Mortgage overpayments

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07_Maestro

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Hi everyone, I want to start overpaying on my tracker mortgage repayments with AIB to reduce the term of the loan by 5 - 10 years down the road, can I log in to AIB online banking and pay this manually? and will this payment come off the capital? or do i have to write to the lender and set up some agreement? I want to be flexible as in one month it could be a 250euro overpayment and another month it could be more, so don't really want to have a set overpayment agreed. Thank you for any advice, it is much appreciated.
 
First any payment you make comes off capital as AIB add interest to the mortgage periodically and your capital goes up.

My view is do not under any circumstances shorten your term. This is because for any reason that you need to reduce your payments you can do if you haven't altered your term. Altering your term will commit you to these larger payments.

You make the additional payment voluntarily.

AIB will either reduce the term or facilitate the increased payment. If I were in your shoes I would contact AIB to make sure that your term wont be shortened.
 
Your mortgage account will have a Sortcode and Account Number, or maybe a IBAN at this stage. You will find it on your mortgage documents from AIB.

AIB had a block on paying into AIB Mortgages on their own banking system, I am not sure if this is still the case.

Set up your Mortgage Account as a Payee on your internet banking. Note: You may have to use another bank, due to AIBs block! I used a BOI account.

If you have not already done so, you can setup access to your Mortgage Account on AIB Internet Banking. This will allow you to view your Balance and Payments.

Make payments online you AIB Mortgage accounts as you desire.

Do Not go to AIB to increase your payments (shorten the term). You cannot reduce them again without jumping through hoops. They will have you go through the same process as someone who cannot make their full monthly repayments.
 
Sorry to jump on here. We have a fixed rate with AIB but would like to start overpaying on our mortgage. Does anyone know can we still over pay with out affecting our rate?
 
With aib so doing this on an ongoing basis.
Just add the iban and you'll see the mortgage in your online
Do electronic transfer between accounts as normal
About 2 weeks later you get a letter stating reduced monthly amount.

However given trackers now 6% unless you are going to pay it off soon some of the fixed options might be better.
 
Cathbarr said:
Sorry to jump on here. We have a fixed rate with AIB but would like to start overpaying on our mortgage. Does anyone know can we still over pay with out affecting our rate?
Click to expand...
Overpaying had never been a legitimate grounds for withdrawing a fixed rate mortgage.

Their current policy is to allow €5k a year without trigger a break fee calculation.

AIB Fixed Rate Mortgage - now allows €5,000 early repayment annually

Dear Customer We are writing to let you know about our new AIB Fixed Rate Mortgage Overpayment feature that will soon be available to you. From 14 October 2023, all fixed rate mortgage customers can make payments, over the normal regular scheduled payments, up to €5,000 each calendar year for...
www.askaboutmoney.com

Don't get overly fixated on that as a limit. You can pay off as much or as little as you like and it won't effect your rate. There may be a break fee but depending when you took your mortgage out that could easily be zero.
 
WizardDr said:
First any payment you make comes off capital as AIB add interest to the mortgage periodically and your capital goes up.

My view is do not under any circumstances shorten your term. This is because for any reason that you need to reduce your payments you can do if you haven't altered your term. Altering your term will commit you to these larger payments.

You make the additional payment voluntarily.

AIB will either reduce the term or facilitate the increased payment. If I were in your shoes I would contact AIB to make sure that your term wont be shortened.
Click to expand...
But with the shorter term you would pay less interest over the duration of the loan.
 
Just a reminder - make sure you do not shorten the term or you will be contractually committed to higher payments and it may happen automatically.
 
skrooge said:
Overpaying had never been a legitimate grounds for withdrawing a fixed rate mortgage.

Their current policy is to allow €5k a year without trigger a break fee calculation.

AIB Fixed Rate Mortgage - now allows €5,000 early repayment annually

Dear Customer We are writing to let you know about our new AIB Fixed Rate Mortgage Overpayment feature that will soon be available to you. From 14 October 2023, all fixed rate mortgage customers can make payments, over the normal regular scheduled payments, up to €5,000 each calendar year for...
www.askaboutmoney.com

Don't get overly fixated on that as a limit. You can pay off as much or as little as you like and it won't effect your rate. There may be a break fee but depending when you took your mortgage out that could easily be zero.
Click to expand...
Thanks for the information. I rang them and they told me this. You can make up to 5k overpayment per calender year. But if we make the overpayment our payments will reduce which we do not to happen. We have decided to just save the money and hopefully in 18months we can pay off the mortgage in full.

There would be no break fee if we were to come off the fixed rate as we are on a very low rate, but the rate we would then be paying would be 2% more so happy to sit tight for now.
 
Cathbarr said:
Thanks for the information. I rang them and they told me this. You can make up to 5k overpayment per calender year. But if we make the overpayment our payments will reduce which we do not to happen. We have decided to just save the money and hopefully in 18months we can pay off the mortgage in full.

There would be no break fee if we were to come off the fixed rate as we are on a very low rate, but the rate we would then be paying would be 2% more so happy to sit tight for now.
Click to expand...


What's the rationale for waiting 18 months? If it's just to be in a position to pay off the mortgage in full you'll save more interest chipping away at it as soon as you can rather than going for the big bang approach.

However, if deposit rates (adjusted for DIRT) are above your current mortgage rate it makes sense to save rather than overpay for as long as that situation remains.
 
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