Overpaying aib mortgage options.

T

tom1ie

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Hi all
Does anyone know how you go about overpaying your aib mortgage? Is it a case of transferring money from a current account to the mortgage account via internet banking?
If so can this be done weekly?
Is there a limit on the overpayments? (Monetary value and the amount of repayments p.a)
Is it just as easy to get mortgage account set up for internet banking as it is a current account?
Regards
Tom
 
Hi,

This applies to AIB only, as EBS sit on a different Mortgage platform.

I do this anytime I've a little best egg saved up. If it's a variable rate loan there are no limits to early repayments.

Firstly, I had to phone them up to get the Mortgage available on my internet banking.

Once I had that, I can just use the 'transfer between my accounts' option.

I transfer from current account to Mortgage, and that's it. It might take a day to appear on mortgage account, but you get the correct value date for it.

The default setting on AIB is that they recalculate your monthly repayment amount, and keep the term the same.
I'm not sure if they've any additional logic for small repayments.

Every time you make an overpayment, they send you a letter within a few days outlining you need repayment amount.

If you want to keep the repayment amount, and adjust the term, you need to send them a written letter as you're making an irrevocable change to your contract. It needs both signatures if jointly held. This is for each repayment. What I've done in the past is made a few repayments, and then just sent a single letter asking them to reduce the term by 1 year for example.
 
What happens if you do nothing with the letter that they send out and just keep overpaying? I'm in middle of switching to AIB from EBS and want to make regular monthly overpayments. I dont want to shorter the term, so can I just ignore their letter?

e.g. if our mortgage is E1500,set up by direct debit, and I set up a separate overpayment direct debit of E200 per month. What happens on month 2? Will they still take E1500 as the before, and my E200 will also go out? How does the monthly repayment reduce then, or instead of taking E1500 will they take E1498 (for example)?
 
username123 said:
What happens if you do nothing with the letter that they send out and just keep overpaying? I'm in middle of switching to AIB from EBS and want to make regular monthly overpayments. I dont want to shorter the term, so can I just ignore their letter?

e.g. if our mortgage is E1500,set up by direct debit, and I set up a separate overpayment direct debit of E200 per month. What happens on month 2? Will they still take E1500 as the before, and my E200 will also go out? How does the monthly repayment reduce then, or instead of taking E1500 will they take E1498 (for example)?
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By default they reduce the amount, so if you ignored the letter it's a reduced amount.

Getting into technicalities, but your extra 200 would be a standing order, not a DD, so you control it, not the Mortgage.

If you want to make a regular overpayment, you might be better off contacting them to see if they can for example set up to collect 1700 per month for 12 months, and then revert to normal. Other banks accommodate this, but their system might not cater for it.
 
Yes sorry you are correct - standing order. But my question is will the original E1500 of their direct debit decrease in month 2, 3 etc. (based on my standing order overpayments having the effect of reducing the monthly payment)?

I'd prefer not to alter the original DD amount up to E1700 in case they treat this as altering the original term of the loan, and may not allow me to go back - its not worth risking!

thanks
 
Ah, actually I'm not entirely sure what they do with 'small' regular overpayments. They might treat different to a lump sum (more than 1 normal repayment). All my repayments would have been lump sums (small lump sums!).

Just checked, and they tell you to set up a standing order for regular overpayments, so they must be able to handle them. Maybe someone else here has done it before and can advise.

(EBS is different, you send them an instruction to collect a greater amount until further notice - their system doesn't correctly allocate overpayments).
 
The treatment of overpayments with EBS one of the many reasons I am in the process of leaving them.
If, like me, you want the overpayment(s) to be applied to your loan to reduce future repayments (rather than to reduce the term), you need to write them a letter every time you want to do this. So if you want to make monthly overpayments, it's a separate letter every month, signed by both parties if a joint loan. An email is no good.
The process is a little less arduous if you want the overpayment to reduce the term, but not much.
 
I overpay my AIB SVR mortgage every month via Internet Banking. The default position is that the monthly repayment amount is reduced due to the overpayment - no letter required. As per RedOnion I receive a letter for every extra transfer stating what my new repayment will be. Once your account is added to Internet Banking you can transfer money between the accounts.
Example: My repayment is €1000 and I put in €200 extra via online Banking. My next repayment is €998 so I transfer in €202, next month €204 etc. In reality I tend to round up and would put in €210 for example instead of €202 further reducing repayment etc. I am hoping this will have a large effect! No standing order but I am logging into Internet Banking anyway and it takes 2 minutes.
 
RedOnion said:
Hi,

This applies to AIB only, as EBS sit on a different Mortgage platform.

I do this anytime I've a little best egg saved up. If it's a variable rate loan there are no limits to early repayments.

Firstly, I had to phone them up to get the Mortgage available on my internet banking.

Once I had that, I can just use the 'transfer between my accounts' option.

I transfer from current account to Mortgage, and that's it. It might take a day to appear on mortgage account, but you get the correct value date for it.

The default setting on AIB is that they recalculate your monthly repayment amount, and keep the term the same.
I'm not sure if they've any additional logic for small repayments.

Every time you make an overpayment, they send you a letter within a few days outlining you need repayment amount.

If you want to keep the repayment amount, and adjust the term, you need to send them a written letter as you're making an irrevocable change to your contract. It needs both signatures if jointly held. This is for each repayment. What I've done in the past is made a few repayments, and then just sent a single letter asking them to reduce the term by 1 year for example.
Click to expand...

So am I right in thinking that when I overpay the mortgage, let’s say by 100 in Jan, (1000+100)
Then in feb the mortgage will be 995(for example).
So if that’s the case I could overpay by 100 plus the 5 euro that the mortgage monthly payment has been recalculated as? And so on and so on?
Is this correct?
 
Yes, that's exactly how I understand it.

If you weren't paying by direct debit you could just set up a standing order to pay in 1,100 or whatever amount every month. I don't think that's an option except on older Mortgages.
 
tommygirl said:
I overpay my AIB SVR mortgage every month via Internet Banking. The default position is that the monthly repayment amount is reduced due to the overpayment - no letter required. As per RedOnion I receive a letter for every extra transfer stating what my new repayment will be. Once your account is added to Internet Banking you can transfer money between the accounts.
Example: My repayment is €1000 and I put in €200 extra via online Banking. My next repayment is €998 so I transfer in €202, next month €204 etc. In reality I tend to round up and would put in €210 for example instead of €202 further reducing repayment etc. I am hoping this will have a large effect! No standing order but I am logging into Internet Banking anyway and it takes 2 minutes.
Click to expand...

Excellent, thanks for that. That is what I had guessed.
 
tommygirl said:
I overpay my AIB SVR mortgage every month via Internet Banking. The default position is that the monthly repayment amount is reduced due to the overpayment - no letter required. As per RedOnion I receive a letter for every extra transfer stating what my new repayment will be. Once your account is added to Internet Banking you can transfer money between the accounts.
Example: My repayment is €1000 and I put in €200 extra via online Banking. My next repayment is €998 so I transfer in €202, next month €204 etc. In reality I tend to round up and would put in €210 for example instead of €202 further reducing repayment etc. I am hoping this will have a large effect! No standing order but I am logging into Internet Banking anyway and it takes 2 minutes.
Click to expand...

Great stuff thanks for letting me know. I’m paid weekly and was thinking of transferring money over every Friday, not sure if aib would allow that as it would mean a recalculation on their end every week and 4 letters a month sent out to me, or would it?
 
From my understanding you would get a letter every week. I have made lodgements twice one month and got two letters. I could be wrong but assume the letters are generated automatically so it is the price of a stamp that would be at issue?
You could call to ask them but they weren't too anxious on me making overpayments every month and were advising me to gather up some money and make a lump sum lodgement every year or every few months. As you can see I ignored that advice!
 
I overpay with AIB every month, manually (via the internet banking). I actually don’t think the letters are entirely automatically generated; they made an error in one one month (just the letter; actual balance and repayment changed by the expected amount), and sent a follow up letter the next month apologising for this.

Ive been overpaying every month for the last couple of years, and they haven’t complained yet, though I assume they’d prefer I did it less...
 
I have overpaid a couple of times recently and haven't received any letter. I use the Internet banking to pay off odd amounts to make it look like mortgage is reducing quite quickly when it actually isn't really. It reduces my monthly repayments but I think I may contact them in the new year re reducing the length which will actually save more in long term. Awaiting tracker redress.
 
marymidlands said:
I have overpaid a couple of times recently and haven't received any letter. I use the Internet banking to pay off odd amounts to make it look like mortgage is reducing quite quickly when it actually isn't really. It reduces my monthly repayments but I think I may contact them in the new year re reducing the length which will actually save more in long term. Awaiting tracker redress.
Click to expand...

Would you not be better off leaving the term length, overpaying your mortgage, and allowing your monthly to fall, thus allowing you to throw the difference off the capital, which will reduce your mortgage quicker.
Example:

Month 1:
Repayment 1000, overpay by 100, total=1100

Month 2:
Repayment 995, overpay by 105, total =1100, but this time there’s 105 coming off your capital not just 100 as in month1.
As the months/years go on and the mortgage repayments reduce, this means there’s more money to throw off the capital, which will eventually mean you’ve paid back your mortgage early without reducing your term at all.
 
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