AIB Fixed Rate Mortgage - now allows €5,000 early repayment annually

[The Oggster]

I was contacted by AIB saying an overpayment I recently made will NOT go off the term as instructed, instead it will decrease the monthly repayments. I will need to wait until 2027 until fixed term ends

I know you said in another thread that you prefer reducing the term but in my opinion you're better off reducing the monthly repayment.

We pay extra every month off our mortgage. We receive a letter a while later saying that the break fee is zero and our new monthly payment is €XXX. If you keep over paying, you will pay off your mortgage early anyway. But I have an option to not overpay some months if I need the money for something else. If I had shortened the term I'm stuck paying the higher amount.

You can also increase your overpayment every month by the amount the scheduled payment has reduced.

 

[Merowig]

I know you said in another thread that you prefer reducing the term but in my opinion you're better off reducing the monthly repayment.

We pay extra every month off our mortgage. We receive a letter a while later saying that the break fee is zero and our new monthly payment is €XXX. If you keep over paying, you will pay off your mortgage early anyway. But I have an option to not overpay some months if I need the money for something else. If I had shortened the term I'm stuck paying the higher amount.

You can also increase your overpayment every month by the amount the scheduled payment has reduced.

This is the correct way to do it - improves your free cash flow if needed and the term is reduced anyway at the end.

 

[The Oggster]

Hi
I am on 5 years fixed mortgage with AIB ending in 2026.
Apart from 5 thousands, can I pay extra monthly ?
My worry is will they make me kick out of current fixed rate and take me another one which is way higher interest or no?

You took out your mortgage in 2021 so the rates are now higher. You can pay as much as you like and as often as you like without a fee.

The €5,000 is in addition to what is covered under AIB's rules for calculating the break fee. So if the rates were now lower than the rate you fixed at, it would give you leeway to pay off without incurring fees.

 

[skrooge]

Thank you so much . If I pay more, can they make me take another fixed mortgage rate or will my current one remain the same

The only way you will lose your fixed rate is if you choose to give it up. Overpayment had no bearing on this.

 

[Dr Strangelove]

Each month you manually transfer an extra 100 to your mortgage, so you are paying 1,000 per month in total. If you keep doing that, you'll have it paid off in 20 years, instead of 23.

Do you mean 1100 here?

 

[The Oggster]

Do you mean 1100 here?

RedOnion was making the point that if your current scheduled payment is 1000 a month and you pay a lumpsum, which reduces your scheduled payment to 900, then you can pay the 100 as an extra payment each month so your actual payment remains at 1000.

The scheduled payment is the calculation of the rate, time remaining and balance. So it changes each month if you continue overpaying as the balance is reducing by more than the calculation has figured.

 

[Pinoy adventure]

Any idea of the timeframe of an overpayment going true from submitting a paper application form too be processed ?

 

[orwell]

So I have AIB green mortgage fixed at 2.1% for 5 years. Taken out November 22
I have overpaid monthly since I drew down and always got the standard letter ‘there has been no penalty for this payment ‘letter

Today I received letter for recent overpayment and it seems they have calculated my last 2 overpayments and taken that off the new allowed 5.000 and informing me I’ve another 4290.00 before the end of the year to be in for the current overpayment allowance
Any additional overpayment may result in an overpayment charge as per my terms and conditions

I presume that as my terms and conditions allowed me to over pay with no fee due to the way they calculate this, this still remains??

 

[Pinoy adventure]

So I have AIB green mortgage fixed at 2.1% for 5 years. Taken out November 22
I have overpaid monthly since I drew down and always got the standard letter ‘there has been no penalty for this payment ‘letter

Today I received letter for recent overpayment and it seems they have calculated my last 2 overpayments and taken that off the new allowed 5.000 and informing me I’ve another 4290.00 before the end of the year to be in for the current overpayment allowance
Any additional overpayment may result in an overpayment charge as per my terms and conditions

I presume that as my terms and conditions allowed me to over pay with no fee due to the way they calculate this, this still remains??

I’m not sure if it still remains but if possible overpay the balance of this years €5000 and repeat starting early next year

 

[BigPineapple]

So I have AIB green mortgage fixed at 2.1% for 5 years. Taken out November 22
I have overpaid monthly since I drew down and always got the standard letter ‘there has been no penalty for this payment ‘letter

Today I received letter for recent overpayment and it seems they have calculated my last 2 overpayments and taken that off the new allowed 5.000 and informing me I’ve another 4290.00 before the end of the year to be in for the current overpayment allowance
Any additional overpayment may result in an overpayment charge as per my terms and conditions

I presume that as my terms and conditions allowed me to over pay with no fee due to the way they calculate this, this still remains??

At 2.1% rate, I don't think you need to worry about the 5K limit they introduced earlier in the year (which was supposed to be an added bonus - Probably for most people who signed up with much higher rates).

Read your T&Cs from your pack for the formula for calculation. You can compare it to the thread link below, it should be exactly the same and therefore should come out as unlimited overpayment at 2.1% as RedOnion said on second post of this current thread

Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

Moderator's note: Because of a quirk in how AIB calculate their break fee / early redemption charge, you can make unlimited overpayments on some of their fixed rates without penalty. Or you can break out of your existing AIB fixed rate and re-fix on a different rate, again without penalty. (You...

www.askaboutmoney.com

 

[orwell]

Yes it is exactly as pointed out in the original posts . With the quirk in the way AIB calculate it I wouldn’t have a penalty
I’m presuming after I exhaust the 5,000 per annum the letters would return to ‘no early redemption fee’ or whatever way they usually phrase it

 

[The Oggster]

Yeah, that's happening with me too. The €5k allowed overpayment amount is reducing with each payment.

But after that it'll go back to the calculation to work out a fee which will be €0.

People should be mindful that the zero fee is based on fixing at a lower rate than is available now. When your rate is up and you fix again at a higher rate, there may be a fee due.