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getting out of a fixed mortgage

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  • 04-12-2008 11:47pm
    #1
    Boom Boom
    Registered Users Posts: 240 ✭✭


    Hi guys,

    Does anyone know if it possible to get out of a fixed mortgage. I'm currently fixed till nov 09 and would like to get out to try save on the interest rate cuts


    any advice greatly appreciated


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    #2
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    Check with the customer services of your lender in the morning. There will more than likely be a penalty - could be like 6 months interest which will negate the savings on lower interest rate.


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    #3
    B1977
    Registered Users Posts: 410 ✭✭B1977


    yes, you can get out of a fixed rate mortgage.
    I was quoted €66to get out my mortgage which is fixed till November 2009.This amount is calculated on a daily basis by a formula the bank have.


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    #4
    unclebill98
    Registered Users Posts: 3,816 ✭✭✭unclebill98


    Boom Boom wrote: »
    Hi guys,

    Does anyone know if it possible to get out of a fixed mortgage. I'm currently fixed till nov 09 and would like to get out to try save on the interest rate cuts


    any advice greatly appreciated

    You can be charged anything from 3-6 months worth of interest.


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    #5
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Check your mortgage documentation. It must give you the method of calculating the breakage cost/redemption fee. Who is your mortgage with?

    One such method (don't know if every bank uses this) is:

    Early breakage cost = A x U x D%, where

    "A" is the amount of the prepayment or early repayment following demand by the Lender, or the amount of the conversion, and
    "U" is the unexpired term of the fixed interest rate period, and
    "D" is the difference between the fixed interest rate applying to the facility and the fixed interest rate which would then apply to the facility for the amount of "A" for the term of "U".


    E.G. EUR100k @ 7% for 60 months, full repayment after 36 months, current prevailing rate for 24 months= 5% early breakage cost EUR4,000 (EUR100k X 24/12 X 2% = EUR4,000)


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    #6
    B1977
    Registered Users Posts: 410 ✭✭B1977


    I was quoted €66 last Friday,today it was €411.I have only 10 months left and Im losing out on around €60 a month,not sure what to do.


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    #7
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    B1977 wrote: »
    I was quoted €66 last Friday,today it was €411.I have only 10 months left and Im losing out on around €60 a month,not sure what to do.

    With interest rates going down (and no chance of going up in the next 10 months*), I'd go for it. You stand to gain close to €200 minimum. It's not much, but it's better than nothing.

    * Ok, there's a chance, but it's so small you have more of a chance of winning the lotto in the next 10 months than interest rates increasing!


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    #8
    Nath
    Registered Users Posts: 89 ✭✭Nath


    Can you define what the "current prevailing rate" means?
    Is this the current rate for the fixed mortgage product you originally bought into?


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    #9
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Nath wrote: »
    Can you define what the "current prevailing rate" means?
    Is this the current rate for the fixed mortgage product you originally bought into?

    The "current prevailing rate" is the fixed rate currently being offered by the bank for the remainder fof the term.

    So, for example, if there is 2 years left on your fixed rate, then the "current prevailing rate" is whatever rate the bank currently quotes for a 2-year fixed rate.


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    #10
    Nath
    Registered Users Posts: 89 ✭✭Nath


    dotsman wrote: »
    The "current prevailing rate" is the fixed rate currently being offered by the bank for the remainder fof the term.

    So, for example, if there is 2 years left on your fixed rate, then the "current prevailing rate" is whatever rate the bank currently quotes for a 2-year fixed rate.

    Thanks for the info. Are the rates quoted typically APR rates?
    I'm not sure if the rate on my fixed mortgage agreement is APR rate or not.

    I'm with BOI who recently announced fixed mortgage rate cuts, and they
    present the new rates in non-APR and APR form, which do I compare my
    rate on the fixed mortgage agreement to?


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    #11
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Nath wrote: »
    Thanks for the info. Are the rates quoted typically APR rates?
    I'm not sure if the rate on my fixed mortgage agreement is APR rate or not.

    I'm with BOI who recently announced fixed mortgage rate cuts, and they
    present the new rates in non-APR and APR form, which do I compare my
    rate on the fixed mortgage agreement to?

    That's a good question! To the best of my knowledge, it would be the non-APR rate. But either way it would probably only be a difference of a few euro/cent (depending on the amounts we are talking about)


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    #12
    Wisheress
    Closed Accounts Posts: 74 ✭✭Wisheress


    Interesting to see the variation. I am due to be free of the fixed rate at the end of the year (have had the mortgage for over 2 years now). IIB just quoted me a penalty of 2600E to switch now! A switch would result in a saving of 140E a month.....


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    #13
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Wisheress wrote: »
    Interesting to see the variation. I am due to be free of the fixed rate at the end of the year (have had the mortgage for over 2 years now). IIB just quoted me a penalty of 2600E to switch now! A switch would result in a saving of 140E a month.....

    Is that quote in line with what your mortgage sanction documentation states? It is supposed to have the method of calculating the breakage cost/redemption fee


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    #14
    Wisheress
    Closed Accounts Posts: 74 ✭✭Wisheress


    dotsman wrote: »
    Is that quote in line with what your mortgage sanction documentation states? It is supposed to have the method of calculating the breakage cost/redemption fee

    Not sure to be honest, will have to have a look but I imagine it is or at least the IIB person on the phone seemed to suugest so. Thanks though. Darn mortgages: like many others I'm in a position where the fixed rate has hit hard, the value of my place has dropped by 70K, where selling is thus not an option, and renting doesn't meet repayments. I really hope that our generation will learn from the mistakes of the "Celtic Tiger" [so called]. Just had a look at the After Hours thread on the various stores that are going out of business and I can't believe we've got to this point. As I was always told, property is only a long term investment and I don't think I appreciated this fully.


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