Hi, my understanding is that the letter is actually a legal requirement. It has nothing to do with where the funds are coming from, but that you are changing your mortgage contract. I have made several overpayments on my mortgage with AIB, and the only time we both need to send a letter is when I want to reduce the remaining term of mortgage (i.e. where I want to repayment amount to remain unchanged).
Firstly, clarification. Any overpayments are repayments of capital - i.e. they reduce the balance on which interest is calculated. However, by default what AIB will do is reduce the remaining monthly repayments over the existing mortgage term. There is a reason for this - the only contract you have with AIB is to repay the outstanding amount over a specified term. If you want the existing repayment amount to remain after an overpayment, you are changing the end date in your mortgage contract.
From my own experience, if you want to make overpayments, you have a few choices:
1. Use online banking, and just make the transfers yourself. Note - you will receive a letter from AIB on each occasion as they recalculate your repayments. If you mortgage isn't already available on your online profile, you just need to call them and get it added. It takes a day or 2 for the repayment to be reflected in your mortgage account. Likewise, it should be possible to set up a standing order, but I've never done this myself.
2. Ask AIB to make a permanent reduction in the term of your mortgage. This way the change is permanent and they will automatically take the increased repayment amount. However, the change is permanent, and my understanding is that you lose the flexibility of reducing repayments in future.
Normally I've made chunky overpayments (i.e. more than a normal monthly repayment amount). You would need to confirm with AIB that if you make on overpayment of say 150 that they won't automatically treat it as a part repayment of the next month and automatically reduce that (some bank's systems are set up to do this, but I'm not sure about AIB).
Best of luck.