No penalty/break fees to Overpay PTSB (UB) Fixed rate mortgage?

S

SPC100

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Hi,

Is this too good to be true?

I have a PTSB fixed rate mortgage, that was transferred over from Ulster Bank.

With the UB mortgage, you could overpay 10% of the balance a year without penalty.

PTSB say I can pay as much as I want with no penalty/break fees. There would only be fees, if I paid it off fully before the fixed term ends.

They didn't do a breakage fee calculation specific to my mortgage, they said it's their policy.

Can anyone else confirm this? It sounds too good to be true?

Thanks!
 
Hi SPC

Did they tell you in writing?
If not, get it in writing.

This might suit a lot of people who could avail of ptsb's new lower fixed rates.

Brendan
 
No it was verbal. I didn't belive it, and asked for it in writing. I also asked for the full redemption figure, to see what break fees it might indicate.

I quizzed the agent thorughly and pointed out all the reasons this would be very surprising, and they were 100% confident, and consistent in how it would be applied etc., I ran a second agent and got the same answers. Agents confirmed with colleagues twice. So either multiple agents are misinformed, or it is a very nice feature!

If it was true, I don't think it would help somone get a lower rate. They explained, that while you can overpay, you can't pay off the mortgage (penalty free) before the fixed term expires. So I don't think one could use it to switch.
 
If you look at this 2019 key post on how overpaying at PTSB works, it talks about the PTSB ability to build up credit by overpaying (for a payment holiday) and get a lower effective interest charge. You can see in this 2022 post on that thread, That "Paul F" confirms you can build up credit on a fixed rate mortgage, and you re-confirm it too!!!!

This 'build up of credit' is part of their "Flexible Mortgage Repayment Options" and is what happens if you don't instruct PTSB to reduce term or payments. So if you can build up credit on a fixed mortgage, it's not a large jump that they support term reduction and payment reductions too.
 
Here is another post implying someone could overpay a 5 year fixed rate mortgage.

This reddit thread confirms it too. Edit: Confusingly This update on that reddit thread from the OP, indicated they overpayed 5k on a fixed rate PTSB mortgage got charged 180 euro, but it seems they had a commercial mortgage, so that might be different.
 
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Included is their current docs about flexible mortgage repayment options "intended for use by former Ulster Bank mortgage customers whose mortgage has transferred to PTSB"
 

Attachments

  • PEP-flexi-options-ptsb-02.24.pdf
    155.6 KB · Views: 36
Quote from this reddit post, bold mine

Just copying my comment from another post about overpaying on a PTSB fixed rate mortgage

I used to work on the PTSB existing mortgages team. You can set up a regular overpayment to overpay by whatever amount you choose with your direct debit each month even if you are on a fixed rate. Your overpayment amount actually builds up as a credit balance and doesn't come off your principal balance but it is taken into account when your daily interest is being calculated. If you wish to make a once off lump sum payment you can also do this but you would have to leave it as a credit on your mortgage while on a fixed rate or you may face a penalty. But as I said you are benefitting from a lower interest calculation each month.

So you can leave this building up on your mortgage and when your fixed rate expires you can process a lump sum payment of your credit balance for no charge when you are on a variable rate. Then go back on a fixed rate once the lump sum is processed. Ask for a flexi options booklet the details are all in there
Click to expand...

This is in line with, but slightly different to what the agent said to me.
 
SPC100 said:
Quote from this reddit post, bold mine



This is in line with, but slightly different to what the agent said to me.
Click to expand...
I was moved from UB to PTSB last year. I am on a medium term fixed rate and asked about over paying last year. Was explained to me as per the post from reddit.

A very nice feature as you could build up your 'rainy day' fund as a credit against your mortgage and then it you need access, just stop paying mortgage and use repayments as accessible cash.
 
SPC100 said:
Hello TRS! So I guess when you overpay you see your monthly payment decrease?
Click to expand...
Hey

I unfortunately haven't been able to start on this yet due to other more pressing financial priorities, however, I hope to start later this year.

That is one option, or you can keep your monthly payments the same and decease the term. I will be going for the latter option.
 
I have it in writing today.

In a letter refering to my phone call and mortgage account.

We can confirm that there are no fees or penalities when making lump sum payments.
Click to expand...

It goes on to say, that a lump sum form is required to say if the funds are to be used for reduceing monthly instalments or to reduce the term. it doesn't mention the 'credit' directly.

So, once you are not fully paying off your fixed rate mortgage before the end of the fixed term, you can make unlimited overpayments. That's a great feature on a fixed rate loan. And It seems you can 'keep' them as a 'credit' that you could later use for a payment holiday, and as TRS mentions in this, way you can use it as part of your 'emergency fund', and you can get a DIRT-free return on it.

I have sent a small overpayment, and will report back.
 
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This is fascinating. So, for example, if I owe PTSB €600k, can I repay €200k, suffer interest on only €400k thereafter, safe in the knowledge that I could stop repaying my mortgage until I’d ‘used up’ €200k of credit?
 
Yes exactly! I thought I was very well informed on Irish mortgage market, I had assumed it was a misinformed adviser. But it seems legit.
 
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If you can raise the cash it's effectively a way to break out of your fix rate but without a penalty. E.g. pay down 590 in your case, and after the fix period ends pay off the rest.
 
The pdf you shared is super interesting as I'm in the process of moving house and securing a new mortgage.

My broker sent me all the options from the main lenders and mentioned PTSB allow unlimited overpayments on a fixed rate. (BOI/Avant allow circa 10% of monthly payment/capital outstanding respectively).
SPC100 said:
It goes on to say, that a lump sum form is required to say if the funds are to be used for reduceing monthly instalments or to reduce the term. it doesn't mention the 'credit' directly.
Click to expand...
From the pdf it would seem that if you pay a lump sum against a fixed rate mortgage then you will pay an additional charge:

"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)."

However there is no such stipulation for the Regular Overpayment Option where you mandate a payment of X over the normal payment.

This is very interesting to me, so you can use your 2% cashback or additional funds to over pay the mortgage each month and benefit from reducing interest payments.
 
Gordon Gekko said:
This is fascinating. So, for example, if I owe PTSB €600k, can I repay €200k, suffer interest on only €400k thereafter, safe in the knowledge that I could stop repaying my mortgage until I’d ‘used up’ €200k of credit?
Click to expand...
I am amazed by this and that it’s not more widely known.
 
Gordon Gekko said:
This is fascinating. So, for example, if I owe PTSB €600k, can I repay €200k, suffer interest on only €400k thereafter, safe in the knowledge that I could stop repaying my mortgage until I’d ‘used up’ €200k of credit?
Click to expand...
Interesting.

Say I owed PTSB €300K, hit 50, take my tax-free lump sum of say €100K from previous employment BOB. Put if 'off' the mortgage and divert current repayments back to pension till €100K used up.

Is there any scenario (interest rate level etc) that would make this financially beneficial I wonder?
 
Thought I'd share the PTSB Flexible Mortgage Repayment Options pdf I just received from my broker. Seems to have been revised from the version @SPC100 shared, but I haven't reviewed it in depth yet.
 

Attachments

  • PTSB Flexible Payment Options Brochure.pdf
    156.5 KB · Views: 35
The one I shared is on their website but is targeted to customers that came from UB.
 
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