AIB Mortgage overpayment electronically

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stovesoot

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Found this form and guide for overpaying mortgages with AIB https://aib.ie/content/dam/aib/personal/docs/our-products/mortgages/overpayment.pdf

Given the mortgage accounts are online within your AIB app
  • can you make an electronic transfer (assuming STV and no fixed restrictions)
  • will AIB automatically select an option in terms of reducing term, reducing repayments
(I know I can answer this with probably 20+ mins on a helpdesk call, but assume someone here has already done this)
 
Hi,

We make frequent overpayments on AIB fixed and variable rate mortgages.
The payments were made by EFT from a different bank to the mortgage account in AIB, never submitted any forms and never had any issue.

AIB will automatically reduce the principal, not the term for an overpayment so if you want to reduce the term you'll have to use the form I guess.
 
Thanks @PensionPlans
So the default is it comes off the principal and the monthly payments drop by reduced amount e.g. 100 over the same term.
I transferred 5k as a test last week but no communication from AIB yet - I guess I'll get the answer in next month's direct debit.
 
You basically add your mortgage account in the app. So you can see at all times what you owe and what interest was added.

As for overpayment, you transfer to the mortgage account and the principal is deducted immediately (That's what happen when I transfer mine, it is immediate from AIIB to AIB).

The monthly payment doesn't drop by the reduced amount but rather the reduction is the interest calculated will be based on the new balance owed. The more you overpay, the less interest.. naturally.

You don't have to inform AIB anything, they will by default keep the same term but reduce the monthly repayment. A letter will be issued out to you to tell you the latest balance (Which you will already know from the App as the App is instant) and the new monthly repayment they will take at the next payment date.
 
PensionPlans said:
Hi,

We make frequent overpayments on AIB fixed and variable rate mortgages.
The payments were made by EFT from a different bank to the mortgage account in AIB, never submitted any forms and never had any issue.

AIB will automatically reduce the principal, not the term for an overpayment so if you want to reduce the term you'll have to use the form I guess.
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Paying directly into the mortgage account without filling the form doesn't "break" your fixed term?
I've used the form the last 2 years for overpayment, break my fixed term as the fee were equal to 0, and going for a lower rate, but I'm at the lowest now, so no need to break anymore.
 
Fibo49 said:
Paying directly into the mortgage account without filling the form doesn't "break" your fixed term?
Click to expand...

Unless there is a loophole in the system, making an overpayment on a fixed term, would break the fixed term for the amount of the overpayment and could be subject to a break fee.

For simplicity, let's say you have a mortgage of €100,000 and the break fee is €1,000 on the entire mortgage.
If you make a €2,000 overpayment, they could charge you € 20

If you are not being charged break fees on your overpayments, there could be two reasons
1) The movement in rates since you took out your mortgage means that no break fee applies. This is very common with AIB because they messed up the way they calculated break fees.
2) Although there should be a break fee, the online system has not been designed to accommodate them.

Other lenders allow overpayments of up to 20% a year without break fees, but I don't think AIB has any such facility officially.

Brendan
 
For clarity, mine was a Variable mortgage.

Not sure about what user PensionPlans mentioned. I didn't try it on fixed mortgage.
 
Can I ask a silly question if I fix on AIB green mortgage rate at 2.1% for 5 years today as an example and next month I overpay can I ask how that works practically speaking.
Do I need to contact them first to check if there is a break fee?
If the break fee is 0 and I overpay but the the fixed green rate mortgage has gone up to 2.5% in the interim, will AIB apply the 2.5% rate when they are refixing post overpayment or have I got the process wrong? Thanks
 
pumba said:
Can I ask a silly question if I fix on AIB green mortgage rate at 2.1% for 5 years today as an example and next month I overpay can I ask how that works practically speaking.
Do I need to contact them first to check if there is a break fee?
Click to expand...
Yes, technically you should always contact them and request them to post you out the break fee (even though in the case of AIB's "green mortgage" it is very likely to be zero for the foreseeable future). Once the break fee letter arrives, you transfer the overpayment amount from your current account (AIB or non-AIB) to your mortgage account. You should do this within the time window specified in the letter.

pumba said:
If the break fee is 0 and I overpay but the the fixed green rate mortgage has gone up to 2.5% in the interim, will AIB apply the 2.5% rate when they are refixing post overpayment or have I got the process wrong? Thanks
Click to expand...
No, the interest rate on your fixed-rate mortgage will not be changed, no matter how much you overpay by. Just because you are overpaying, it does not mean you are breaking out of your fixed rate.
 
Paul F said:
Yes, technically you should always contact them and request them to post you out the break fee (even though in the case of AIB's "green mortgage" it is very likely to be zero for the foreseeable future). Once the break fee letter arrives, you transfer the overpayment amount from your current account (AIB or non-AIB) to your mortgage account. You should do this within the time window specified in the letter.


No, the interest rate on your fixed-rate mortgage will not be changed, no matter how much you overpay by. Just because you are overpaying, it does not mean you are breaking out of your fixed rate.
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Thank you that’s really helpful.
 
Hi All,

I just switched to AIB's Green Fixed Rate 2.15% and would to lodge a lumpsum.
Do I request a break fee or just transfer using the AIB app?

Also, will this reduce monthly payments?
 
masterboy123 said:
Hi All,

I just switched to AIB's Green Fixed Rate 2.15% and would to lodge a lumpsum.
Do I request a break fee or just transfer using the AIB app?

Also, will this reduce monthly payments?
Click to expand...
I switched too, same product and rate.
I requested break fee. They said it is only valid for 5 days, then you have to request a new break fee as they cant guarantee what the break fee will be after the 5 days. Having reading posts on here is likely to be zero anyway while on the green rate.
Anyway I requested the fee, 2 weeks went by, no paper in the door, rang again informed them I had not received it.
They said the will send it out again, when I did get it in the door the 5days from the date that was on the letter to the date I got it in the door had passed. It had expired before it got to my letterbox.
The letter did state that it will reduce monthly repayment and term would stay same and they gave the new monthly amount.
Once you get the break fee in the post you can transfer it from what ever account you like to your mortgage account.
 
masterboy123 said:
I just switched to AIB's Green Fixed Rate 2.15% and would to lodge a lumpsum.
Do I request a break fee or just transfer using the AIB app?

Also, will this reduce monthly payments?
Click to expand...
Technically you should request the break fee first but as @help999 says this seems to be taking a long time. The risk in waiting is that AIB could put up their rates at any time. And as @help999 also points out, because you are on the green rate your break fee is very likely to be zero anyway.

Yes, it will reduce the monthly payments, not the term.
 
help999 said:
I switched too, same product and rate.
I requested break fee. They said it is only valid for 5 days; then you have to request a new break fee as they cant guarantee what the break fee will be after the 5 days. Having reading posts on here is likely to be zero anyway while on the green rate.
Anyway I requested the fee, 2 weeks went by, no paper in the door, rang again informed them I had not received it.
They said the will send it out again, when I did get it in the door the 5days from the date that was on the letter to the date I got it in the door had passed. It had expired before it got to my letterbox.
The letter did state that it will reduce monthly repayment and term would stay same and they gave the new monthly amount.
Once you get the break fee in the post you can transfer it from what ever account you like to your mortgage account.
Click to expand...
That's really helpful information, thank you.

So did you take the risk and transfer money to your mortgage account even though the 5 days period has elapsed?

I recall it was 10 day period with PTSB for break fees.
 
masterboy123 said:
That's really helpful information, thank you.

So did you take the risk and transfer money to your mortgage account even though the 5 days period has elapsed?

I recall it was 10 day period with PTSB for break fees.
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Hi, that's no problem, share the knowledge i say. I did not yet, i just wanted to get to know the process, how long it take and how easy it is etc so going forward if i decide to make multiple overpayemts i have a better understanding. Cheers.
 
Anyone got break fee letter from AIB?
I contacted them last week requesting break fee but no letter received.
I am on AIB Green fixed rate.
 
masterboy123 said:
Anyone got break fee letter from AIB?
I contacted them last week requesting break fee but no letter received.
I am on AIB Green fixed rate.
Click to expand...
I'd say wait 7 days from the time you contacted them and call them again if nothing has arrived by then.
 
masterboy123 said:
Thanks.
But from what I hear the break fee quote is valid for only 5 days. Is this correct?
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I think that's right. But in your case that is largely irrelevant: because of a quirk in how AIB calculate break fees, if you are on their "green" fixed rate the break fee is very likely to be zero for the foreseeable future. More details in this thread.

So when you get a break fee quote and it is zero, you don't have to worry if it has expired.
 
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If your break fee is zero, confirmed by AIB, and if you were lucky enough to have the cash to pay off the total, can you just do that electronically from your current account - or are there any other formalities you need to consider when you pay off the full mortgage electronically rather than just paying off a lump sum ?
 
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