Hi, We took out a €420,000 mortgage 6 months ago (term = 35yrs). 1st yr rate = 4.6%, remaining years is ECB+1.1% (5.1%) (AIB Tracker).
We used our savings of €25,200 and asked specifically in writing for this to be taken off the outstanding mortgage amount in order to reduce the term.
Our outstanding principle prior to sending in the cheque was €416,954. After our cheque is applied to our account the revised outstanding principle should be €416,954 - €25,200 = €391,754.
Using Karl Jeacles mortgage calculator I estimated that this would wipe off 4 years and approx 9 months off the term. However, AIB has just confirmed to me that my term has been reduced by 3years 5months which falls far short of that expected. Their explanation is that the outstanding principle prior to cashing our cheque is €416,954 plus interest accrued to date of €3,267 which totals €420,221 which is more than my original mortgage amount !!!! What is interest accrued to date? For each monthly payment i assumed that i was paying off some principle but mostly interest so with this in mind where does the 'interest accrued to date' come from?
We are very annoyed about this as it leaves us with a longer mortgage term than expected. Is this normal? Why is there a marked difference between Karl Jeacles calculator and AIB's term reduction??
Any advice gratefully received.
thanks
B
We used our savings of €25,200 and asked specifically in writing for this to be taken off the outstanding mortgage amount in order to reduce the term.
Our outstanding principle prior to sending in the cheque was €416,954. After our cheque is applied to our account the revised outstanding principle should be €416,954 - €25,200 = €391,754.
Using Karl Jeacles mortgage calculator I estimated that this would wipe off 4 years and approx 9 months off the term. However, AIB has just confirmed to me that my term has been reduced by 3years 5months which falls far short of that expected. Their explanation is that the outstanding principle prior to cashing our cheque is €416,954 plus interest accrued to date of €3,267 which totals €420,221 which is more than my original mortgage amount !!!! What is interest accrued to date? For each monthly payment i assumed that i was paying off some principle but mostly interest so with this in mind where does the 'interest accrued to date' come from?
We are very annoyed about this as it leaves us with a longer mortgage term than expected. Is this normal? Why is there a marked difference between Karl Jeacles calculator and AIB's term reduction??
Any advice gratefully received.
thanks
B
