Case Study: Internal Mortgage Switch UB

HollowKnight

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Lender: UB
Amount of mortgage balance outstanding: €303k
Date you fixed: November 2018
Period for which you fixed: 4 years
Fixed rate: 2.6
Term left: 3yrs
Breakage fee: €2500 (worked out using ICE report data)

Approx interest cost in next 3years (whilst on 2.6%) = €23.6k
Approx Balance after 3years = €276k

If I switch to the new 2.2% rate
Approx interest cost in next 3years = €20k
Approx Balance after 3years = €273k

It would appear it makes sense to switch. Am I missing something?
There may be a need to have the house revalued but it would still make sense to switch even with this cost.

If I don't do this somewhat quickly, I will be unable to (as the balance will fall below the €300k for the new low rate in April).

Thoughts appreciated.
 
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RedOnion

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I did some back of the envelope (well, napkin) calcs earlier, and because UB cap the break fee at 6 months interest, even if a customer had the max break fee on any existing rate this is worth looking at.

I need to look a bit more at real examples, so I might take a look at yours tomorrow.
 

mojoask

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194
I'm interested in this as well, may I ask what ICE report data is, and how you used it to work out the breakage fee?
 

HollowKnight

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252
I'm interested in this as well, may I ask what ICE report data is, and how you used it to work out the breakage fee?

I wouldn't have known about this but for this webpage. And I'm not really learned enough to explain what the figures are but I've an idea of how to use them.
You find the rate on the date you fixed and the potential new rate. Ulster Bank has a formula on their website to work out the break fee.
 

RedOnion

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@mojoask
Do you want to post your info, and I'll do it as a 2nd case study?
I'll estimate the break fee if you include the following:
Amount of mortgage balance outstanding:
Date you fixed:
Period for which you fixed:
Fixed rate:
End date of fixed:
(if possible - UB don't fix for exactly 4 years, it's always a few months extra)
 

mojoask

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@mojoask
Do you want to post your info, and I'll do it as a 2nd case study?
I'll estimate the break fee if you include the following:
Amount of mortgage balance outstanding:
Date you fixed:
Period for which you fixed:
Fixed rate:
End date of fixed:
(if possible - UB don't fix for exactly 4 years, it's always a few months extra)

Very kind of you, I'd be highly surprised if it's advantageous, based on what I've read above!

Amount of mortgage balance outstanding: 430k
Date you fixed: Feb 2019
Period for which you fixed: 4 yrs
Fixed rate: 2.6
End date of fixed: Mar 2023
 

RedOnion

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Late November. Yes, 29/11 I think. With it expiring September 2022.
I'm coming up with a break fee of c 3,400?
4 year rate in Nov 2018 Vs 3 year rate now. There's about 0.41% difference (because rate went negative). Your break fee almost exactly matches the amount you'd save.

I think?
 

RedOnion

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Very kind of you, I'd be highly surprised if it's advantageous, based on what I've read above!

Amount of mortgage balance outstanding: 430k
Date you fixed: Feb 2019
Period for which you fixed: 4 yrs
Fixed rate: 2.6
End date of fixed: Mar 2023
Break fee approx 3,740
Interest savings 5,440
 

HollowKnight

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252
I'm coming up with a break fee of c 3,400?
4 year rate in Nov 2018 Vs 3 year rate now. There's about 0.41% difference (because rate went negative). Your break fee almost exactly matches the amount you'd save.

I think?
I thought it changed from 0.14 to -0.129. I'll ring them Monday and ask to send on their figure anyway.
 

RedOnion

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Right, crude calcs, but for each of the main existing UB rates, I've calculated below the minimum term it would take to 'save' the maximum break fee for each rate.
If your break fee is less than the max (6 months interest), your payback will be shorter.

This doesn't factor in the benefits of have a lower rate fixed for longer.

So for example if you've 4 years left on a 2.75% rate, you'll definitely save money by breaking and refixing.

2.5% 4.2 years
2.6% 3.25 years
2.75% 2.5 years
2.99% 1.9 years
3.14% 1.7 years
 

_ripped_off

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70
Can I jump on the band wagon here and see if I’m calculating the break fee correctly. I’d have to find capital to get into the 80% LTV but I’d like to be able to do these break fee calcs myself to keep an eye on it.
I’m currently calculating a break fee of circa €3500 and interest savings of €5k

Amount of mortgage balance outstanding: 347k
Date you fixed: 11 Sept 2019
Period for which you fixed: 4 yrs
Fixed rate: 2.6
End date of fixed: 30 Sept 2023
 

_ripped_off

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@_ripped_off
Your break fee should be currently a big fat ZERO.
O god I’m worse at Maths than I thought! You’d think after my experience last year I’d have my head around the break fee thing by now!
No rush but if you could share how your arriving at zero I’d be most grateful (again!)
 
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