Trackscandal
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To calculate how much the cash payment will be you need to know what interest you paid on the €12,000 since July 2011.
You will need to know the actual interest rate - this will vary from person to person , depending on your Loan to Value and whether you fixed or not.
If will also depend on when your fixed rate ended. If it finished in October 2008, you will be getting 12 years' interest. If it finished in 2012, you will be getting 8 years interest so it will be less.
If you have all this information, you can work it out exactly, but if you don't, you can use 4% as a very rough estimate.
Here is a typical case for the guy whose €100k mortgage came off a fixed rate in July 2011 and has been on the SVR since. For simplicity , I have used the average SVR for each year.
View attachment 4465
So he paid €4,314 interest on the €12,000 write down.
His mortgage was €100k, so that works out at 4.3% of the balance.
Brendan
Another method of calculating the cash payment is add up the interest you were charged from the date you exited the fixed rate and multiply this by 12%.
Brendan,I was thinking of that since, but it's not correct.
Take a mortgage of €100k at the start with 20 years to go.
View attachment 4665
The €12k is 12% of the balance at the start of year 1.
But it's 20% of the balance in year 10.
Brendan
Hi,I am not near a computer but if you run your model with an $88,000 starting principal versus a $100,000 starting principal in your first model above then the cumulative interest charged to year 10 will be 88% of your first model.
Brendan,Hi Scandal
Think of it like this.
Let's say that there were 13 years left when the fixed rate ended and that was ten years ago.
The balance then was €100k
The balance at the start of this year was €12k
Under the Ombudsman's ruling, the borrower is entitled to the full interest on the €12k
Under your system, they get only 12% of the interest paid.
Brendan
Hi jb1234,If you want to calculate the amount of redress. Think of it as a savings account. Unless you owe less than the 12% on your mortgage now. Use a compound interest calculator.... Start with the 12% and calculate for each interest rate and period since you rolled off fixed in 2009 or 2010
Hi RedOinion,This is completely wrong, and will mislead people who don't understand interest calculations.
Brendan,I was thinking of that since, but it's not correct.
Take a mortgage of €100k at the start with 20 years to go.
View attachment 4665
The €12k is 12% of the balance at the start of year 1.
But it's 20% of the balance in year 10.
Brendan
Hi RedOinion,I doubt you are intending to mislead, but that's what you are doing.
Take a really simple example of 100k annuity at 3% over 20 years, and we're now 10 years into it.
The interest charged would be 23,986
12% of that is only 2,878
However, 3% interest charged on a 12,000 balance over 10 years is 4,192
That's the refund due to the customer.
Hi Brendan,Hi Track
Sorry, you are wrong on this one. And if you have an AIB model which shows it that way, it's wrong too.
AIB is deemed to have overcharged you €12,000 10 years ago.
They must refund you that with interest.
Let's say, for example, that you had paid off the mortgage in full 9 years ago.
AIB would still have to pay you interest for the full 10 years.
So your argument that you made monthly capital repayments on the €12,000 is not relevant.
Brendan
Exactly."refunding by cheque interest charged on that 12% capital amount during the intervening period".
Hi RedOinion,Exactly.
So the AIB statement says exactly what Brendan and I have been saying. Thanks for clarifying.
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