Paying off Mortgage balance on fixed rate

Asus X540L · 14-07-2023 1:35pm #1

I locked myself down to a 3% fixed rate with BOI for the next 5 years.

I'm not sure if this was a good idea as I'm thinking of paying off my mortgage early.

Could anyone give me a rough idea how much penalty I'd be charged for paying off ~66,000 in one lump sum?

Would be be brutal?

Jim2007 · 14-07-2023 2:36pm

Ask the lender they will be able to give you the exact figure, we can only guess...

limnam · 14-07-2023 2:51pm

The penalty calculation for a lot of banks is on the back of the mortgage statment

Asus X540L · 14-07-2023 3:13pm

https://www.boards.ie/discussion/comment/120851107#Comment_120851107

Thanks, I actually found it.

A*(B%-C%)*D / 365

I'm wondering could you great guys explain "C - The annual percentage rate available to us for depositing an amount equal to "A" on the money market for a period equal to D"

(A = amount you pay off early, B = Fixed Rate %, D= time left on fixed rate)

the_amazing_raisin · 14-07-2023 3:59pm

https://www.boards.ie/discussion/comment/120851226#Comment_120851226

As far as I know C is effectively the ECB interest rate

Since that has been going up, it's likely that C-B results in a negative number, in which case there is no charge for paying back any amount of your fixed rate

This is effectively what happened to me, I'm on a fixed rate with UB that got transferred to PTSB. When I asked PTSB about it they said they'd waived the redemption charges for all those mortgages since interest rates were so high now

You would need to confirm with BOI that this is the case before making an overpayment

Asus X540L · 14-07-2023 4:13pm

https://www.boards.ie/discussion/comment/120851430#Comment_120851430

I like the sound of that.

the_amazing_raisin · 14-07-2023 4:15pm

https://www.boards.ie/discussion/comment/120851494#Comment_120851494

Yeah I'll say that we've managed to pay off quite a bit more than the normal 10% allowance this year without any penalties.

Hoping to have the mortgage beaten down as much as possible before the fixed rate ends in 2025 and all those rate increases hit home 😱

As I said, you'll need to double check with BOI but hopefully this helps

whatever76 · 19-07-2023 9:41am

Slightly different scenario - 2 yr fixed rate of 2.9 up in Nov with BOI and rang yesterday as thinking of paying a lump sum in ( sadly cant pay all !) . I am already overpaying monthly by the max 10% allowed without penalties.

I owe approx. 160k and 18 years left . The agent said I can do this but I could be charged a fee of which he said he does not know if I get hit or even how much - he said its all on day and market drives it or something to that effect. Any rough idea what this fee could be - if I put say 20 k off the 160k thanks !!

limnam · 19-07-2023 10:09am

https://www.boards.ie/discussion/comment/120869665#Comment_120869665

Why not just wait till December?

whatever76 · 19-07-2023 10:52am

oh can I do that? -my thinking is get it down before my fixed is up as new rate will prob be over 3%

limnam · 19-07-2023 12:51pm

https://www.boards.ie/discussion/comment/120869926#Comment_120869926

Once the fixed is finish you can pay off as much as you like.

So the first day it ends you can then put down your 20k with no penalty.

kingtut · 19-07-2023 12:56pm

https://www.boards.ie/discussion/2058305061/paying-off-mortgage-balance-on-fixed-rate

Did you get the 3% recently? My current term ends in December and I am looking to switch mortgage providers as the cheapest I could see with BOI was 4.1%

Q&A · 19-07-2023 9:36pm

The break fee is a function of market rates and how they have moved since the day you fixed. Back then the ECB rate was on the floor and swap rates would have been near zero. Since then the ECB have put up rates and market rates have also moved. All that is a long winded way of saying Your break free is almost certainly zero.

pat_sconce · 23-07-2023 10:42pm

https://www.boards.ie/discussion/comment/120851508#Comment_120851508

The chances are that rates will be on the way down by then.

As above, break fee for full or partial repayment will almost certainly be zero.

But I would also review your pension before putting a sum off the mortgage. If you have a strong pension, then pay off part of the mortgage, but if it's not particularly high value, then look at options.

40% tax savings is a lot more attractive than 2.9% mortgage savings

Paying off Mortgage balance on fixed rate

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