Extra payments to an Ebs variable mortgage.

Discussion in 'Mortgages and buying and selling homes' started by advice pls, Feb 13, 2014.

  1. advice pls

    advice pls Frequent Poster

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    Hope the title is ok.

    I have gotten some great advice on here and am hoping to overpay our EBS mortgage now we are no longer in a fixed rate. I spoke to them and while we can just pay extra into the account itself and leave our DD at the original amount he did say the system can identify this as an early payment and therefore reduce the DD amount. We would need to write to them each time to tell them to treat it as an extra payment to avoid this. We could increase the direct debit as we did with the fixed rate but I would like the flexibility of adding anything spare at the end of the month rather than being tied to that amount.

    Has anyone else done this? Is it easy enough to get them to react to the letter or is the direct debit the best way to go?
     
  2. ebs_customer

    ebs_customer Frequent Poster

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    Ive done this a lot, just transferring extra payments in via online banking.
    Basically the overpayment just sits there as a credit on the account reducing the capital amount owed until you instruct them how to handle the overpayment.
    I used to drop in a letter but the branch accepted my instruction via email most recently.
    You can choose to reduce the monthly payment or the term and you will also be credited for any interest overcharged in the time between your overpayment & the changes being executed.
    They are slow to recalculate & adjust the repayment, in my experience it can take up to 2 months or so from the instruction, however there is no real loss unless you are under pressure to have the repayment reduced. Obviously this is unlikely if you are in the position to make overpayments in the first place!
    In my opinion reducing the repayment amount is the most prudent option as it reduces your mandatory minimum payment amount which can be useful to use your cashflow elsewhere when required. It is really simple to make the additional payments online so wouldn't be a big deal to do it regularly if you wanted.
    I took the worse (in my opinion) option of reducing my term however I recently asked then to restore my original mortgage term and they indicated that it would be no problem thankfully.
    I'm just waiting to get notice of my revised repayment amount.
    Overpayment can make a lot of sense, at current rates you would need to make 6.6% or more elsewhere taking account of DIRT to match the mortgage rate - which is risk free of course.
     
  3. advice pls

    advice pls Frequent Poster

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    Thanks a million for your reply. We had been making a small overpayment but as it was a fixed rate they were reducing the years as we couldn't just add payments when it suited us.

    Has it ever affected your direct debit when you transferred the money in directly?
     
  4. ebs_customer

    ebs_customer Frequent Poster

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    No impact on the direct debit unless you instruct them to revise the repayment amount or there is a change in TRS or interest rates.
     
  5. advice pls

    advice pls Frequent Poster

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    That's great to hear thanks again.
     
  6. oceallachain

    oceallachain New Member

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    So does this mean that if you credited the account with funds on one day and didn't instruct them on how to handle the overpayment for two weeks let's say, then you would be renumerated the interest that you paid over those two weeks?
     
  7. ebs_customer

    ebs_customer Frequent Poster

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    Yes, that's correct you will be refunded the interest on the credit balance on your account in the interim period.
    This is as one would expect but is just as well because they can be very slow in recalculating the repayment amount.
    I need to remind them myself about my latest additional payment as I'm still waiting for a repayment reduction some 3 months later.
     
  8. SlurrySlump

    SlurrySlump Frequent Poster

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    I used to do it with the EBS once a year, every year. Make a lump sum payment. I always sent a letter following this as the lump sum sat in the account as a credit.I asked them to capitalise the credit sum to reduce the term rather than the monthly payment. However you can also opt to reduce the monthly repayment and leave the term the same.
     
  9. letitroll

    letitroll Registered User

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    Hi circling back on this

    Does EBS still provide this over payment option.

    Effectively an offset account - where the overpayment is redrawable but while set against the principal it reduces your interest payments?

    There was a KBC option like this previously but that has been withdrawn so surprised to see EBS providing something similiar
     
  10. Blackrock1

    Blackrock1 Frequent Poster

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    interested to know this also
     
  11. ebs_customer

    ebs_customer Frequent Poster

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    I haven't seen any concrete evidence that they will allow withdrawal of overpayments.
    I wouldn't advise making any overpayments that you might potentially need to redraw without written confirmation from EBS that it will be allowed.
     
  12. gnf_ireland

    gnf_ireland Frequent Poster

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    100% agree with this. You should always reduce the repayment amount with over payments, rather than the term. If you continue to overpay on a regular basis, you will end up reducing the term by default. However it does give you the flexibility to reduce the repayments back to standard if you wish for a period of time for whatever reason.

    Lets say your mortgage is 1,000 a month, and you make an overpayment that reduces the repayment amount to 975 a month. You can go into online banking once a quarter (or year if you choose) and pay the difference - 75 a quarter or 300 a year, thereby maintaining your original payment amount. If you are planning to throw 'excess' money at the mortgage on a consistent basis you will be doing this in any event.

    Absolutely. This is risk free 6-7% return that is not available anywhere else. As someone quoted in a similar post to me last night - the German Bond rate which is 'deemed' risk free is currently paying -0.8% !!
     
  13. gnf_ireland

    gnf_ireland Frequent Poster

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    No, I think this is not an offset option. This is simply a standard over payment option on a variable mortgage. It does not allow you to re-draw the funds later (like the offset account would). It just means whether the over payments go against the term or the repayment amount.

    The KBC option that has been withdrawn - I have been unable to find any other bank in Ireland doing the same thing at the moment when I checked last Autumn. I asked each and every main lending bank and they all said it was not a feature they were currently offering.

    Absolutely second this. I had a letter from KBC stating I could redraw the funds, but when I queried this (before making another over payment in early 2016 and triggered by a discussion on AAM) they claimed it was sent to me in error and I had to redraw all over payments made immediately or lose the facility to redraw them. I had to go through their internal complaints process to get final confirmation on what was redrawable and what would not be. I was willing to bring it all the way to the FSO if required - but I had a letter stating it was redrawable originally.
    I would definitely not assume any over payment is redrawable without writing confirmation from their mortgage department and not just from the branch.
     
  14. letitroll

    letitroll Registered User

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    Last edited: Jan 5, 2017
  15. letitroll

    letitroll Registered User

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    Last edited: Jan 5, 2017