Key Post Should an existing KBC mortgage holder do anything now in advance of the sale of their mortgage?

Brendan Burgess

Founder
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44,840
It is expected that your KBC mortgage will be sold to Bank of Ireland. This could happen at any time.

As you will see, Bank of Ireland has far higher rates than KBC, so you do need to something about it before your mortgage is sold.

If you have a cheap tracker, you don't need to do anything.

Bank of Ireland cannot increase the margin.

If you have a Loan to Value of under 60% you should probably switch to Avant

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If you have a loan to value of less than 60%, Avant is a full 1% cheaper than Bank of Ireland.

As mortgage rates will probably rise due to the fall in competition, then switching to Avant and fixing for 7 years seems appropriate.

"My mortgage balance is only €100k, is it worth switching?"

You can fix for 5 years with KBC at 2.4% compared to 1.95% for 7 years with Avant. That is a saving of €450 a year for, say, 7 years or €3,000. It costs about €1,500 to switch. But you are probably going to face the cost of switching from Bank of Ireland anyway when your fixed rate is up. So, on balance, I would switch now and fix for 7 years.

"Avant is cheaper now, but how do you know they will still be good value when the fixed rate is up in 7 years?"
There is no way of being sure. But Bank of Ireland has a long history of keeping its mortgage rates very high and getting new business through gimmicks like cashback. So it's very likely that Avant will be cheaper in 7 years.

But we know that they will be cheaper for the next 7 years.


If you have a Loan to Value of between 60% and 80%, you should probably fix with KBC for 5 or 7 years

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There is no point in switching to Avant for 3 years and saving 0.1% a year.

Is it worth switching for 5 years? On a €200k mortgage, you will save €500 a year or €2,500.

You will probably face at least €1,500 fees up front for switching, so it's not worth the hassle.

So maybe fix for 3 years or 5 years with KBC and Bank of Ireland will not be able to increase the rates until the 3 years or 5 years is up.

The best rates in the market are for LTVs of <60%. If you are just above this level, it is well worth using your emergency fund, child's education fund or a family loan to get the LTV down below 60% to avail of the lower rate.

If you have an LTV over 80%, fix for 5 years with KBC

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Brendan Burgess

Founder
Messages
44,840
I can't switch because I have two years to go in my fixed rate with KBC

You can break out of any fixed rate early. Fixed rate breakage fees are often much lower than people expect. So ask KBC what the break fee is.

If the break fee is very low or zero, then break now. Don't wait until you have been approved by Avant as the break fee is very volatile and could be a lot higher next week.

I don't want to fix as I want to overpay my mortgage or pay lump sums off it?

This is a real dilemma with all lenders. The best value is in fixed rates.

It's probably worth fixing now anyway. It's likely that the break fees for overpayment will be quite low.
 
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AJ1

Registered User
Messages
40
Brendan when do you think the KBC mortgages will be sold to BOI. I'm on a 3 year fixed due to end in November, will be 130 k left at this stage, house value around 400 I. Unlikely to be able to switch. I was hoping to refix in November for 3 or 5 years. Now I'm wondering should I pay the 450 break fee and fix again now.

Thanks
 

AJ1

Registered User
Messages
40
Just got the break fee last week. My current rate is 2.55 with current account discount.
 

Brendan Burgess

Founder
Messages
44,840
Mortgage balance: €130k
Current rate:2.55%
Potential rate: 2.25%
Saving 0.3%
Remaining months: 7 months
Savings to be made by breaking now: €130k @ 0.3% x 7/12 = €230k
Break fee: €450k

Net cost of breaking now: €220k.

Hard to know.

On balance, you probably should wait.

You could lose out if KBC increases their fixed rates before November.
Or if they pull them completely.

However, they are unlikely to do that as the public censure would be huge.

Brendan
 

Brendan Burgess

Founder
Messages
44,840
Hi Muddle

I have updated the first post with the following.

If you have a cheap tracker, you don't need to do anything.



Bank of Ireland cannot increase the margin.
 

TheBig40

Registered User
Messages
110
I broke out of my 2 year fixed rate with KBC 2.25% this week, I’d about 14months left. I’ve now refixed for 3 years at the same rate. Break fee was 34€ on 73k mortgage. Because I didn’t have to change my LTV bracket there was no need to have the valuation redone (the fee for this is €80)
Mostly did all this because I don’t what to have to deal with BOI and I think 3 years will see me done with the loan.
 

Stitcher

Registered User
Messages
185
Hi Big 40,
how long did that process take ? weeks/months? I assume there was no solicitor costs ? I am in a similar situation with a three year KBC fix on <100K taken out 5 months ago. I was thinking to switch to Avant but Just read elsewhere that Avant might require me to be one year with current lender. breaking and refixing with KBC in a few months time could give me almost an extra year at 2.25% before mortgage moves to BOI rate (which I just switched from :mad:!), I dont want to have to deal with their high rates even for a few years. it would also save the hassle of switching.
 

TheBig40

Registered User
Messages
110
Hi Big 40,
how long did that process take ? weeks/months? I assume there was no solicitor costs ? I am in a similar situation with a three year KBC fix on <100K taken out 5 months ago. I was thinking to switch to Avant but Just read elsewhere that Avant might require me to be one year with current lender. breaking and refixing with KBC in a few months time could give me almost an extra year at 2.25% before mortgage moves to BOI rate (which I just switched from :mad:!), I dont want to have to deal with their high rates even for a few years. it would also save the hassle of switching.

A phone call to ask for a break fee, letter arrived about 3 days later with bank details for paying the fee. Paid this and phone again to say I wanted to fix for 3 years at 2.25%. Received a form by mail that had to be signed and emailed back. As the LTV bracket was the same there was no extra valuation fee, no solicitor. Say a week in total.
 

Stitcher

Registered User
Messages
185
Hi Big40,
thanks for that. I have requested the breakage fee now.

On another point, the loan amount for Avant has to be 100,000 minimum. Michael Dowling was very helpful today also. He said there was no lee-way on that.
 

Stitcher

Registered User
Messages
185
Hi all,
I was quoted a break fee of € 0 from KBC yesterday. I took out 3 year fixed last December, so only 5 months in, 2.5 years to go. I was thinking of waiting a bit until the KBC move to BOI was more concrete before breaking and fixing again for 3 years to maximise the length of the kbc 2.25% rate before BOI rate would kick in. Mortgage remaining is about 99,000 with 5.5 years left. I will overpay a bit in the meantime to try and clear a bit earlier.

Does it make sense to wait a few more months before breaking?

Anyone know if the interbank loan rates are going up in next 6 months?
Thanks
 

jpd

Registered User
Messages
2,524
No one knows what the interbank loan rates will be in 6 months - i fact no one knows what they will be tomorrow, never mind in 6 months
 

Brendan Burgess

Founder
Messages
44,840
I was quoted a break fee of € 0 from KBC yesterday.

I would be really tempted to take it while it's zero.

There have been other cases on Askaboutmoney where people reported getting quoted a break fee of zero and then when they went to switch a few months later, they were asked for a fairly significant payment.

Could you fix at 2.5% for one year? Then when you want to fix for a longer term, break out and the fee should be quite small.

Or even go 3% variable. You will be paying 0.75% more than the 2.25% rate. Which is about €100 per month.

But there is no guarantee that KBC won't up their fixed rates or even withdraw them.

So, make life easy. Break now and fix for three years.

Brendan
 

Stitcher

Registered User
Messages
185
Hi Brendan,
after reading a few more posts, and as you say the unpredictabliloty of mortgage rates and eurobar rates, I am going to break now and fix again for 3 years while the cost is zero.
There is really such great advice and great information on this site. Thanks.

I also found out from KBC that if I break and fix again, there is another opportunity to pay off a lump sum with the new mortgage which is an advantage.
 

Stitcher

Registered User
Messages
185
That's what the KBC guy on the phone said. So, if I pay off the 10% max before i break, i can pay off another 10% of the new mortgage when i then fix again. I will pursue this further as I go through the process but it sort of makes sense. And great when the breakage fee is zero.
 

Brendan Burgess

Founder
Messages
44,840
Hi Stitcher.

If there is no break fee, there is no need to pay anything off before you break! :)

Let's say you want to pay off 20%
Break to a variable.
Pay off 20%.
Fix.
then if you want to pay off 10% after 6 months, you can.
 
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