Key Post Should an existing Ulster Bank customer do anything before their mortgage is sold to permanent tsb?

dgray_ie said:

Variable rate: 3.00% (discounted loyalty rate I believe)
Mortgage Balance: €159,081.05
Current LTV: 27%
Mortgage: €1356.19 pm
Remaining Term: 11yrs & 6 mths

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If you could switch to Avant now, you would save 0.4% of €160k or €650 a year. So it would take about three years to recover the legal costs of switching.

So, switch to the 2.35% rate for 4 years

Then if BoI takes over, they can't slap you with higher rates for 4 years.

After 4 years you will owe about €100k with 7 years left.

You may well overpay your mortgage in the meantime.

Brendan

Itchy said:

AIB could be a suitable alternative for you. 2k switcher bonus would cover fees

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Not sure it's worth the hassle.


Maybe if you qualify for the Green rate.

Or if you have any plans to take out a top-up to extend, then it would be worth switching to AIB.

Brendan

Brendan Burgess said:

Not sure it's worth the hassle.

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Maybe if you qualify for the Green rate.

Or if you have any plans to take out a top-up to extend, then it would be worth switching to AIB.

Brendan

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Hi Itchy & Brendan, thanks for the quick reply. I called AIB and they ran through our details and confirmed we would be eligible for the Green Rate 5 years fixed @2.1%. If we kept term at 11 yrs it would be ca. €1,300 pm or if we shortened the term to 10 yrs ca. €1470pm and 8 yrs €1,800pm. They give €2,000 cashback with this offer. If we call them we can go through the express mortgage journey over the phone and get approval in principal for 6 months.

Do you think this would best & worth the hassle, perhaps consider if we could afford to shorten the term or Itchy advised 'there would be free overpayments in the future should you require it'?

Thanks.

dgray_ie said:

Hi Itchy & Brendan, thanks for the quick reply. I called AIB and they ran through our details and confirmed we would be eligible for the Green Rate 5 years fixed @2.1%. If we kept term at 11 yrs it would be ca. €1,300 pm or if we shortened the term to 10 yrs ca. €1470pm and 8 yrs €1,800pm. They give €2,000 cashback with this offer. If we call them we can go through the express mortgage journey over the phone and get approval in principal for 6 months.

Do you think this would best & worth the hassle, perhaps consider if we could afford to shorten the term or Itchy advised 'there would be free overpayments in the future should you require it'?

Thanks.

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Note, I just clarified with AIB they do not allow any overpayments in the 5 year term.

dgray_ie said:

Note, I just clarified with AIB they do not allow any overpayments in the 5 year term.

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dgray_ie said:

Hi Itchy & Brendan, thanks for the quick reply. I called AIB and they ran through our details and confirmed we would be eligible for the Green Rate 5 years fixed @2.1%. If we kept term at 11 yrs it would be ca. €1,300 pm or if we shortened the term to 10 yrs ca. €1470pm and 8 yrs €1,800pm. They give €2,000 cashback with this offer.

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I mean if you can afford an 8 year term, lock in a low 5 or 7 year rate and interest rates will be largely immaterial when the rate expires.

Any idea for deadline for ub customers to take action? (E.g. ub no longer allowing internal switches after date x, or actual transfer date to ptsb). I understand that folks can still take action after the transfer to ptsb.

Second question is there any difference in how ptsb and nib calculate break fees. Everything else being equal would one expect a lower or the same break fee before or after transfer?

dgray_ie said:

Note, I just clarified with AIB they do not allow any overpayments in the 5 year term.

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That would be illegal.

They probably said they don't allow overpayment without calculating a break fee? Which is currently zero unless they change their pricing of shorter term products:

Protocol said:

This has already been posted earlier, in a thread about a possible UB internal switch.

UB mortgage, original 200k, I think 24yr term
Date you fixed: 10-Dec-2018, start of mortgage
Period for which you fixed: 4 years
Fixed rate: 2.60%
Fixed until 31.03.2023
Note that the fixed period is actually more like 4y 4m. So I am roughly half way through the fixed rate period.

Amount of mortgage balance outstanding: €150k, December 2020
Letters rec'd from UB, Jan 2021, in response to my query about breakage fees.
Break fee = 1,944.28, valid until 14.01.2021.
Rate sheet: 2yr fixed 2.2% until 31.03.2023 is 39 less pm for same term, so a saving of 26 months * 39 = 1,014


Lump-sum 10% overpayments already made: 2019, 2020, 2021
Balance now = 134k, LTV is well below 50%, LTI is less than 2x gross income


Possible switch to Avant at 1.95%?

Break fee = nearly 2,000
Sol fee =? I suspect I could get it done for 1,000, outside Dublin

That 3,000 fee is a lot to offset....................

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I still haven't done anything.

I know BB suggests we act, but nearly 3,000 fees is a lot..........

My 3yr fixed term ends with ulster bank in sept 2021. Called UB customer care regarding a fresh fixed term, they think the switch will take atleast 2years and was advised not to rush for breaking and fixing for a new term before sept... Anyone else in the same boat and tried to re-fix their mortgage with UB?

Hey dude

Did you ask what the break fee would be?

There isn't a rush in the sense of doing it this week. But I would guess that the fee might well be zero or very little.

UB could increase their rates at any time.

Brendan

Brendan Burgess said:

Hey dude

Did you ask what the break fee would be?

There isn't a rush in the sense of doing it this week. But I would guess that the fee might well be zero or very little.

UB could increase their rates at any time.

Brendan

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I didnt ask today, but breakage fee in march was approx 570€ which i didnt go for... may be it will be around 200€ now since only 2 months remained... hoping that they will offer other fixed options and rates by 1st of august (60days before).

My break fee is around 2400€ atm, with ~15 months to go. I'd rather not get stuck with PTSB so I'll switch. But based on the 'it might take a year or two' - maybe I can wait for the break fee to go down.

HollowKnight said:

My break fee is around 2400€ atm, with ~15 months to go.

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You can wait.

But why not do the calculations. How much will you save over the next 15 months by switching to a lower rate?

brazen_dude said:

My 3yr fixed term ends with ulster bank in sept 2021. Called UB customer care regarding a fresh fixed term, they think the switch will take atleast 2years and was advised not to rush for breaking and fixing for a new term before sept... Anyone else in the same boat and tried to re-fix their mortgage with UB?

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I have a 4 year fixed ending March 2022 and was quoted 653 to break now. I will take a chance on it taking 2 years for them to leave and fix again next year when current fixed term ends.

Again, that is fine. But why not do the arithmetic?

How much interest would you save between now and March by fixing at a lower rate.

For example,
Say your mortgage is €300k
Your current fixed rate is 3%
You can fix at 2.5%
Your annual saving would be €300,000 @.5% = €1,500
Your saving for 8 months would be 8/12 x € 1,500 = €1,000
which is more than your break fee.

And if you are paying a lump sum off your fixed rate mortgage, the saving in interest will always exceed the penalty.

Brendan

The highest UB fixed rate is 3.15% but most people will likely be in the 2.2-2.5% range on the shorter terms. The savings from something that low will likely not offset the break fee in a single year, especially on smaller mortgages. And that of course ignores the legal costs in switching too.

Edit: legal costs are for switching banks only. I would think that everyone on this thread will looking at options at moving away given the sale. Sorry that wasn't clear. More figures below.

ryaner said:

And that of course ignores the legal costs in switching too.

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There's no legal cost to refixing with the same lender.

ryaner said:

The savings from something that low will likely not offset the break fee in a single year, especially on smaller mortgages

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Well, all other things being equal, the break fee on a smaller mortgage would be less...

Brendan Burgess said:

Again, that is fine. But why not do the arithmetic?

How much interest would you save between now and March by fixing at a lower rate.

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On this point, those on higher LTVs in particular, who fixed prior to November 2020, would be best placed to benefit from breaking a refixing.

Some previous examples here:

RedOnion said:

There's no legal cost to refixing with the same lender.


Well, all other things being equal, the break fee on a smaller mortgage would be less...

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I've edited my original comment to make that clearer as I'd assumed everyone would be looking at longer term options of moving away before PTSB get involved.

Some figures from an average type mortgage fixed in recent years.

Mortgage 300k
Using https://www.ulsterbank.ie/mortgages/mortgage-rates.html#fixedrates and picking a "high" 4 year 80% ltv
Fixed Rate 2.45%
Full years interest €7,143.08 (using a full year at the highest point)

Switching to avant @ 3 years @ 2.2% (the best rate I can find, also using their 70-80% range assuming ltv drops from original UB fix)
Full years interest €6,701.87

Meaning it takes a full year to make back a break fee of €450, excluding any switching costs (e.g. solicitor fees), and the difference will be lower

For my own case, and I do have a smaller outstanding amount, the 13 month break fee from my fixed rate would take 7 years to earn back in the difference between my UB rate and Avants lowest rate, again before the other fees involved in switching are working in.

People should definitely do the math to see if breaking makes sense, but it definitely is *NOT* clear cut for people breaking the fixed.
Someone else pointed out that it is also worth checking the break fee at different times. In our case our latest break fee was higher than one from a few months ago for whatever reason, and I'd assume/hope the opposite is true where it'll drop again before the sale is final and things transfer to PTSB.

ryaner said:

Some figures from an average type mortgage fixed in recent years

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Theres nothing 'average' about your scenario. You've picked an example that matches your comment. You're using a rate that was only available for that LTV post November 2020.

ryaner said:

People should definitely do the math to see if breaking makes sense, but it definitely is *NOT* clear cut for people breaking the fixed.

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That's exactly what @Brendan Burgess and I said above. So stop trying to make it look clear cut that it's not worth while.

ryaner said:

I would think that everyone on this thread will looking at options at moving away given the sale

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That's a bit of a flawed assumption. Why would you switch lender if you can lock in a good rate with UB? And what about the thousands of customers who can't switch lender? Should they do nothing?