Key Post How overpaying a ptsb mortgage works

Coldwarrior said:
Not if you maintain the same term, the payment would drop to be the same as 200k mortgage.
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I'm note sure we are talking about the same thing. An Overpayment credit only exists in the context of the higher mortgage still contractually being in place for the higher monthly repayment. If in fact the ump sum is used to reduce the mortgage and its attendant monthly repayment then it no longer exists as a credit to be used for future holidays.
 
Duke of Marmalade said:
I'm note sure we are talking about the same thing. An Overpayment credit only exists in the context of the higher mortgage still contractually being in place for the higher monthly repayment. If in fact the ump sum is used to reduce the mortgage and its attendant monthly repayment then it no longer exists as a credit to be used for future holidays.
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Ah, if that's true then that's the catch, though I guess if you had planned to make regular overpayments anyway this would still make sense.
 
Have we confirmed that paying a lump sum off the mortgage results in a recalculation of the repayment and does not go into the credit account?

But say I have a contractual mortgage repayment of €1,000 a month and I have €40,000 lump sum available.
Can I not set up an over payment of €10,000 a month and cancel it after 4 months.

It is critically important for anyone with a ptsb mortgage when they are making a lump-sum overpayment to keep the term the same and reduce the scheduled repayment.

Brendan
 
i currently have an overpayment option. initially, i put in a lump sum. that lump sum sat as a credit, it did not reduce my payment or my agreed term.

in the options booklet (almost sure its available on their website) i have (may not be the current version, in a drawer a while) i can select to reduce the term or the payment where a lump sum is lodged. this is the same booklet that has the option of regular overpayments and underpayments.

i vaguely remember being advised by the bank that unless i requested the term or payment change that they wouldn't change. they also mentioned interest only mortgage was different but as i dont have interest only so he didnt elaborate.

not sure what happens where there is a rate change i.e payment is recalculated using balance including or excluding lump sum/credit which could effect those with just a lump sum.
 
Hi onequestion

That is very interesting. It is as I expected it, that any overpayment whether a lump sum or a regular payment would go into the "credit account"

onequestiononly said:
not sure what happens where there is a rate change i.e payment is recalculated using balance including or excluding lump sum/credit which could effect those with just a lump sum.
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I presume that they calculate the repayment based on the gross balance i.e. the balance excluding the credit balance.

Brendan
 
Is it true that taking a mortgage holiday is seen as a sign of risk of default and would likely reduce ability to switch mortgage away from pstb in the future? A friend that works in legal in AIB raised this point when I said I was planning on switching to pstb for the overpayment facility. I'm not sure if she has a valid point...
 
Brendan Burgess said:
Hi onequestion

That is very interesting. It is as I expected it, that any overpayment whether a lump sum or a regular payment would go into the "credit account"



I presume that they calculate the repayment based on the gross balance i.e. the balance excluding the credit balance.

Brendan
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I have a PTSB mortgage I have been overpaying regularly each month, I can confirm the credit accrued is used in the calculation of interest. Ie Gross balance minus accured overpayment credit. I have never sent a letter to PTSB on how to treat the regular overpayment.

I am not sure how lump sums are treated in regards to balance calculation. If you trust the lady on phone from PTSB she says it sits unused in a credit account unless they are informed by letter.

Separately I recently transferred a lump sum to the mortgage account and trusting the PTSB phone advice informed the bank by letter that I would like to keep the term the same and reduce the monthly. The new calculated demanded direct debit figure from PTSB is now much less than my orginal contracted amount with the bank.

In summary I see this as a great feature of the mortgage account but PTSB higher mortgage interest rate needs to be consider also, so essentially they are indirectly charging for this service/facility.
 
I have a 5 year fixed rate mortgage with PTSB. At the time of draw down I'm pretty sure they told me I couldn't overpay while I was on a fixed rate.

The leaflet is not the clearest it says:
"Please Note: Certain conditions apply when making regular overpayments to fixed rate loans. See the important information at the inside back cover under “Fixed Rate Loans” for full details."

Then in the "Important Information" section at the back it just lists the usual paying of a fixed rate loan early can have penalty's text.

"Fixed Rate Loans WARNING: YOU MAY HAVE TO PAY CHARGES IF YOU PAY OFF A FIXED RATE LOAN EARLY. Whenever (i) repayment of a loan in full or in part is made or (ii) with the agreement of permanent tsb, the loan is switched to a variable rate loan or other fixed rate loan, before expiry of the Fixed Rate Period (hereinafter called the “Early Termination”), the applicant shall, in addition to all other sums payable as a condition of and at the time of the Early Termination, pay a sum equal to the permanent tsb’s estimate of the loss (if any) arising from the Early Termination. In the calculation of the said loss, permanent tsb shall endeavour to apply in so far as it is fair and practicable. This is how the fee is calculated; C = (I-S) x R x (M-T)/12 “C” is the charge to compensate for the loss (if greater than 0), “I” is the swap/ Important Information Section 4 – Terms, Conditions and other Important Information BMK3625 2016 NEW BRAND FLEXI OPTIONS 80% A4.indd 18 21/12/2018 12:53 19 Section 4 – Terms, Conditions and other Important Information market fixed interest rate for the term of the Fixed Rate Period at the date of its commencement, “S” is the swap/market interest rate for the remaining fixed period, “R” is the amount of the fixed rate loan balance paid or switched at the date of Early Termination, “M” is the Fixed Rate Period (in months) and, “T” is the time expired of the Fixed Rate Period at the date of Early Termination (in months). Here is a worked example; “I” = 5%, “S” = 3%, “R”* = €100,000, “M” = 24 months, “T” = 12 months. C = (5%-3%) x €100,000 x (24-12) / 12 So, C = 2% x €100,000 x 12 / 12, C = €2,000 *For the purposes of the above fixed rate mortgage breakage fee worked example, a fixed balance of €100,000 representing the loan balance to be paid or switched at the date of Early Termination is used for “R”. In the actual calculation of the fixed rate mortgage breakage fee payable to the Bank, a reducing loan balance approach is used to calculate “R”. This approach is used to take into account the fact that, after the switch or Early Termination, the loan balance typically reduces due to scheduled repayments for the remainder of the fixed rate period. The fee calculated using a reducing balance approach will always be lower than the fee calculated using a fixed balance approach. Please contact your local Permanent TSB branch for further information. "
 
There seems to be recommendations here to apply for a mortgage far in excess of the value of the house.

I thought the bank only releases a principal amount that maps to the difference between the original deposit and the purchase price?
 
Perhaps I read it wrong but Coldwarrior was suggesting a split mortgage totalling 378 and I think I held on to the fact that Housebuyersqs had a 120k, getting close to 500k for a 420k house.
 
Cloudd said:
Perhaps I read it wrong but Coldwarrior was suggesting a split mortgage totalling 378 and I think I held on to the fact that Housebuyersqs had a 120k, getting close to 500k for a 420k house.
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He'd be borrowing 378 (90%) against a house worth 420.
The fact he has other money on deposit is irrelevant.
 
RedOnion said:
Because PTSB offer different rates for new business and existing customers.
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Good point. If I was to go variable and pay a lump sum off and then fix I would only be able to fix at 2.95% as I would now be an existing customer.
Coldwarrior said:
Split, 300k fixed and 78k variable, then pay off the 78k straight away
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I was hoping this would solve above issue but Red Onion correctly points out:
RedOnion said:
The rate of 2.5% is only available up to 80% LTV.
You need to work out if the extra cash back on a small amount outweighs a higher rate on the total.
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Since the mortgage would be 90% at the start I guess I wouldn't be able to fix the 300k at the 2.5%. Looks like I could only get 2.8%. The extra repayments over 3 years would pretty much wipe out the extra cashback.

I might do the split and fix option with 80% LTV (336K) so fix 300k and variable on 36K to get €6720 cashback - assuming there are no flaws in that!

I will also look and see if this idea is doable with any of the other cashback banks.
 
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Duke of Marmalade said:
This looks like an excellent facility. One slight catch is that the 2% monthly cashback is not available on the Overpayments but that is only €6 a month in your example, so seems worth the price for the flexibility. Would the the €300 not be better off in a pension policy, but let's not go there as it is covered adequately in other threads.
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The 2% cashback IS available on the overpayments. I am getting this, my overpayment gets me €6 cashback back per month which covers the account maintenance fee. Thanks
 
Brendan Burgess said:
I was vaguely aware of this but it was brought to my attention this morning by someone who is choosing ptsb because of this facility.


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In simple terms, if you overpay your ptsb mortgage, the overpayments go into a separate credit account.
The interest is charged on the net balance.

If you need cash in the future, you can't get the money back, but you can use the overpayment account to fund the monthly payments.

So if you are taking out a €200k mortgage for the first time and you don't know whether to go for a 20 year mortgage or a 35 year mortgage?
Or you are not sure about how much you should have in rainyday fund?

Take out a 35 year mortgage where the scheduled repayment will be €800 a month.
But pay it as if it were a 20 year mortgage, €1,100 a month.

You will pay the same interest as a 20 year mortgage.
But if your circumstances change after 2 years, you will have build up a fund of €7,200 which will keep up your repayments for 9 months.

If you had taken out a 20 year mortgage, you would be in the same net position, but you would now be going into arrears.


Brendan
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Is this on a fixed or variable mortgage? Is this still available? Thanks
 
Just saying said:
Is this on a fixed or variable mortgage? Is this still available? Thanks
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Yes it is still available, I was with PTSB on a fixed rate, this was so handy, The only negate is that their follow on rates are high hence the reason why I switched before I got myself in a position where I couldn't!
I had credit built up and when I switched it came off the redemption figure and i was refunded the amount of credit I had built up.
I applied to the new bank for the full amount, that way I got to get the overpaid credit back.
For example say my mortgage was 200,000 and say I had a overpaid credit of 20,000, the interest is only being charged on 180,000
So rather that leaving the 20,000 in the bank to rot away put into the ptsb overpay facility.
When you go to switch, apply for 200,000, the ptsb mortgage is redeemed at 180,000 and they refund you the 20,000!
 
help999 said:
Yes it is still available, I was with PTSB on a fixed rate, this was so handy, The only negate is that their follow on rates are high hence the reason why I switched before I got myself in a position where I couldn't!
I had credit built up and when I switched it came off the redemption figure and i was refunded the amount of credit I had built up.
I applied to the new bank for the full amount, that way I got to get the overpaid credit back.
For example say my mortgage was 200,000 and say I had a overpaid credit of 20,000, the interest is only being charged on 180,000
So rather that leaving the 20,000 in the bank to rot away put into the ptsb overpay facility.
When you go to switch, apply for 200,000, the ptsb mortgage is redeemed at 180,000 and they refund you the 20,000!
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I currently have an application in with PTSB so would like to clear up a few things, if you don't mind.

Are there any limits on what you can overpay by for a fixed rate mortgage? Are there any extra charges?
 
OEP1990 said:
I currently have an application in with PTSB so would like to clear up a few things, if you don't mind.

Are there any limits on what you can overpay by for a fixed rate mortgage? Are there any extra charges?
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I overpaid by 350 per month, no penalty, no limits, there may be a break fee when you actually got to use that credit to reduce term or principle.
 
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