Not allowed to make regular overpayment off capital amount on First Active tracker

[russell6]

I currently have a First Active tracker mortgage and I would like to make a regular overpayment off my mortgage. As I want to try reduce the term of the mortgage I want this regular payment to come off the capital amount.

I contacted First Active to ask could I do this and I was told no regular payments are taken off the capital amount. I was told I could make a "Step-Up" payment which one piece of literature states "this amount does not directly come off your balance but has the effect of building a credit balance on your account" and another piece of literature states "the loan balance will be reduced by the overpayment for the purpose of calculating the interest"
Are both these statements saying the same thing???

So is it worth my while to make any overpayment on my mortgage with these conditions??

I am really keen to try reduce the term of the loan. While I am figuring out the above situation I am paying the excess money I have on a monthly basis into a BOI regular saver account at 7% - should I just continue with this instead until I have enough to make a lump sum payment which First Active are saying has to be 5% of original loan?

I thought the banks would be delighted I wanted to give them some extra cash but it doesn't appear so!

 

[shaking]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

My opinion would be to keep putting it in the BOI regular saver. You're getting 7% p.a. on this, ECB is currently at 2% so you're not paying anything near that in interest on your mortgage. I'd keep building up the lump sum and if and when rates change and you're paying more interest on your mortgage than you are getting on deposit I'd pay the lump sum off.

 

[asdfg]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

Remember anything over 5K interest is reduced to 3%
from BoI website on savings regular savings

A great rate of 7% EAR variable on regular savings up to €5,000
3% EAR variable on balances over €5,000

 

[russell6]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

I am aware of the reduction back to 3% over 5K, thanks.

And I am also more aware that I don't think I'll be able to save up enough to make a lump sum payment ie 5% of original loan. So the money I'm putting away each month in the BOI will never get to help my mortgage. This is the reason I'm keen to want to put the money in FA and pay off my capital amount but FA won't let me pay off my capital in regular overpayments

 

[henry]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

I also have a FA tracker and was in your situation in relation to wanting to pay extra to my mortgage facility.

What I was allowed to do was to pay a fixed amount per month - eg, if my repayments were to be 1,000 per month, and I wanted to pay an extra 500 per month, I asked FA to set up my repayments as being 1,500 per month.

This fixed amount does not reduce with the drop in interest rates, its fixed at 1,500.

Would this system be possible for you ?

 

[russell6]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

Yes this is possible but this extra money only sits as a credit balance in your mortgage account and is not taken off the capital amount and in turn will not reduce the term of the loan

 

[IrlJidel]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

Yes this is possible but this extra money only sits as a credit balance in your mortgage account and is not taken off the capital amount and in turn will not reduce the term of the loan

So do these 'Step-up' payments almost work like the offset-mortgage. The money in your mortgage account from these over-payments are offset off your balance for calculating interest portion of your payments.

[broken link removed]

"The amount of any Step-Up Payment(s) can subsequently be withdrawn from your mortgage account on request"

So when your steps-up payments reach 5% of capital could you not withdraw the money and then use it to make a 'Lump Sum' payment and then formally reduce the term of your loan?

 

[cazmayo]

Re: Not allowed to make regular overpayment off capital amount on First Active tracke

Hi,
I have an offset mortgage, and got a letter from FA saying that my mortgage payments would stay the same rather than reducing my monthly mortgage payment and that would result in my mortgage term being shortened by 4 years X months, however if I wanted to reduce my monthly payment due to interest rate cut that I needed to inform them.

So I dont understand how the money wouldnt be coming off the capital.

Cheers
Caz