
Same as myself - just received my letter from AIB with the rate change (2.45% to 2.25%) confirmed, with no break out fee (fixed period "re-starts" again though, but only a few months into it).

##### Registered User
Am I correct in saying that if I fix today at their 3yr fixed rate, the only way I could end up paying a break fee is if their 1-2 yr rate falls below today’s 3yr rate during the next 3 years?

#### tommyryan55

##### Registered User
Thanks Brendan, new rate of 2.35% confirmed today.

#### RedOnion

##### can edit posts
Am I correct in saying that if I fix today at their 3yr fixed rate, the only way I could end up paying a break fee is if their 1-2 yr rate falls below today’s 3yr rate during the next 3 years?
Yes, you are absolutely correct.

They've royally messed up their pricing by not understanding their own terms and conditions.

##### Registered User
Thanks @RedOnion. I fixed at their 3yr rate of 2.45% (50%-80% LTV) about a month ago. Had been on a variable rate of 2.95%.

If/when they next reduce their rates, as long as the 1-2 yr rates don’t come down by more than 0.6% at that stage, I’ll be able to break for free.

#### RedOnion

##### can edit posts
Yes, exactly.
And they can't change the rules - this is written in your terms and conditions!

#### dignanl

##### Registered User
Hi,
I am two years into a 7 year fixed rate of 3.5%, with AIB. I enquired about breaking and re-fixing at a lower rate both in October 2019 and January 2020 and both times I received a breakage fee of 4000 euro!
They would not budge either time on the figure and actually said to me that if I had an issue with it I am free to move bank.
I could not afford this at the time and still can't, so have remained on the 3.5%.
Does anyone have any advice? It seems unfair to me that people are allowed move to lower rates without hassle and yet AIB won't budge on the extortionate breakage fee of 4000 euro for me?
Thanks so much for any advice at all. It's really bothering me.
I am looking to move to the 2.25% rate for green mortgages for five years.

#### RedOnion

##### can edit posts
I enquired in october 2019 and January 2020 and both times received a breakage fee of 4000 euro.