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

[Darava]

Hi Paul,

If possible would really appreciate some advise on the below, if u get a chance, thks

• Current lender BOI

• Outstanding mortgage balance (how much you still owe) €155,00

• Approximate current value of your property €270,00

• The date you started your fixed-rate mortgage (month and year) Feb 2018

• How many years you fixed for 5yrs

• Your current mortgage interest rate 3.1%

• Your current monthly repayment (excluding any overpayments) €1014.00

• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary N/A

• 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 - KBC
• Outstanding mortgage balance (how much you still owe) - 194K
• Approximate current value of your property - 600K
• The date you started your fixed-rate mortgage (month and year) - N/A on variable
• How many years you fixed for - N/A on variable
• Your current mortgage interest rate - 3.05%
• Your current monthly repayment (excluding any overpayments) - 2050
• Your property's BER (Building Energy Rating) - 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? N/A

@cidersnail 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 €5,820 over the next 3 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €5,320 over the next 3 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 €4,020 over the next 3 years
  
  
• Switching immediately to Permanent TSB's 7-year fixed rate (3.0% with €3,880 initial cashback and 2% monthly cashback) will save you about €3,920 over the next 3 years – but with the longer security of 7 years on a fixed rate
  • 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 2.8%
  • 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 KBC's 3-year fixed rate (2.25% with no cashback) will save you about €4,010 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 KBC's 5-year fixed rate (2.4% with no cashback) will save you about €3,270 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 5-year fixed rate (2.15% with no cashback) will save you about €3,020 over the next 3 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €2,520 over the next 3 years – but with the longer security of 7 years on a fixed rate
  • This is better value than Permanent TSB's 7-year rate over the next seven years

These savings estimates use for comparison the scenario of staying on the variable rate with KBC and assume that that rate doesn't change between now and June 2025 (which is very 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.

It may seem like it is not worth switching to another lender but bear in mind that your mortgage will soon be owned by Bank of Ireland, whose rates are much higher than KBC's. So if you don't switch now, you might find that you really want to switch in a few years' time, at which point rates might be higher (and it might be impossible to switch if your financial situation has deteriorated).

You could ask KBC if they would let you switch to their 10-year fixed rate (2.85%) if that appeals to you, even though there are only 9 years left on your mortgage.

All of Avant's 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).

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) - 287K
• Approximate current value of your property - 600K+
• The date you started your fixed-rate mortgage (month and year) - Aug/Sep 2018
• How many years you fixed for - 7 years
• Your current mortgage interest rate - 3.5%
• Your current monthly repayment (excluding any overpayments) - 1410
• Your property's BER (Building Energy Rating) - A3
• 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? N/A

@MagpieJohn Your break fee should be zero at the moment – but it is volatile because wholesale interest rates are volatile, so 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 Haven's 4-year green fixed rate (2.0% with €2,000 cashback) will save you about €14,280 over the next 4 years
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.1% with no cashback) will save you about €12,500 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • 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 5-year fixed rate (2.15% with no cashback) will save you about €10,600 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €9,500 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 €7,920 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 €7,860 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • This is much better value than Haven's 10-year rate over the next ten years
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will save you about €6,760 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 26 years)
  
  
• Switching immediately to AIB's 7-year fixed rate (2.95% with no cashback) will save you about €3,100 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 save you about €2,320 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 AIB's 10-year fixed rate (3.1% with no cashback) will save you about €1,440 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 20-year fixed rate (3.0% with no cashback) will save you about €1,220 over the next 4 years – but with the longer security of 20 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 Finance Ireland's 25-year fixed rate (3.15% with no cashback) will leave you worse off by about €440 over the next 4 years – but with the longer security of 25 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 2.1% rate with AIB when the current fixed rate ends. And that's assuming that AIB are even offering a 2.1% rate in September 2025 – 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 50% so that you are eligible for AIB's green rate. (You are already eligible for the other rates listed above.) Your LTV estimate is 287.0k/600.0k = 47.8%. If you get a valuation of less than €574k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 50%. But that is not a reason to delay the switch – i.e., you can start the switch immediately.

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 €17,280 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) €155,00
• Approximate current value of your property €270,00
• The date you started your fixed-rate mortgage (month and year) Feb 2018
• How many years you fixed for 5yrs
• Your current mortgage interest rate 3.1%
• Your current monthly repayment (excluding any overpayments) €1014.00
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary N/A
• 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

@Darava Your break fee should be around €320 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €4,220 over the next 4 years
  
  
• Switching immediately to AIB's 5-year fixed rate (2.45% with €2,000 cashback) will save you about €3,440 over the next 4 years
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €3,100 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €2,540 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 €2,300 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to KBC's 10-year fixed rate (2.85% with €3,000 cashback) will save you about €2,160 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • 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).
  • You must apply by 15 July 2022 if you wish to switch to KBC. You would also have to apply for a current account with them by that date.
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €1,680 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • This is much better value than KBC's 10-year rate over the next ten years
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.4% fixed rate with no cashback) will save you about €1,640 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term
  • You would have to shorten your mortgage term to 15 years to be eligible for this rate
  • The monthly repayment would be €1,026
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €240 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 €1,160 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 €2,120 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 February 2023 – it could be higher (or lower). The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

You should call Bank of Ireland and tell them that you are planning to switch to another lender. Ask them what interest rates they will offer you to break and re-fix with them. Please post a summary of their response here.

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 155.0k/270.0k = 57.4%. If you get a valuation of less than €259k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 60%. But that is not a 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).

 

[Shinny]

• Current lender - BOI
• Outstanding mortgage balance (how much you still owe) - 271000K
• Approximate current value of your property - 400
• The date you started your fixed-rate mortgage (month and year) - Aug 2017
• How many years you fixed for - 5years
• Your current mortgage interest rate - 3.25%
• Your current monthly repayment (excluding any overpayments) - 1244
• Your property's BER (Building Energy Rating) - c3
• Are you due to get extra cashback from your current lender in the future, - 3000 due back at the end of July

am wondering what the best thing to do is regarding how long to take a mortgage out over- 25 years , 24 or 23, and if it makes much difference now? I read another thread that suggested putting the extra money into pension instead.

Also wondering if best to go with a fixed rate of 2.2 (high value ) for 4 years with Aib or 7 years with AIB at 3.0- or indeed with another lender but the letter of offer would be a lot sooner with AIB, might get in before the rise in July... anyone know when in July they are talking about rising it?

 

[Paul F]

• Current lender - BOI
• Outstanding mortgage balance (how much you still owe) - 271000K
• Approximate current value of your property - 400
• The date you started your fixed-rate mortgage (month and year) - Aug 2017
• How many years you fixed for - 5years
• Your current mortgage interest rate - 3.25%
• Your current monthly repayment (excluding any overpayments) - 1244
• Your property's BER (Building Energy Rating) - c3
• Are you due to get extra cashback from your current lender in the future, - 3000 due back at the end of July

@Shinny Your break fee should be around €300 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

• Switching immediately to AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €8,700 over the next 4 years
  
  
• Switching immediately to Avant Money's 4-year fixed rate (2.05% with no cashback) will save you about €8,240 over the next 4 years
  
  
• Switching immediately to Haven's 5-year fixed rate (2.55% with €5,000 cashback) will save you about €8,040 over the next 4 years
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €7,000 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 (2.25% with no cashback) will save you about €6,140 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.35% with no cashback) will save you about €5,100 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 (2.5% with no cashback) will save you about €3,540 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • If you want to fix for 10 years and Avant won't take you, consider Haven's 10-year fixed rate (2.85% with €5,000 cashback)
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.65% fixed rate with no cashback) will save you about €1,960 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term (approximately 27 years)
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% and you would get the 1% (€3,000) cashback) will leave you worse off by about €240 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 (3.05% with no cashback) will leave you worse off by about €2,240 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.
  
  
• Switching immediately to Finance Ireland's 20-year fixed rate (3.15% with no cashback) will leave you worse off by about €3,300 over the next 4 years – but with the longer security of 20 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.
  
  
• Switching immediately to Bank of Ireland's 10-year fixed rate (3.3% and you would get the 1% (€3,000) cashback) will leave you worse off by about €3,540 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 25-year fixed rate (3.3% with no cashback) will leave you worse off by about €4,880 over the next 4 years – but with the longer security of 25 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 3.3%) 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 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 August 2022 – it could be higher (or lower). The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

These savings estimates assume that you are still with Bank of Ireland in July/August and that you have received the 1% (€3,000) cashback. But given that switching takes a few months, you should start the switch now.

You should call Bank of Ireland and tell them that you are planning to switch to another lender. Ask them what interest rates they will offer you to break and re-fix with them. Please post a summary of their response here.

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 70% so that you are eligible for the listed rates. Your LTV estimate is 271.0k/400.0k = 67.8%. If you get a valuation of less than €388k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 70%. But that is not a 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).

am wondering what the best thing to do is regarding how long to take a mortgage out over- 25 years , 24 or 23, and if it makes much difference now? I read another thread that suggested putting the extra money into pension instead.

The general advice on this site is to keep your mortgage term unchanged but make regular overpayments if that makes sense in the context of your financial situation.

Remember also that overpaying your mortgage may not be the best use of your money. Your priorities should usually be:

• Paying off expensive debt (credit cards, personal loans, car loans, etc.)
• Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
• Saving money for any expenses you will have over the next few years (kids; childcare; adult children going to college, etc.)
• Maxing out your pension contributions (very large tax relief is given)
• Overpaying your mortgage

in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.

Also wondering if best to go with a fixed rate of 2.2 (high value ) for 4 years with Aib or 7 years with AIB at 3.0- or indeed with another lender but the letter of offer would be a lot sooner with AIB, might get in before the rise in July... anyone know when in July they are talking about rising it?

Why do you suppose that you would be able to switch to AIB any quicker than to any other lender? They seem to be about as slow as any of the others, based on what some people have posted.

 

[Darava]

@Darava Your break fee should be around €320 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €4,220 over the next 4 years
  
  
• Switching immediately to AIB's 5-year fixed rate (2.45% with €2,000 cashback) will save you about €3,440 over the next 4 years
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €3,100 over the next 4 years
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.25% with no cashback) will save you about €2,540 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 €2,300 over the next 4 years – but with the longer security of 7 years on a fixed rate
  
  
• Switching immediately to KBC's 10-year fixed rate (2.85% with €3,000 cashback) will save you about €2,160 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • 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).
  • You must apply by 15 July 2022 if you wish to switch to KBC. You would also have to apply for a current account with them by that date.
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.4% with no cashback) will save you about €1,680 over the next 4 years – but with the longer security of 10 years on a fixed rate
  • This is much better value than KBC's 10-year rate over the next ten years
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.4% fixed rate with no cashback) will save you about €1,640 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term
  • You would have to shorten your mortgage term to 15 years to be eligible for this rate
  • The monthly repayment would be €1,026
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (3.0% with no cashback) will leave you worse off by about €240 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 €1,160 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 €2,120 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 February 2023 – it could be higher (or lower). The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

You should call Bank of Ireland and tell them that you are planning to switch to another lender. Ask them what interest rates they will offer you to break and re-fix with them. Please post a summary of their response here.

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 155.0k/270.0k = 57.4%. If you get a valuation of less than €259k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 60%. But that is not a 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).

God thank u so so much for all the info. I had been onto BOI yesterday and they said a break out fee would be as of yesterday €130 obviously today could be more..

I'm going to look into the above and will post details of what I go with..Thanks again, its a mind field and this has hugely helped me.

Much appreciated
Cathyann

 

[Gordon Gekko]

Your break fee will be approximately €3,800, but confirm it with Ulster Bank.

Switching to Avant's 1.95% rate fixed for up to 7 years will save you about €7,700 over the next five years (versus switching immediately to Ulster Bank's 2.2.% 5-year fixed rate), and that's after accounting for fees and cashback. Of course, if you decide to stay with UB and switch to their 2.2% rate, you will probably have to switch again in a few years, at which point interest rates might be higher.

The above assumes that you start the switch to Avant before the end of March and use a broker who is an Avant "Gold Partner", so that you are eligible for the €1,500 cashback.

Your break fee (€3,800) and the amount of extra interest you would pay by staying on the 2.5% rate (€3,575, versus switching to Avant) are similar, so there is probably little point in delaying the switch.

The break fee turned out to be zero actually so I’m fixing at 2.2% for 5.5 years. Less hassle than switching to Avant.

 

[Shinny]

Hi Paul
Thank you so much for working out all this . Appreciate it. The only reason I think Aib would be faster is we are at the waiting the letter of offer stage.
Wondering if there would be any benefit in splitting mortgage into 2 sections- say 4 years high value at 2.2 per cent and the other part at 7 years Aib 3.05 per cent.
It means after 4 years the portion on 2.2 per cent would be tied to Aib so not able to take up any offers in 4 years but a portion would be in a secure 7 year loan!
Thanks!!!!

 

[Paul F]

The break fee turned out to be zero actually so I’m fixing at 2.2% for 5.5 years. Less hassle than switching to Avant.

What was the date of the break fee quote?

 

[LolaJay]

I requested details of the break fee from KBC on 30 May. Sk

 

[Paul F]

Thank you so much for working out all this . Appreciate it. The only reason I think Aib would be faster is we are at the waiting the letter of offer stage.
Wondering if there would be any benefit in splitting mortgage into 2 sections- say 4 years high value at 2.2 per cent and the other part at 7 years Aib 3.05 per cent.

That's ultimately your call.

It means after 4 years the portion on 2.2 per cent would be tied to Aib so not able to take up any offers in 4 years but a portion would be in a secure 7 year loan!

Can you explain what you mean here?

 

[Blackrock1]

Thanks for all the help on this thread Paul, similar to Gordon our break fee became zero recently and even though its not the most efficient cost wise i have also decided to switch to the 2.2% 5.5 year ulster bank offering as i dont think ill get it done with anyone else before rates increase (Avant are a nightmare and this is on a LTV of about 30% on a house in Dublin i cant imagine what they would be like if it was in any way tricky).

 

[Gordon Gekko]

What was the date of the break fee quote?

A couple of days ago.

 

[IrishGunner]

• Current lender – Ulster Bank
• Outstanding mortgage balance (how much you still owe) €225,396
• Approximate current value of your property €465k
• The date you started your fixed-rate mortgage (month and year) Feb 2020
• How many years you fixed for 16 years 8 months remaining
• Your current mortgage interest rate 3.7%
• Your current monthly repayment (excluding any overpayments) €1509.97
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary D1 (need to get this updated as house recently renovated)
• 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? None

Was on fixed term rate with UB for 2 years but this expired and put in application with Avant and got AIP but still not fully drawn down. Solicitor said it would take 2-3 months and thus wont be in time before rates go up 15th July

House was recently renovated so BER rating may go up but this was rate when we bought it 2 years ago and have not got it checked again

Also our LTV is good but we are only getting the 60% LTV as its based on our salary and not on our House value. This is what broker is saying which we find weird?

Looking if Avant is still our best option even with rates increase

Thanks

 

[Shinny]

That's ultimately your call.


Can you explain what you mean here?

Hi
what I mean by that is that the whole loan is tied to AIB for the full 7 years, some of it will be on a 2.2 rate and then it will have to be put at another rate for the remaining 7 years

 

[Paul F]

Hi
what I mean by that is that the whole loan is tied to AIB for the full 7 years, some of it will be on a 2.2 rate and then it will have to be put at another rate for the remaining 7 years

Yes and no – you can switch to another lender at any point in the future, even if you are in the middle of a fixed rate. Of course, if you do that there might be a break fee, but it might also be low or even zero.

 

[fixedratenovice]

@fixedratenovice Your break fee should be around €40 at the moment – but it is volatile because wholesale interest rates are volatile, so confirm it with Bank of Ireland (and please post it here when you receive it, including the date of the letter).

• Switching immediately to AIB's 4-year fixed rate (2.2% with €2,000 cashback) will save you about €6,900 over the next 4 years
  
  
• Switching immediately to Haven's 5-year fixed rate (2.55% with €5,000 cashback) will save you about €5,680 over the next 4 years
  
  
• Switching immediately to Haven's 7-year fixed rate (2.65% with €5,000 cashback) will save you about €4,460 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 €2,040 over the next 4 years – but with the longer security of 10 years on a fixed rate
  
  
• Switching immediately to Avant Money's 7-year fixed rate (2.45% with no cashback) will save you about €1,820 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 €1,217
  
  
• Switching immediately to Avant Money's 10-year fixed rate (2.6% with no cashback) will save you about €20 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 €1,241
  
  
• Switching immediately to Bank of Ireland's 5-year fixed rate (2.8%and you would get the 1% (€3,270) cashback) will save you about €2,370 over the next 4 years. And it is very simple and quick to do (no bank statements, salary cert or solicitor, etc., needed).
  • This accounts for the interest rate discount offered by Bank of Ireland
  
  
• Switching immediately to Bank of Ireland's 10-year fixed rate (3.1% and you would get the 1% (€3,270) cashback) will leave you worse off by about €1,270 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).
  • This accounts for the interest rate discount offered by Bank of Ireland
  
  
• Switching immediately to Finance Ireland's 10- or 15-year fixed rate (3.15% with no cashback) will leave you worse off by about €6,640 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 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 July 2022 – it could be higher (or lower). You would get the Bank of Ireland €3,270 future cashback in such a scenario, and the savings estimates account for this. The estimates also account for any fees (break fee, solicitors' fees, valuation fee) that you have to pay and any cashback offered by the above lenders.

It is unlikely that you will be able to switch to another lender while you are on probation. But there is no harm in talking to AIB or to a broker who works with Haven to see what their attitude to your situation is.

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 80% so that you are eligible for the listed rates. Your LTV estimate is 310.0k/400.0k = 77.5%. If you get a valuation of less than €388k, you will need to make a few more monthly mortgage payments and/or a small overpayment to get the LTV below 80%. But that is not a 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).


The break fee depends on:

• Your outstanding balance
  • Notional interest doesn't come into it
• How long is left on the fixed-rate period
• The change in interbank interest rates (notmortgage interest rates) from when you fixed to now
  • BOI don't use the deposit rate in their calculations

The day that you fix, your break fee is zero. If interbank interest rates fall, your break fee rises; if interbank interest rates rise, your break fee falls (all other things being equal).


If you fix with BOI for 5 years, their cost of funding will be similar to this rate. If you fix with BOI for 10 years, their cost of funding will be similar to this rate.

If the relevant interbank rate (e.g., the 3-year rate when there are 3 years left on your fixed period) on the day you break is higher than BOI's cost of funding, your break fee will be zero. If it is lower, you will have a break fee.

Because the time left on the fixed-rate period is a factor in the break fee calculation, fixing for ten years can lead to higher break fee quotes, on average, than fixing for five years. But, as mentioned, break fees can also be low or even zero – it all depends on the change in interbank interest rates.

Bank of Ireland do not allow you to "take your mortgage with you" – only Finance Ireland offer this feature.

Thanks Paul - this is really helpful and I appreciate you taking the time to set out my switcher options. Given I'm still on probation, it seems like it might be safer to re-fix with BOI.

Thanks also for explaining the break fee process in plain English.

From the links you provided it looks the interbank rate used by BOI if I fixed for 10 years right now would be ~2.5%? So if, for example, I sought to break out of the fixed rate in five years time and the ECB had raised rates from what there are now, it is likely (but not certain) that the interbank rate would be higher than it is now (and also in that case the relevant rate would be BOI's 5 year interbank rate)? So the main risk of a very high break fee is if ECB rates, and hence the interbank rates, fall from what they are now, as well as how long is left of my fixed period.

I mentioned deposit rates in my first post because the BOI break fee formula provided to me is as follows:

"C" = compensation to BOI.

"A" = the amount repaid early averaged from the date of early repayment to the end of the fixed period to allow for scheduled repayments (if any) and interest charges.

"R%" = the annual percentage interest rate which was the cost to us of funding an amount equal to "A" for the originally intended fixed rate period.

"R1%" = the annual percentage interest rate available to use for a deposit of an amount equal to "A" for a period equal to "D".

"D" = the number of days from the date of early repayment to the end of the fixed period.

C = (A x (R% - R1%) x D) / 365

Presumably, R1% is the interbank rate and this is rate that BOI can deposit funds with another bank for? Also, will BOI tell me what R% is if I ask them?

Anyway, I am leaning towards going with BOI's 10 year fixed because interest rates and rising and the chance of rates significantly lower than they are now is relatively low (I think!) - I'm just trying to tease out the risk of a large break fee down the line. It may be safer to take BOI's 5 year fixed and hope rates aren't significantly higher in 2027...

 

[dotTom]

Hi there,

Any direction on the below would be greatly appreciated.

• Current lender – Haven Mortgages
• Outstanding mortgage balance (how much you still owe) €320k
• Approximate current value of your property €400k
• The date you started your fixed-rate mortgage (month and year) March 2020
• How many years you fixed for 3
• Your current mortgage interest rate 2.85%
• Your current monthly repayment (excluding any overpayments) €1269.67
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary D2
• 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? None

I confirmed a no break fee yesterday 30/06/2022 as we were looking at the 10yr fixed with haven at 2.85%.

But want to review all other options

and to understand what your view is on switching now, would we have enough time to complete it for the current offers around?

Additional question; when can you lock in the fixed rate? Is at AIP stage/ letter of offer/ drawdown

Thanks in advance
Tom

 

[Paul F]

• Current lender – Ulster Bank
• Outstanding mortgage balance (how much you still owe) €225,396
• Approximate current value of your property €465k
• The date you started your fixed-rate mortgage (month and year) Feb 2020
• How many years you fixed for 16 years 8 months remaining
• Your current mortgage interest rate 3.7%
• Your current monthly repayment (excluding any overpayments) €1509.97
• Your property's BER (Building Energy Rating) – check it here or estimate it if necessary D1 (need to get this updated as house recently renovated)
• 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? None

@IrishGunner 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 €14,500 over the next 4 years
  • You need a Building Energy Rating (BER) of B3 or better to be eligible for this rate
  
  
• Switching immediately to AIB's 5-year green fixed rate (2.1% with €2,000 cashback) will save you about €13,680 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)
  • You need a Building Energy Rating (BER) of B3 or better to be eligible for this rate
  
  
• Switching immediately to Avant Money's 4-year fixed rate (1.95% with no cashback) will save you about €13,080 over the next 4 years
  
  
• Switching immediately to AIB's 5-year fixed rate (2.35% with €2,000 cashback) will save you about €11,820 over the next 4 years
  
  
• Switching immediately to Avant Money's 5-year fixed rate (2.15% with no cashback) will save you about €11,420 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 €11,260 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 3.0%
  • 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 7-year fixed rate (2.25% with no cashback) will save you about €10,600 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 €9,360 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 2.4% fixed rate with no cashback) will save you about €9,200 over the next 4 years – and the interest rate will remain fixed for the remainder of your mortgage term
  • You would have to shorten your mortgage term to 15 years to be eligible for this rate
  • The monthly repayment would be €1,492
  
  
• Switching immediately to Avant Money's "One Mortgage" (a 2.5% fixed rate with no cashback) will save you about €8,540 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 Ulster Bank's 7- or 10-year fixed rate (2.8% with no cashback) will save you about €7,540 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 save you about €5,220 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 Ulster Bank and assume that that rate doesn't change between now and July 2026 (which is very 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).

Was on fixed term rate with UB for 2 years but this expired and put in application with Avant and got AIP but still not fully drawn down.

I'm wondering why your Ulster Bank variable rate is 3.7% and not 3.5%. What estimated property value and loan-to-value (LTV) ratio is showing when you log in to UB's Manage My Mortgage portal?

Solicitor said it would take 2-3 months and thus wont be in time before rates go up 15th July

The above estimates assume that those rate rises have occurred. But keep pushing Avant and your solicitor and see if you can beat that deadline.

House was recently renovated so BER rating may go up but this was rate when we bought it 2 years ago and have not got it checked again

You would only be eligible for the Haven and AIB green rates if you get a BER of B3 or better. And you'd be starting the switching process from scratch, so you'd run the same risk of interest rates increasing before you draw down.

Also our LTV is good but we are only getting the 60% LTV as its based on our salary and not on our House value. This is what broker is saying which we find weird?

That is weird and sounds totally wrong. Are you sure that is what the broker said? Anyway, it doesn't matter because <60% LTV is Avant's lowest LTV bracket.

Looking if Avant is still our best option even with rates increase

It would seem so. Your main decision is how long to fix for.