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AIB Green Mortgage - Breakage Cost

  • 16-12-2019 11:17am
    #1
    Squall
    Registered Users, Registered Users 2 Posts: 1,345 ✭✭✭


    Hi All,

    Currently on a variable rate with AIB but considering changing to their 2.5% fixed Green Mortgage. Only thing holding me back at the moment is we may end up selling before the 5 years is up. Trying to figure out what the breakage cost might be. Its a bit unusual in that this longer term rate has a lower rate than their other shorter term fixed products (e.g. 3 year fixed at 2.85%). Their calculation is as follows:

    How do we calculate the early repayment charge?
    We calculate the early repayment charge using the following formula: (A) X (U) X (D %) = € ERC [early repayment charge], where:
    (A): Amount of your mortgage loan being repaid early, or converted to another interest rate.
    (U): Number of months remaining before the fixed interest rate is due to expire, divided by 12.
    (D%): Difference between your original fixed interest rate at the start of the fixed interest rate term, for the full fixed interest rate term,
    and the applicable fixed interest rate offered by the Bank at the time the mortgage loan is repaid or converted, for the period of (U).

    D% in this case would be negative by my reckoning e.g. switch in 2 years time would mean their 2.85% rate is the applicate rate so 2.5 - 2.85 = -0.35%

    Highly doubt they are going to give money back here!

    Anyone have any ideas? Trying to get an answer from AIB but no joy so far


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