Should we break out of variable before we switch (when low penalty)

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Sonic hedgehog

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We are currently with boi 3% fixed mortgage (for five years)
To break to a variable rate of 3.5% today costs 100 euro.
We want to switch to the avant 1.95% rate.
I note it takes a couple of months.
Should we break out of the variable rate now (while penalty is low) or hold off until we switch (we'd save a few quid depending on how long it takes) and only switch at the last minute.
We fixed in January 2021.
 
Sonic hedgehog said:
We are currently with boi 3% fixed mortgage (for five years)
To break to a variable rate of 3.5% today costs 100 euro.
We want to switch to the avant 1.95% rate.
I note it takes a couple of months.
Should we break out of the variable rate now (while penalty is low) or hold off until we switch (we'd save a few quid depending on how long it takes) and only switch at the last minute.
We fixed in January 2021.
Click to expand...
How long have you been with BoI? If you haven't been with them at least a year, Avant won't take you.

Assuming you have been with BoI at least a year, are you living in/near one of the towns/cities that Avant will offer mortgages for?

Assuming you have a €300k mortgage, the extra 0.5% (3%->3.5%) will cost you an extra €1,500 per year in interest, approximately. Or €750 if the switch takes 6 months. It seems unlikely to me that your break fee would be that high in 6 months (but there are no guarantees), so staying on the fixed seems better.

Also, if the BoI offer included 1% extra cashback in 5 years, you will miss out on that by switching.

What is your mortgage balance?
 
Thanks. That's what I thought. I think the switch will take at least 6 months.
Approx balance outstanding is 250k.
We are with boi about 6 years.
Will stay fixed .
Cheers
 
With your balance of €250k, six months of the higher (3.5%) interest rate would cost an extra €250000*(6/12)*0.5/100 = €625 in interest, approximately.
 
Thanks Paul. I can't see break fee going that high when it's currently 0.
Who knows though?
Anyway I'm staying fixed
Cheers
 
There's no reason if you have all documents prepared this couldn't be done in 2 months. Speaking from experience.
 
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