As I believe that Howitzer is incorrect, I have temporarily deleted the replies which are just confusing.
I have written a guide to
Mortgage Repayment Calculations , which people might need to read to understand the principles behind this.
Here is the PTSB's brochure on [broken link removed]
B. Overpayment options
1. Lump Sum Payments
(i) Lump Sum Payments of any amount will be
(a) credited to the mortgage account thus reducing the loan balance outstanding and allowing the funding of future Underpayments or Payment Holidays with Overpayments or
(b) in the case of Annuity Mortgages applied, at the option of the Applicant, to reduce the loan term or
(c) applied, at the option of the Applicant, to reduce the Applicant’s monthly repayments and to continue to repay the loan over the remaining term.
(ii) Interest may be adjusted, in the case of monthly rest accounts on the first day of the month following receipt of payment of the Lump Sum and in the case of daily rest accounts, on receipt of payment of the Lump Sum.
(iii) Where the lump sum payment is made in respect of a fixed rate mortgage prior to the expiry of a fixed interest rate period, the applicant shall pay an additional sum calculated in accordance with the conditions relating to fixed rate loans as provided in General Mortgage Loan Approval Conditions applicable to the Applicant’s mortgage. (Please see important information on “Fixed Rate Loans” at the end of the terms and conditions).
(iv) In order to reduce the term of the mortgage or, the monthly repayment, from a lump sum payment, the applicant must complete the appropriate section in the attached application form.
(v) In the case of Annual Interest Mortgages, Lump Sum Payments will only be included for interest calculation purposes from the 31st December of that year and thereafter.
(Note these are very old mortgages where interest was calculated once a year - not relevant - Brendan Burgess)
(vi) No interest benefit will accrue for Lump Sum P ayments on former Irish Permanent Endowment mortgages or permanent tsb Interest Only or pension backed mortgages unless the credit is transferred off the capital.
(Not sure why this is - but does not apply to repayment mortgages)
(vii) This option cannot be exercised in conjunction with Underpayments and Overpayments