Key Post It may be much cheaper than you think to break out of a fixed rate early...

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Your best and most reliable bet is to call Haven and ask.

If it turns out to be zero, you don't need to get your head around it.

Brendan
 
Brendan Burgess said:
Your best and most reliable bet is to call Haven and ask.

If it turns out to be zero, you don't need to get your head around it.

Brendan
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I have asked them but we are in the middle of resolving an issue and they have told me they cannot give me that figure as things stand at the moment. It is important for me to have it so that I can make an informed decission.
 
Dear All,

I have found these threads very helpful. Could someone help me to calculate my breakage fees please? @RedOnion @Paul F

Moved into brand new house July 2020 and paid 3 installments so far. First time buyers.

Mortgage of €175,500 with PTSB at 2.95% - 5 years fixed (total duration 24 years). Got 2% cashback from PTSB. Hoping to get another cashback deal and looking for approximate break fee with PTSB please.

Thanks so much
 
Sorry can't help with break fee calculation but just wanted to advise you are unlikely to be able to switch until twelve months pass on your first mortgage.
 
RedOnion said:
Hi,
Yes there would be a break fee. It would be calculated based on the difference between the 6 year rate when you fixed, and the 2 year rate now.

The fee looks correct, but I'd need to know exactly when you fixed to check the calculation because rates fell quickly in Q2 2016. UB don't fix for exactly 6 years so you could have fixed anytime between January & June 2016.

Just bear in mind that rates have been moving around a bit in the current crisis. If you delay, and rates settle back down again you could end up with a larger fee (if interbank rates drop, your break fee goes up).

Hope this helps.
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Hi RedOnion,
I was wondering could you help me in relation to a breakage fee issue? I explained a few weeks ago that I was leaving Ulster Bank for KBC and the breakage fee at the time was €2400 approx. I am now officially leaving in the next week or two but Ulster Bank are quoting me almost €3000 to leave. I feel as though this might not be an accurate figure and want to make sure I am not being scammed because I am leaving their bank. I am requesting a breakdown of the €3000 breakage fee today from their office to get more details.
 
UB cap the breakage fee at 6 months interest, would think UB will have a few anxious customers now with speculation that a vulture fund is interested in buying its entire loan book, from a personal point of view what happens when a fund takes over your mortgage?, is there a subsidiary that manages it?, also if you had a fixed rate with UB say lasting 4 years and a fund bought it they honour that rate but can they determine whatever rate thereafter?
 
allaround said:
if you had a fixed rate with UB say lasting 4 years and a fund bought it they honour that rate but can they determine whatever rate thereafter?
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Yes that's the concern I have, since they wouldn't be competing for new mortgage business like a normal bank they'd have less market pressures to offer competitive rates after peoples' fixed rates expire.
 
Coldwarrior said:
Yes that's the concern I have, since they wouldn't be competing for new mortgage business like a normal bank they'd have less market pressures to offer competitive rates after peoples' fixed rates expire.
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Same boat here. It appears to this layman that fixed rates are competitive at the moment so I'm breaking and refixing. I've been dilly-dallying over it and I think it's time to move. I'd assume they have to honour a fixed mortgage.

Thoughts?

BTW, first post, I really appreciate the forum. Wish I found it when I got a quote of 87 euro and didn't pounce on it.
 
It would depend very much on what the wind-down looks like.

They might sell it on to a fund, or they might just sit around for a while and not take on board new business.
 
though can a fund determine what rate they apply via subsidiary who manages?, is there a barometer on which rates are determined in these funds or just pluck them from the sky?
 
Paul F said:
Hi @Panch18 ,

The formula for the break fee (at least the one used by Ulster Bank) is
A*(R-R1)*Y
where
  • Y is the number of years until the end of the fixed rate (approximately 5.1)
  • A is the outstanding mortgage balance as it will be around Apr 2023 (halfway between now and Nov 2025; approximately €335k, assuming you have a 30-year mortgage)
  • R is the 10-year interbank rate available to the lender in Nov 2015 (approximately 0.94%)
  • R1 is the 5-year interbank rate available to the lender now (approximately -0.42%). We use the 5-year rate because it's the one closest to Y.
Like other people here I use this site to estimate the interbank rates.

So the break fee is A*(R-R1)*Y = 335000*(0.94 - (-0.42))/100*5.1 = €23,235 (approximately).

This estimate is a bit different to BOI's but not hugely (~15%). You can ask them for a worked example showing how the break fee was arrived at.

Check if you are due cashback to the value of 1% of your mortgage value in Nov 2020 – I'm not sure when BOI introduced the 2% + 1% cashback offer. If you are due this cashback, it's probably best not to break until you receive it.

If you switched to Ulster Bank's 2.2%, 5-year fixed-rate today (assuming you are eligible for it), you would save
357000*(4.2-2.2)/100*5 = €35,700 in interest over 5 years
and UB would give you €2,000 for switching (I believe).

(Avant Money's 2.1% rate for LTV ratios of 60-70% wouldn't be any better because there is no cash amount given for switching, it seems.)

As the saving exceeds the break fee plus solicitors' fees (€28k + €1,500 approx), you could consider switching, or you could wait to see if better offers appear.

But don't rely on my advice!

I'll leave it to someone else to try to answer your other questions.
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Hi
Paul F said:
What interest rate did you fix at and what is the balance of your mortgage now?

I will assume 3.3% and €385k. That balance (>€300k) might make you eligible for Ulster Bank's 2.2%, 5-year fixed-rate mortgage. The amount of interest you would save (see here) is:
385000*(3.3-2.2)/100*5 = €21,175 over 5 years

Verify that your current rate is 3.3% – it might be 3.5%, in which case you would save more in interest.

If (break fee + solicitor's fees < interest saved), you should switch. That is not the case for you now but it could be in a few years.

Remember too that if you switch before 5 years, you won't get an extra 1% cashback from BOI (if that was part of the deal when you took out the mortgage.)
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Hi.
I am looking for some advice in relation to what my breakage fee should be when leaving Ulster Bank. I will attach the breakdown of the latest figures they sent to me yesterday. Hopefully someone will bee able to advise me as to whether this breakage fee is accurate and fair.
Regards.
20201102_162004.jpg
 
Nprice said:
Hi

Hi.
I am looking for some advice in relation to what my breakage fee should be when leaving Ulster Bank. I will attach the breakdown of the latest figures they sent to me yesterday. Hopefully someone will bee able to advise me as to whether this breakage fee is accurate.
Regards
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Your figure looks accurate enough -
(699 * (0.152% - -0.53%) * €224777.04) / 360 = €2,976
 
Can anyone help calculate my break fee.
Outstanding mortage €283,509
3 year fixed at 2.95%.
2 years and 9 months left.
30 year mortgage.
Ptsb, they do 3 yr fixed at 2.55 can i break and switch to that (says only new business).
 
Nowronganswer said:
Ptsb, they do 3 yr fixed at 2.55 can i break and switch to that (says only new business).
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No, that rate is for new business only.
Have you asked your broker or PTSB why that rate wasn't originally offered to you? That's the approach I'd take in your circumstances - somebody missed something.
 
RedOnion said:
No, that rate is for new business only.
Have you asked your broker or PTSB why that rate wasn't originally offered to you? That's the approach I'd take in your circumstances - somebody missed something.
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Similar to what I wrote in the other thread, the 2.55% rate did not exist three months ago. I don't think @Nowronganswer was denied a better rate than he got.

And as also noted in that thread, you are not eligible for the 2.8% rate because you are an existing customer of PTSB.

This discrimination between new and existing customers by PTSB is why quite a few frequent posters here don't like that lender.
 
Paul F said:
2.55% rate did not exist three months ago. I don't think @Nowronganswer was denied a better rate than he got.
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Sorry, not the 2.55% rate, but a rate of 2.8% was available at the time the mortgage was applied for and drawn down. There are a few different threads where @Nowronganswer has asked about it, but they need to raise it with the bank & broker.
 
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