AIB Can I take cash instead of the 12% write down?

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Daithib

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Can the Central Bank therefore do something about this as it seems an unfair result not getting the cash but rather the bank decides to writ it off the mortgage balance?
I’m I correct in using the 12% as a fixed rate of the balance when the fixed term finished or are there other rates and also the 4%?
 
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Daithib said:
Can the Central Bank therefore do something about this as it seems an unfair result
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Why is it unfair?

It's standard in all the tracker redress cases.

Say that you were charged 5% instead of 2%.

Today, you would have paid €20k too much cash and your balance would be €30k higher than it would otherwise have been.
The redress programme would write down your balance and give you the money you have overapaid, so you would be in the same position as you would have been had they charged you the same rate from the start.

The Ombudsman probably tried to replicate that.

Brendan
 
Say you had a mortgage of €300k when you rolled off the fixed rate. Say your mortgage is down to €256k now.

You will get a write down of €36k.

So your mortgage will be €220k

If you want cash, switch to another lender and borrow €256k

Brendan
 
Brendan Burgess said:
Say you had a mortgage of €300k when you rolled off the fixed rate. Say your mortgage is down to €256k now.

You will get a write down of €36k.

So your mortgage will be €220k

If you want cash, switch to another lender and borrow €256k

Brendan
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Previous redress has tended to give the customer a cash payment though. So there is a difference here. Personally I don't have a problem with the money being taken off the capital rather than coming as a lump sum but I can understand that wouldn't be the case for everyone. The bank were at fault so the customer should have the option. The bigger issue for me is being put back onto a tracker for the reasons I outlined elsewhere. It is a great result but it does leave a sour taste that AIB couldn't just admit fault and go the whole way.
 
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Brendan Burgess said:
Why is it unfair?

It's standard in all the tracker redress cases.

Say that you were charged 5% instead of 2%.

Today, you would have paid €20k too much cash and your balance would be €30k higher than it would otherwise have been.
The redress programme would write down your balance and give you the money you have overapaid, so you would be in the same position as you would have been had they charged you the same rate from the start.

The Ombudsman probably tried to replicate that.

Brendan
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Unfair as it’s a far cry from the average €40k per customer as previous posts and plus the fact that it’s our money that the bank owe us so we should be able to get this redress and compensation in cash.. the tracker rate should have also been applied
 
blue_steel said:
Previous redress has tended to give the customer a cash payment through.
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That is not correct. But most people probably thought that as they do not understand how mortgages work.

I have explained it in a long post some years ago, but can't find it now.

Brendan
 
Daithib said:
Unfair as it’s a far cry from the average €40k per customer as previous posts and plus the fact that it’s our money that the bank owe us so we should be able to get this redress and compensation in cash.. the tracker rate should have also been applied
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You are mixing up a lot of issues.

The allocation between writing down the balance and paying cash is the correct way to do it. You had said it was unfair. But that is like saying 2 + 2 = 4 is not fair. You should be able to choose it to add up to 5.

Feel free to discuss the other issues in another thread, but keep this one on topic.

Brendan
 
Brendan Burgess said:
That is not correct. But most people probably thought that as they do not understand how mortgages work.

I have explained it in a long post some years ago, but can't find it now.

Brendan
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Unfortunately I understand mortgages all too well having dealt with this for so long. I'm pretty sure AIB previous redress has been cash payment but can't find the link now. Certainly empirically that has been my experience.
 
blue_steel said:
Certainly empirically that has been my experience.
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It has not been your experience in a redress issue on mortgages.

I have found the post I did on it which should explain it but it takes a while for people to get their head around.

AIB - How to check your AIB redress calculations

Understanding the calculations This is a very hard calculation to understand and explain. And AIB has not helped by doing it in a very convoluted way. I will try to explain the principle Let's say you have a €100,000 over 20 years at an interest rate of 5%. Your repayments were €660 per...
www.askaboutmoney.com
 
I think that is very unlikely.

They got a cheque ok, but not for the full amount.

They got a cheque and the balance on their mortgage was also written down.

Read the example I linked to.

Brendan
 
Brendan Burgess said:
I think that is very unlikely.

They got a cheque ok, but not for the full amount.

They got a cheque and the balance on their mortgage was also written down.

Read the example I linked to.

Brendan
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I think we are taking at cross purposes here. Obviously they didn't get the reduction in capital balance in the cheque but they did get the full amount of interest overcharge. That does not seem to be the case for Karen.
 
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I was trying to think is there a scenario where this would be possible.

The only thing I can think of is if someone made large capital repayments.

This is what would normally happen:

Scheduled balance @ 5% : €100,000
Corrected balance at 2%: €80,000
Overcharge: €30,000
The balance would be reduced by €20,000 to €80,000 and the borrower would get cash of €10,000

Now lets's say that they had paid €40,000 off their mortgage.

The actual balance would be €60,000

So the bank might give them a refund of the full interest charged.

Brendan
 
Brendan Burgess said:
No, we are not at cross purposes.

You just don't understand mortgage calculations.

Brendan
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They were actually with PTSB not AIB, my bad. But they very much did get the full amount of interest overcharge put into their current account. Not privy to the details except basic outline: bought 2006 borrowing €350K on a tracker. Switched to fixed in 2008. Got redress of 32K back in 2016 or so.
Can you clear up if the same criteria for calculation was applied in Karen's case. Or is the ombudsman using a different method to calculate redress for this cohort.
 
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blue_steel said:
I just asked again and my mistake they were with PTSB not AIB but they very much did get the full amount of interest overcharge back as a cheque.
Can you clear up if the same criteria for calculation was applied in Karen's case. Or is the ombudsman using a different method to calculate redress for this cohort.
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My understanding with this ruling is the solution is not the same as the previous issue.
There will not be a cheque for overcharged interest because the ombudsman has been unable to decide what a correct interest rate should have been in the first instance.

Instead, a compromise solution has been to write down 12% of the value of the mortgage when the customer exited their fixed rate mortgage. (Along with a cash payment of any interest they would have received on that amount since).

This assumes you still have a mortgage with aib. If not then it seems people will receive the equivalent in a cash payment.
 
zxcvbnm said:
My understanding with this ruling is the solution is not the same as the previous issue.
There will not be a cheque for overcharged interest because the ombudsman has been unable to decide what a correct interest rate should have been in the first instance.

Instead, a compromise solution has been to write down 12% of the value of the mortgage when the customer exited their fixed rate mortgage. (Along with any interest they would have received on that amount since).
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Thanks. That's the point I was making. That we are NOT being treated the same as previous tracker redress cases. This 16% figure is very similar to what we would have overpaid compared to being on ECB + 1.5% for the past 10 years. So obviously the ombudsman isn't pulling it out of the air. He's basing the compensation on the fact that we should have been on a competitive tracker but has stopped short of putting us on that same tracker going forward. As you say a compromise.
 
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Hi Blue Steel

I went out for a walk and tried to figure out how to explain this to you, and this might make it easier.

Mr Blue takes out a mortgage for €100,000 on 1 January at a rate of interest of 1%.
Mr Green takes out a mortgage for €100,000 on 1 January at an interest rate of 1%.

They both avail of the bank's great offer - a payment holiday for the first year.

At the end of the year, Mr Green looks at his mortgage statement and he sees that his balance is €101,000. €100,00 + €1,000 interest with no repayments.

To Mr Blue's shock, he finds that the balance is €110,000. They put the decimal point in the wrong place and and charged him 10% interest in error.

He calls into the bank and they see the error immediately and apologise and print off a new statement showing €101,000 and smile nicely at Mr Blue
who has gone red with rage. "You overcharged me €9,000. How dare you reduce the balance by that amount. Give me that in cash."

Mr Tdress comes along and suggests encourages Mr Blue to go to a solicitor over it.

Brendan
 
Here is another way of looking at it.

Mr Pink took out a mortgage of €100k.
BoI charged him 5%
He lost his job and today instead of getting the balance down to €70k , he owes €100k i.e. he is in €30k arrears.
BoI discovers that he should have been on a tracker and say that they have overcharged him €20k interest.

He demands the €20k in cash, but BoI correctly reduces the balance on the mortgage to €80k and gives him no cash.

Brendan
 
Fella said:
If I was AIB I'd give people cash as AIB would be profiting again giving you cash.
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That is a really good point. If a borrower has a good credit record and has good positive equity, AIB would be delighted to be allowed by the Central Bank to give them more money at 3% interest.

It was different for those who got their trackers back. the banks would have been lending at 0.6%.

Brendan
 
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