Key Post Switch or re-fix my mortgage? Breakage fee calculator and savings estimates for your case (Ireland)

[Paul F]

@Paul F thanks so much for this, I really appreciate it! In anticipation of your reply I made a quick spreadsheet of my own comparing options, and found the exact Permanent TSB option you suggest came out on top for me too, accounting for the fees in maintaining an Explore account needed to get the monthly cashback component etc.; interestingly, EBS’ 5 year fixed rate at 2.75% with 3% cashback came out a close second for me (even better than their 2.1% 4 year “green” option, based on a 5 year comparison with maybe-too-pessimistic follow-on interest rate projections). Is there some reason I should avoid EBS altogether?

My savings estimates are over four years (meaning that only the initial 2% EBS cashback would have been received) whereas your savings estimates are over five. But even over five years, EBS's 2.75% rate with 3% cashback is much worse value than Permanent TSB or AIB – about €4,500 worse than PTSB.

I’m a Permanent TSB customer, but have never had a mortgage or loan with them; can I definitely still avail of their new business offers?

I believe you would be considered a new-business customer by PTSB because you have never had a mortgage with them, but you should check it with them.

Bear in mind that if you go with PTSB, you may want to leave them in 5 years' time because of their high rates for existing customers, and that switch will cost you about €1,500.

 

[Paul F]

One thing I learned is that the break fee they'll quote is only valid to transfer to another UB product. If we wanted to transfer to another provider then they would calculate an early redemption charge, different to the break fee, which they would also advise by post and would be valid for 4 weeks.

If you are switching to another lender, Ulster Bank will send your solicitor a redemption figure. This is essentially your outstanding mortgage balance plus any interest accrued since your last monthly payment plus the the break fee (if there is one). But the break fee in that circumstance is calculated in the same way as when you are switching to a different Ulster Bank rate.

If the break fee to switch to the UB 5-year fixed is in the order of €180 as you suggested I think we'll just go with that option. Mainly because it's a very easy process, but also we keep T&Cs like the ability to overpay up to 10% of the outstanding balance every year and an ERC capped at 6 months interest on the outstanding amount.

I wouldn't bet on Permanent TSB continuing to allow the 10% overpayment facility when they buy your mortgage from Ulster Bank. There are differing views on this site about whether PTSB will maintain the feature or not. (The overpayment feature is not part of your mortgage contract – it is a benefit offered by Ulster Bank to their mortgage customers.)

But break fees can sometimes be low or zero – it all depends on the change in interbank interest rates.

I believe that the capping of any break fee at 6 months' interest is part of your mortgage contract, however, and so it would have to be honoured by PTSB.

Also, based on your analysis, switching to another provider wouldn't deliver any significant savings over the fixed rate period. We may be stuck on a slightly higher PTSB rate at the end of the 5 years but, if we manage to overpay a bit every year as planned, the mortgage would be down to about €50k at that point. If UB's rate for the 7-year or 10-year fixed were a bit lower I would be tempted to fix for longer.

That makes sense.

 

[Solution]

• Current lender: ptsb
• Outstanding mortgage balance (how much you still owe): 267,160
• Approximate value of your property: 550,000
• The date you started your fixed-rate mortgage (month and year): on variable
• How many years you fixed for: on variable
• Your current mortgage interest rate: 3%
• Your current monthly repayment (excluding any overpayments): 1,515.27
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: B2
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? No

 

[Paul F]

• Current lender - BoI
• Outstanding mortgage balance (how much you still owe) - 184,500
• Approximate value of your property - 240,000
• The date you started your fixed-rate mortgage (month and year) - April 2019
• How many years you fixed for - 5
• Your current mortgage interest rate - 3.2%
• Your current monthly repayment (excluding any overpayments) €777
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - B3
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? 1% in April 2024 (Approx €1,970)

@Rory_H

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €6,060 over the next 4 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.15% with €2,000 cashback) will save you about €4,980 over the next 4 years
  • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €1,400 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.45% with no cashback) will save you about €800 over the next 4 years – but with the longer security of 7 years on a fixed rate
  • You would have to shorten your mortgage term to 30 years to be eligible for this rate
  • The monthly repayment would be €724
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€1,970) cashback) will save you about €290 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will leave you worse off by about €40 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.6% with no cashback) will leave you worse off by about €280 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • You would have to shorten your mortgage term to 30 years to be eligible for this rate
  • The monthly repayment would be €739
  
  
• Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€1,970) cashback) will leave you worse off by about €1,890 over the next 4 years – but with the longer security of 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (3.15% with no cashback) will leave you worse off by about €4,260 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  • And your interest rate (initially 3.15%) will automatically fall as time passes and you move into lower loan-to-value (LTV) brackets. See the section "How we decide rate reductions" on this page.

These savings estimates use for comparison the scenario of switching to the 2.9% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 2.9% rate in April 2024 – it could be higher (or lower). You would get the Bank of Ireland €1,970 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

The estimates also assume that your loan-to-value ratio (LTV) is currently 184.5k/240.0k = 76.9%. A higher property valuation (€264k) and/or a few more monthly mortgage payments and/or a lump sum overpayment would get you into a lower LTV bracket (< 70%), and you would be eligible for lower rates from Avant. But that is probably not a good reason to delay the switch – i.e., you can start the switch immediately.

If you want savings estimates for longer-term fixed rates, let me know.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

 

[Paul F]

• Current lender - AIB
• Outstanding mortgage balance (how much you still owe) - 218,000
• Approximate value of your property - 600,000
• The date you started your fixed-rate mortgage (month and year) - June 2022
• How many years you fixed for - 5
• Your current mortgage interest rate - 2.1%
• Your current monthly repayment (excluding any overpayments) €1294
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - B1
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? No

@lialwarrior Your break fee should be zero at the moment – but confirm it with AIB. If it is higher than zero, please post it here when you receive it, including the date of the letter.

• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €2,700 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €3,880 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €4,680 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 17 years)
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €7,900 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of doing nothing. The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

Bear in mind that interest rates could rise between now and the time that you complete any switch. Check whether the Avant/Finance Ireland broker has the right to charge you a fee if you pull out of a switch half way through.

 

[Paul F]

• Current lender Ulster Bank
• Outstanding mortgage balance (how much you still owe) 198k
• Approximate value of your property 650k
• The date you started your fixed-rate mortgage (month and year) 10/19
• How many years you fixed for 4 years
• Your current mortgage interest rates 2.6%
• Your current monthly repayment (excluding any overpayments) 1242
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary B3
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? No.

@narkymark Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Ulster Bank. If it is higher than zero, please post it here when you receive it, including the date of the letter.

Note: you may receive two separate letters from Ulster Bank a few days apart, and their structure and wording can lead to confusion. Look for the line that says: "To break out of this fixed rate early, you would have to pay a fee of €X". That amount is your break fee. Ignore all other references to break fees.

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €3,820 over the next 4 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €3,100 over the next 4 years
  • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)
  
  
• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €2,140 over the next 4 years
  
  
• Switching immediately to Ulster Bank's 4- or 5-year fixed rate (2.35% with no cashback) will save you about €740 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Note that if you decide to do this, your mortgage will soon move onto Permanent TSB's books, and they discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 2.8%
  • So if you switch to this Ulster Bank offer now, you will probably not be eligible to switch to one of Permanent TSB's low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €700 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will leave you worse off by about €20 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,100 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €1,820 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 16 years)
  
  
• Switching immediately to Ulster Bank's 7- or 10-year fixed rate (2.8% with no cashback) will leave you worse off by about €2,520 over the next 4 years – but with the longer security of 7 or 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • The same warnings as above regarding higher Permanent TSB rates in the future apply
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €4,740 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of switching to the 2.35% rate with Ulster Bank when the current fixed rate ends. And that's assuming that Ulster Bank (or Permanent TSB, if they have taken over your mortgage by then) are even offering a 2.35% rate in January 2024 – it could be higher (or lower). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

I have in mind Avant Money perhaps with a top up.

If you do decide to switch to another lender, you will need to research their attitudes to giving topup mortgages. Have a look at this thread and this thread, and contact the lenders themselves. AIB have a section of their website dedicated to topup mortgages.

 

[Paul F]

Current lender - Bank of Ireland
Outstanding mortgage balance (how much you still owe) - 192,446EUR
Approximate value of your property- 300,000EUR
The date you started your fixed-rate mortgage (month and year) - August 2018
How many years you fixed for - 10
Your current mortgage interest rate - 3.5
Your current monthly repayment (excluding any overpayments) - 1330EUR
Your property's BER (Building Energy Rating) – check it here or estimate it if necessary - C3
Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much and when? -Yes 1% after 5 years [€2,295]

@Ada20211

• Switching immediately to Permanent TSB's 4-year fixed rate (2.05% with 2% monthly cashback) will save you about €7,320 over the next 4 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 3.0%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 4-year fixed rate (2.05% with no cashback) will save you about €6,420 over the next 4 years
  
  
• Switching immediately to AIB's 5-year fixed rate (2.45% with €2,000 cashback) will save you about €5,660 over the next 4 years
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.25% with no cashback) will save you about €5,020 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.35% with no cashback) will save you about €4,320 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €4,260 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€2,295) cashback) will save you about €3,530 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.5% with no cashback) will save you about €3,280 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will save you about €2,860 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.65% fixed rate with no cashback) will save you about €2,220 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 16 years)
  
  
• Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€2,295) cashback) will save you about €1,410 over the next 4 years – but with the longer security of 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (3.05% with no cashback) will leave you worse off by about €600 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  • And your interest rate (initially 3.05%) will automatically fall as time passes and you move into lower loan-to-value (LTV) brackets. See the section "How we decide rate reductions" on this page.

These savings estimates use for comparison the scenario of doing nothing. You would get the Bank of Ireland €2,295 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

The estimates also assume that your loan-to-value ratio (LTV) is currently 192.4k/300.0k = 64.1%. A higher property valuation (€321k) and/or a few more monthly mortgage payments and/or a lump sum overpayment would get you into a lower LTV bracket (< 60%), and you would be eligible for lower rates from Avant. But that is probably not a good reason to delay the switch – i.e., you can start the switch immediately.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

 

[Feria50]

Hi all,

My situation is as follows.

Point to note, I am on probation til Mid November and my wife is on probation til January!

Current lender: BoI

Outstanding mortgage balance (how much you still owe) €223k approx

Approximate value of your property €400k

The date you started your fixed-rate mortgage (month and year): October 2021

How many years you fixed for 24

Your current mortgage interest rate 2.7%

Your current monthly repayment (excluding any overpayments) €1,027

Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: A2

Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? 1% in year 5. About €2,240

On probation so can't switch but perhaps I could break out and refix with BoI for 4/5 years at 2.7%?

 

[Paul F]

How many years you fixed for 24

@Feria50 What I was asking here is how long the fixed-rate period of your mortgage lasts, not the full length of your mortgage term. E.g., 3 or 5 years.

 

[Feria50]

@Feria50 What I was asking here is how long the fixed-rate period of your mortgage lasts, not the full length of your mortgage term. E.g., 3 or 5 years.

Sorry it's a one year fix

 

[Paul F]

• Current lender: ptsb
• Outstanding mortgage balance (how much you still owe): 267,160
• Approximate value of your property: 550,000
• The date you started your fixed-rate mortgage (month and year): on variable
• How many years you fixed for: on variable
• Your current mortgage interest rate: 3%
• Your current monthly repayment (excluding any overpayments): 1,515.27
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: B2
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? No

@Solution Because you are on a variable-rate mortgage, you do not have to pay a break fee.

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €10,540 over the next 4 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €9,540 over the next 4 years
  • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)
  
  
• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €9,000 over the next 4 years
  
  
• Switching immediately to Haven's 5-year fixed rate (2.55% with €5,000 cashback) will save you about €8,060 over the next 4 years
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €7,060 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €7,020 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €6,020 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Haven's 10-year fixed rate (2.85% with €5,000 cashback) will save you about €5,040 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €4,520 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Bank of Ireland's 10-year green fixed rate (3.0% with €5,343 cashback) will save you about €3,880 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • Note that Bank of Ireland discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Bank of Ireland customer, the best rate you would be able to switch to today is 3.0%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will save you about €3,520 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 19 years)
  
  
• Switching immediately to Permanent TSB's 5-year green fixed rate (2.8% with no cashback) will save you about €2,010 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Permanent TSB's 7-year fixed rate (3.0% with no cashback) will not save you or cost you anything over the next 4 years – but with the longer security of 7 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €480 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of staying on the variable rate with Permanent TSB and assume that that rate doesn't change between now and June 2026 (which is unlikely). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

If you're feeling brave, you could consider the strategy outlined in this thread: switch to Haven's 2.35% 3-year fixed rate and get the €5k cashback. Then quickly switch to Haven's 2.0% green rate. If it works, you will be better off by about €13,540 in four years' time. Nobody knows for sure if Haven will allow you to do this, so you might be stuck on the 2.35% rate, but at least you'd have got the €5k cashback.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

 

[Paul F]

Current lender: BoI
Outstanding mortgage balance (how much you still owe) €223k approx
Approximate value of your property €400k
The date you started your fixed-rate mortgage (month and year): October 2021
How many years you fixed for [1 year]
Your current mortgage interest rate 2.7%
Your current monthly repayment (excluding any overpayments) €1,027
Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: A2
Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? 1% in year 5. About €2,240

@Feria50 Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland. If it is higher than zero, please post it here when you receive it, including the date of the letter.

I am showing the products that you would be eligible for if you and your wife were not on probation and if you had been with Bank of Ireland for at least 12 months.

• Switching immediately to Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €8,860 over the next 4 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.15% with €2,000 cashback) will save you about €7,600 over the next 4 years
  • And it is quite likely that you will be able to make unlimited overpayments without penalty for the foreseeable future (see this thread)
  
  
• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €7,260 over the next 4 years
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €5,560 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €4,700 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €3,420 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €2,000 cashback) will save you about €3,320 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Haven's 10-year fixed rate (2.85% with €2,000 cashback) will save you about €1,600 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €230 over the next 4 years. But it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €860 over the next 4 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below
  
  
• Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% with no cashback) will leave you worse off by about €2,830 over the next 4 years – but with the longer security of 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).

These savings estimates use for comparison the scenario of switching to the 3% rate with Bank of Ireland when the current fixed rate ends. And that's assuming that Bank of Ireland are even offering a 3% rate in October 2022 – it could be higher (or lower). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

The estimates also assume that your loan-to-value ratio (LTV) really is below 60% so that you are eligible for the listed rates. Your LTV estimate is 223.0k/400.0k = 55.8%. If you get a valuation of less than €372k, you will need to make a few more monthly mortgage payments and/or a lump sum overpayment to get the LTV below 60%.

Some of the above lenders will only let you switch to them if you have had a mortgage with your current lender for at least 12 months. See this thread for more details. AIB accept switchers once they have been with their current lender for at least 6 months, and Finance Ireland apparently have no minimum time period. Haven's rule is unknown. You could approach those lenders now and see what their attitude is to you and your wife's probation situation.

On probation so can't switch but perhaps I could break out and refix with BoI for 4/5 years at 2.7%?

If AIB, Finance Ireland and Haven won't accept you in the near term, consider re-fixing with Bank of Ireland sooner rather than later. Note that you will not be eligible for their 2.7% "green discount" rate because that rate is not available to existing customers, as far as I can tell. (Even Permanent TSB allow their existing customers to avail of the green discount, but Bank of Ireland don't.)

If you want savings estimates for longer-term fixed rates, let me know.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).

 

[Feria50]

Quick update.

Rang BoI this morning and currently the break fee is zero.

You are also correct about the green discount, this is not available for existing customers

So my fix options would be at 3%

I'll check how the other lenders view the probation period.

Suggestions that there could be 4 rate increases before the end of the year so thinking the 3% might not be the worst option..?

 

[Paul F]

You are also correct about the green discount, this is not available for existing customers

So my fix options would be at 3%

I'll check how the other lenders view the probation period.

Suggestions that there could be 4 rate increases before the end of the year so thinking the 3% might not be the worst option..?

One approach you could take is to re-fix immediately with Bank of Ireland at 3% and then see if you can start the process of switching to another lender.

The risk of taking that approach is that there could potentially be a break fee when you finally break out of the BOI mortgage and draw down with the new lender. But if it looks like that is going to be the case (or if the new lender has increased their rates significantly), you could abandon the switch half way through (provided you have not become liable for solicitors' or brokers' fees).

The risk of not re-fixing with BOI now is that they could put up their rates.

 

[LolaJay]

Thanks so much for working this out. Have asked KBC for break fee and they said it will be sent in 7-10 days. Will update when received.

I requested details of the break fee from KBC on 30 May. Still waiting! They don't provide details over the phone.

 

[Lucan22]

Hi Paul,

What would need to happen in order for there to be a significant break fee from AIB based on their current formula?

Thanks in advance.

 

[RonanL]

Posting here having started another thread looking for advice.

• Current lender: KBC
• Outstanding mortgage balance (how much you still owe): 175000
• Approximate value of your property: 500000
• The date you started your fixed-rate mortgage (month and year): NA (we're on a variable)
• How many years you fixed for: NA
• Your current mortgage interest rate: 3.2%
• Your current monthly repayment (excluding any overpayments): €906
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary: C1
• Are you due to get extra cashback from your current lender in the future, e.g., "1% after 5 years", or "2% cashback monthly"? If so, how much (monetary amount) and when? No

The remaining term on my mortgage is 22.5 years, and we want to reduce that significantly. We had a lot of savings sitting on deposit, so I'm thinking of bringing the balance down to 125K, and trying to remortgage with avant (or whoever) to get a fixed 5 year mortgage. Having read some of the helpful posts at the start of this thread, it seems that might be acceptable to avant. My main question is, do we have to remortgage to achieve what we want? Or would our current lender potentially allow us to reduce the term etc without having to get solicitors etc involved?

 

[Protocol]

As you have a variable rate, you can overpay as much as you like, and that will reduce the effective term.

No legals involved.

 

[RonanL]

As you have a variable rate, you can overpay as much as you like, and that will reduce the effective term.

No legals involved.

Thanks for the reply. I should have been clearer - we want to fix because we're hearing lots of predictions of rising interest rates.

 

[Paul F]

I requested details of the break fee from KBC on 30 May. Still waiting! They don't provide details over the phone.

@LolaJay You should press ahead with your plans even if the break fee quote hasn't arrived, whether that is to switch to another rate with KBC or to switch to another lender. The break fee is very likely to be zero.

The below estimates assume that you get your loan-to-value ratio (LTV) below 60% so that you are eligible for the listed rates. (You are already eligible for some of them.) Your LTV is currently 399.1k/650k = 61.4%. A higher property valuation (€666k) and/or a few more monthly mortgage payments and/or a lump sum overpayment will get you below 60%.

Note also the 10-year KBC fixed rate, which may be of interest to you.

• Switching immediately to Permanent TSB's 3-year fixed rate (2.5% with €7,982 initial cashback and 2% monthly cashback) will save you about €6,800 over the next 3 years
  • Note that Permanent TSB discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Permanent TSB customer, the best rate you would be able to switch to today is 2.95%
  • So if you switch to them now, you will not be eligible to switch to one of their low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Permanent TSB's 5-year fixed rate (2.55% with €7,982 initial cashback and 2% monthly cashback) will save you about €6,220 over the next 3 years
  • The same warnings as above regarding higher Permanent TSB rates in the future apply
  
  
• Switching immediately to Haven's 3-year fixed rate (2.35% with €5,000 cashback) will save you about €4,500 over the next 3 years
  
  
• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €4,100 over the next 3 years
  
  
• Switching immediately to AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €3,240 over the next 3 years
  
  
• Switching immediately to Haven's 5-year fixed rate (2.55% with €5,000 cashback) will save you about €2,160 over the next 3 years
  
  
• Switching immediately to KBC's 3-year fixed rate (2.25% with no cashback) will save you about €1,960 over the next 3 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • Note that if you decide to do this, your mortgage will soon move onto Bank of Ireland's books, and they discriminate between new and existing customers, i.e., their best rates are not available to existing customers
  • For example, if you were an existing Bank of Ireland customer, the best rate you would be able to switch to today is 3.0%
  • So if you switch to this KBC offer now, you will probably not be eligible to switch to one of Bank of Ireland's low rates in the future and you will end up on a higher interest rate. When that happens, you may want to switch again to another lender, which will incur costs (and it might be impossible to switch if your financial situation has deteriorated).
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €1,780 over the next 3 years
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €1,000 over the next 3 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €620 over the next 3 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to KBC's 5-year fixed rate (2.4% with no cashback) will save you about €200 over the next 3 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • The same warnings as above regarding higher Bank of Ireland rates in the future apply
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will leave you worse off by about €1,120 over the next 3 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Haven's 10-year fixed rate (2.85% with €5,000 cashback) will leave you worse off by about €1,340 over the next 3 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will leave you worse off by about €2,280 over the next 3 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 26 years)
  
  
• Switching immediately to KBC's 10-year fixed rate (2.85% with no cashback) will leave you worse off by about €5,040 over the next 3 years – but with the longer security of 10 years on a fixed rate. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • The same warnings as above regarding higher Bank of Ireland rates in the future apply
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (2.9% with no cashback) will leave you worse off by about €6,960 over the next 3 years – but with the longer security of 10 or 15 years on a fixed rate
  • This product has a benefit in relation to moving home in the future that is explained below

These savings estimates use for comparison the scenario of switching to the 2.25% rate with KBC when the current fixed rate ends. And that's assuming that KBC (or Bank of Ireland, if they have taken over your mortgage by then) are even offering a 2.25% rate in October 2023 – it could be higher (or lower). The estimates also account for any fees (solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

All of Avant's rates, and Finance Ireland's 10-year and longer fixed rates, allow you to avoid any potential break fee if you move home in the future (as long as you take out a new mortgage with them, and subject to certain conditions). And in the case of Finance Ireland you can "take your mortgage with you" – meaning that you get to keep the same interest rate when you move (again, subject to certain conditions).

If you want savings estimates for longer-term Finance Ireland fixed rates, let me know.

Bear in mind that interest rates could rise between now and the time that you complete any switch, so if you are thinking of switching you should probably apply simultaneously to two or more lenders for approval in principle (AIP).