Paying off portion of fixed mortgage - Penalty fees with different banks

machalla

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I'm currently looking at switching away from EBS at a 3% fixed rate which has come to an end now. This would be for a >80% <90% LTV mortgage.

I'm looking to get a fixed rate for a period of 4-5 years. The two best rates I can get are Ulster Bank and KBC.

Later in the year I may have a lump sum that will allow me to pay off about a third of the new mortgage.

I can't seem to find much info so far on which banks will allow you to pay off a lump sum on a fixed rate mortgage without penalty.

If anyone has any particular experience with any of the banks on this I'd appreciate hearing about it. EBS have said they don't have any rules around that at the moment but it may change in the future.
 

Dauhee

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UB allow 10% of loan amount
BOI allow extr 10% of monthly payment
PTSB may allow unlimited extra if you ask nicely!

In saying that, in current market break fees are near 0 anyhow

If rates were going to go up, you could ask for variable portion on mortgage and use lump sum for that

The main thing is, make sure you switch from EBS :)
 

RedOnion

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From key post


Can I Overpay without a Penalty?
A question that pops up in a few threads discussing fixed rate mortgages is whether or not you can overpay during the fixed rate term before the bank check if a break fee is payable.

From what I can gather each of the banks rules are as follows (any corrections welcome).

I have based this on each Banks Terms & Conditions. I won't comment on whether the banks system / processes can be circumvented as these system failures cannot be relied upon:

AIB: No early repayments allowed without checking break fee

Bank of Ireland: The greater of EUR65 or 10% of normal repayment each month. However, this is done by increasing monthly repayment, and can’t be paid in as a lump sum. There are examples on AAM of posters who have set up a monthly overpayment, while on variable, being able to continue this once they have fixed, and got confirmation from BOI on same.

EBS: No early repayments allowed without checking break fee

KBC: 10% of the initial balance can be repaid early at any stage during the term without incurring a break fee. This is a cumulative limit of the fixed term, so if for example you have fixed for 5 years, and you overpay by 10% of the balance in year 1, that's your limit used up for the 5 years.

PTSB: No early repayments allowed without checking break fee

Ulster Bank: 10% of the balance at the beginning of the calendar year can be repaid each year without triggering a break fee calculation
 
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HollowKnight

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Just to further the point above for UB - they allow 10% over-payment each year during a fixed period on the total of that year.

e.g. you have 200000 on 1/1/19, you can pay up to max 20000 in 2019.
Let's say with your regular payment and the 10% over-payment, you have 170000 left on 31/12/19.
On 1/1/20, you can then pay additional 17000 that year etc.
 

lledlledlled

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If you are likely to be able to pay off one third with a lump sum, it sounds like you should have a split mortgage, one third variable, two thirds fixed.
I have something similar to this with kbc at the moment.
 

machalla

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Thank you all again for the useful and helpful suggestions here, much appreicated. The split mortgage idea sounds like it might have potential for me in this case. The timing around any potential lump sum will be uncertain.
 

Paul F

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Hi,

Does anybody know if Bank of Ireland allow you to make large overpayments on fixed-rate mortgages.

I know it would trigger a check on the break fee, but my question is whether they even allow you to make large overpayments. Can they forbid them outright?

Thanks
 

EmmDee

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198
Hi,

Does anybody know if Bank of Ireland allow you to make large overpayments on fixed-rate mortgages.

I know it would trigger a check on the break fee, but my question is whether they even allow you to make large overpayments. Can they forbid them outright?

Thanks
BoI allow you overpay 10% on your monthly repayment on fixed rate. Don't allow large capital repayments. So you'd need to trickle it in monthly.
 

Zenith63

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295
What do the AAM brain trust think about shortening the term vs. decreasing the monthly repayments when over-paying? Are both options always available, are there merits to one over the other?

I'm hoping to pay-off some of mine later in the year (likely a lump sum to get down below 60% LTV) and would prefer to see the monthly repayments come down, rather than shortening the term. My logic being that shortening the term means that if some day money is tight, you're still "stuck" on the higher repayments and might regret having paid back part of the mortgage and not having that cash there, whereas getting the monthly repayments down makes it easier to manage the monthly repayment if you did get into money trouble some day.
 

Andrew365

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What do the AAM brain trust think about shortening the term vs. decreasing the monthly repayments when over-paying? Are both options always available, are there merits to one over the other?

I'm hoping to pay-off some of mine later in the year (likely a lump sum to get down below 60% LTV) and would prefer to see the monthly repayments come down, rather than shortening the term. My logic being that shortening the term means that if some day money is tight, you're still "stuck" on the higher repayments and might regret having paid back part of the mortgage and not having that cash there, whereas getting the monthly repayments down makes it easier to manage the monthly repayment if you did get into money trouble some day.
By overpaying you are reducing the mortgage term without contractually reducing it, therefore you retain flexibility to stop overpaying should you need to for a period of time.
 

Paul F

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33
BoI allow you overpay 10% on your monthly repayment on fixed rate. Don't allow large capital repayments. So you'd need to trickle it in monthly.
Thanks EmmDee. I know that I would be penalised if I overpaid by more than 10%. But can anybody here tell me if BOI forbid this outright?
 

username123

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Why don't you ring BOI and ask them? It seems a very specific question that wouldn't come up that often....
 

Monfreid

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Why don't you ring BOI and ask them? It seems a very specific question that wouldn't come up that often....
@machalla

I did call them yesterday for the same type of request, I want to pay a lump sum and then do a split rate mortgage, 90% or so on a 10 years fixed and the rest on variable (to continue to overpay as much as I can). Then, once the variable rate is paid off, I will overpay the 10 years fixed by 10% but also by paying biweekly (so 13 payments per year instead of 12).

They said that the fee will be 1514 euros if I want to change my 5 years fixed into a split rate mortgage or any different loan type than my current one. They will move the full mortgage first to a variable rate and then I will be able to set up the split rate mortgage.

On the other hand, they said that I could make the overpayment and remain in my 5 years fixed rate (2 years to go) and it will cost me 300 eur.

By default, they told me that it will reduce the monthly payment but if I want, I could request to shorten the term instead.

So basically, it's 300 eur to pay off a lump sum on your current fixed rate mortgage or 1514 eur if you choose to do a different type of loan as well. They told me that those fees change everyday so it will be slightly different if you call them later on.

Hope this help
 

Laughahalla

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115
Another option if you are with EBS is to reduce the term. They won't charge a break fee if you reduce the term of the loan.
e.g. if you have a 20 year loan but want to over pay, you could reduce the term to 14 years instead without a break fee but obviously pay more each month.
 

Paul F

Registered User
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33
So basically, it's 300 eur to pay off a lump sum on your current fixed rate mortgage or 1514 eur if you choose to do a different type of loan as well. They told me that those fees change everyday so it will be slightly different if you call them later on.
Thanks Monfreid - very helpful.

If you're OK with sharing some information I could check if the fees they are quoting seem correct:
  • When did you originally fix (month and year)?
  • For how long?
  • What's your mortgage balance?
  • How big was the lump sum that you wanted to pay off?
Cheers
 

iceblue

Registered User
Messages
12
If it helps:
We are on a 2yr fixed rate with BOI. Finishing next year.
We over pay with BOI each month by 10%. This is about €130pm so greater then the €65 noted above.
We have also paid off a lump sum each year on top of this monthly payment for which a very small breakage charge was incurred each time.
So if large is about 25k, then large overpayments are not forbidden
 
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