Ebs fixed rates v's variable

casperjack

Registered User
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Hi currently on Ebs fixed rate of 3.7. Thinking of switching to fixed rate of 3.15 for 3 years or 3.25 for 5 years. Currently have mortgage left of 124k and house value 145k. If I fix now and in a year or two need to sell as mother getting older and lives on her own so may have to move in with her as I'm an only child to care for her would I have a big breakage fee if I was to sell and clear off mortgage. Ebs advisor just telling me can't say what breakage fee would be. So wondering is it really worth fixing as only will be saving about €25 a month they say. I am on a restructured mortgage where I am paying off an amount of 90k at moment and rest is parked till I turn 65. This deal was put in place a few years ago when I was on reduced hours in work. Currently I am 42.
 
If you are already fixed then there may be two breakage fees to consider, first for breaking now and second for possibly breaking from your new fix in the future.

The break fee is based on the difference between what it cost the bank to borrow on the day you fixed and the day you breakout of your fixed rate. This rate difference plus how long is left on your current fix and how big your loan is will determine the size of break fee. So the fee will vary day-to-day but the basic idea is if you took out your fixed rate mortgage at the height of the crises you may be facing a relatively larger fee than if you took it out, say, a year ago. It is also possible that there may be no fee associated with breaking out of a fixed rate if banks cost of funds have increased.

The adviser might not have been able to tell you the current break fee as he would not know the cost of funds on the day you were talking to him or the day you had taken your fixed originally. However, you can formally request this information from EBS. Have a look at this thread to get an idea of what banks charge - there may be a case similar to yours. It's worth nothing that the AIB group, which EBS is a part of, calculate the break fee a little differently to others.

The above breaks you out of your current fixed rate, if you have to do it again with the second rate the same logic applies. The difference between what the two are comes down to timing. We are more or less at the bottom of an interest-rate cycle which means for a fixed-rate mortgage taken out now, the cost of breaking out of it in the future may be small or indeed nothing.

First thing to do is request a letter outlining the break fee. This will help you decide if it is worth your while switching. You will be saving somewhere between €20-€25 a month on repayments but that would have to be weighted up against what the upfront break fee would be. I would also ask if breaking has any implications for the €34K this is currently warehoused. I doubt there are but no harm checking.
 
If it was at all possible in your circumstance, how about move to Ulster Bank, get 2% cashback and fixed rate of 2.6%? Also PTSB can offer similar deal
 
Thanks for replies. I made a mistake it should have read I am currently on a variable rate of 3.7%. Thanks for links I take from it if I fix now to 3.15% and need to break it that if rates go up I won't have a breakage fee. Will ask about warehoused bit I just presumed they will both be treated the same
 
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