definition of 'arrears'

M

mpg67

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I have an AIB buy to let mortgage and in the good times made additional repayments over and above my normal annuity payments. These totaled about €5,000. So that the loan balance is €5k lower than it should be. Lately I have missed 2 monthly repayments and I have received a letter from AIB to state that the loan is in arrears. The total of the two missed payments is approx €1,500. To my mind the loan is not in arrears but is ahead of schedule by €3,500.
I have spoken to AIB and while they accept that I have made 'out of course' repayments, the fact that a payment has been missed means that the loan is classed as being in arrears.
Has anyone come accross this situation before and how did they deal with it?
 
Seems ridiculous.
If I borrow €100k over 10 years, pay off €95k in year 2 and then miss then next monthly repayment, the loan is deemed to be in arrears. To classify the loan as being in arrears seems to be a very technical definition. Surely the loan is ahead of schedule in terms of repayments?
Should the banks not take these payments into account before classifying it as being in arrears?
What view would the courts take?
 
technically you are in arrears.
you are also technically ahead of schedule.
if you wanted to get back the overpayments, usually the bank would want you to repay the arrears then you would be able to get the full overpayments back.
 
A court would not entertain them if they were to issue proceedings. And they certainly wouldn't for €1500.
 
Technically, as rameire says, you are in arrears.

Like you said, you made out of course payments in the 'good times'. The bank may see that curcumstances have changed and that your mortgage has to be managed as an arrears case. If they didn't manage it like this, the FR would come down hard on them for not doing so. The regulator is keeping a close eye on how banks are managing arrears now.

While your case is exceptional in that you have paid well ahead was owed, best thing to do is contact the bank and try and come to an arrangement to clear arrears if you are going through difficulties.
 
Rameire, does this mean if you made a lump sum overpayment in the past and are still ahead of schedule that the bank would allow you to draw down the overpayment? Would negative equity come into it?
Sybil
 
This shows one of the risks of overpayments on your mortgage.
These overpayments save interest in the long term, but this equity is hard / impossible to liquidate in an emergency.

The OP has an agreement to pay x every month. If X is not paid, the mortgage is in arrears. The bank are right to contact you and tell you that you are in arrears on your loan agreement. But, this does not mean that the bank intend taking you to court in the morning, just that something will have to be done about this.

However, the previous repayments should give the OP more leverage to renegotiate with the bank. But, you will have to do this. Don't ignore the issue. Contact the bank with a plan
 
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