Additional payments on a tracker mortgage - bank wont allow it.

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minion

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Im looking for some confirmation here on this.

My Dad has a tracker mortgage with first active. He called to tell them he wants to pay €3000 off the mortgage. They told him that he cant do this. They will let him pay it but it will be kept in an account until he adds enough to it to make it 5% of the mortgage amount, then they will pay it off the mortgage.

He also asked to make additional payments of €150 per month too. And they gave him the same story.

Now i have told him that they cant do this. Its a variable rate mortgage and as such he can pay it down whenever he wants and can increase the payments whenever he wants. He has asked them again and its the same story.

Can anyone tell me if they are actually allowed to prevent him from paying down his mortgage earlier in this way?

If they are breaking the law can you provide me with a link for something to print out and let him take with him when he speaks to them.

Thanks,and Happy Christmas and new year
 
This doesn’t answer your specific question about the legality of First Actives answers but it might be of some help.

Your Dad’s terms and conditions should clarify how the bank deals with lump sum payments and additional monthly payments.

Look at “Lump Sum Payments” in the link below, it says the lump sum payment option is only allowed on variable mortgages.

Also look at “Monthly Step Up Payments”, it makes no mention of this option only being allowed on certain mortgages types.

[broken link removed]
 
Thanks for the info.
He brought that into First Active already. They have no problems taking the payments, but they have this stupid idea that he needs to build up 5% of the outstanding value BEFORE they will pay it off the mortgage.

So there it will sit in an account and not reducing interest on the loan.
 
We have a tracker with Permanent TSB and they let us put in extra money each month in order to reduce the term of the mortgage. When you lodge the money they automatically put it into a credit account, and you have to then specify that you want it lodged into the principle of the loan.

While the money is in the credit account the interest calculated on the mortgage is on the principle minus the balance in the credit account.
 
He can pay in the money and it will sit as a credit on the account until it reaches 5% of loan, however that does not mean he will not benefit from interest saving, the interest will be calculated daily on net outstanding balance which will take into account the extra money he has paid in. It relates more to the recalculation of the mortgage term and repayments, once you pay in more than 5% then you have an option to reduce the payments or reduce the term officially. Until it reaches 5% the repayments stay the same and the term officially stays the same, although obviously the mortgage would finish earlier if you have paid in extra. The upside is if he for whatever reason needed to take back that money he could do so until such time as it reaches the 5%. I think its more a case of it was badly explained to him by FA, maybe he spoke to the call centre rather than a loan advisor. It is to his advantage to pay in more even if it is not capitalised until it reaches 5%.
 
They didnt make this clear at all. He asked for an account number for this other account so he could put extra money in from time to time without going into the bank. They said that he couldnt do that.
 
now I'm confused! What other account? I thought he was paying the extra money into the mortgage?
 
Sorry, just read your original post again, I doubt there is any other account, this was just the explanation for the credit on the mortgage account I would think. What he needs is a tracker flexible options form, this will give him the option to make the 3k lump sum payment and set up additional regular monthly payments. Occasional irregular payments would need to be made through a branch.
 
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