Overpaying an AIB mortgage

Discussion in 'Mortgages and buying and selling homes' started by WorstPigeon, Jan 30, 2016.

  1. boe

    boe Frequent Poster

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    If you go to Settings, you can change this to show the impact if you were to reduce the payment.
     
  2. WorstPigeon

    WorstPigeon Frequent Poster

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    Ah, thanks, just what I'm looking for. At the level of overpayment I'm looking at, it all looks pretty reasonable.
     
  3. boe

    boe Frequent Poster

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    No problem. I'm considering paying a lump sum myself at the moment. The temptation is to just reduce the term but the advice seems to be to reduce the payment amount via the lump sum but continue to pay your mortgage at the current rate as this gives the most flexibility if you run into difficulties in paying the mortgage down the line.
     
  4. celticbhoy32

    celticbhoy32 Registered User

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    Hi im thinking of throwing a lumpsum at my mortgage too. Just want to be sure doing the right thing. Mortgage taken out in 09 for 198000. Circa 160000 remaining at 3.5per cent. Currently fixed with aib (know i cant put lumpsum til back on variable). Thinking of releasing 10k. Is that even considered a lumpsum??
     
  5. Dermot

    Dermot Frequent Poster

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    It will be treated as a lump sum but just mention it when lodging it to them that you wish to keep your term the same for flexibility. They used to send you out a letter afterwards acknowledging it as an "out of course payment"
     
  6. bungaro

    bungaro Frequent Poster

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    really interesting thread as i was just coming in to ask something like the op.

    basically we're in negative equity and are 7.5 years into our 35 year mortgage. we want to trade up in the next 18 months and i'm hoping that we will break even when we sell. with a loan from our parents and some savings we should have our 20% deposit for the next place (and after reading this thread we will hopefully get under the 80% if possible for the lower ltv rate). we pay our mortgage fortnightly and we are on the aib 1 year fixed rate. i was thinking of over paying the mortgage slightly to reduce it a bit faster (and bring it towards break even price) but i am unsure of a couple of things after reading this thread.

    1. as we are on a fixed rate, would we get penalised for overpaying??

    2. can i just set up a direct debit or just pay here and there into the mortgage account if i have the correct details or would i need to contact aib to inform them of this beforehand??

    3. does the over payment come off the amount borrowed or does some of it go towards the interest??

    4. would overpaying be viewed negatively in anyway if going for another mortgage!?

    thanks
     
  7. Dermot

    Dermot Frequent Poster

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    Absolutely not.

    Also consider that in 18 months time you are going to have to allow for selling and purchasing costs. They could be significant.
     
  8. bungaro

    bungaro Frequent Poster

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    thanks dermot, will look into it a bit more so. might be a better option when we get the next mortgage. read something on the sunday times business section a while back, some guy was paying his mortgage by 1/3 fixed and 2/3 variable. never knew this was even an option but it was something to do with overpayment too. think he was saying that he didn't get charged for the overpayment as he was over paying on the variable section?!
     
  9. Dermot

    Dermot Frequent Poster

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    Those type of mortgages were common enough at one time and you correctly understand the overpayment in that situation
     
    bungaro likes this.
  10. Rory_W

    Rory_W Frequent Poster

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    much as i would never advocate borrowing on a credit card, is there any merit in borrowing the balloon required to bring mortgage below 80% on the credit card and then repay the credit card ASAP and benefit from 0.2% saving on mortgage ? Or a credit union loan for the shortfall ?
     
  11. Dave_Curry_IMC

    Dave_Curry_IMC Frequent Poster

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    The banks need to account for and be satisfied with the sources of the deposit funds. It's very unlikely that they would allow any part of it to be borrowed. Much better to get a gift for the shortfall.
     
  12. losttheplot

    losttheplot Frequent Poster

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    Give the much higher rate on a credit card it would have to be paid of quick to make it feasible. If you're going to get the money quickly to pay the credit card just put it off the mortgage.
     
  13. WorstPigeon

    WorstPigeon Frequent Poster

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    One other question on this. Say I end up overpaying substantially, and a couple of years down the line, prices haven't dropped, I've got a lower ltv, and switching looks like it makes sense. At that point, how would the bank I'd be applying to see the overpayment? Would they see it as a positive (demonstrates ability to pay), or not relevant at all? Or would they see it as a negative, because if I keep it up, it reduces the money they make off the mortgage in the long run?
     
  14. celticbhoy32

    celticbhoy32 Registered User

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    Hi just a query regarding overpaying on mortgage or transfering lump sum. I contacted aib re same and was told to transfer it to diff account, quoting my own account in the narrative. Is there a reason I can't just transfer directly to the account my direct debit goes to every month??
     
  15. WorstPigeon

    WorstPigeon Frequent Poster

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    I overpay mine through online banking; see http://www.boards.ie/ttfpost/94174973 . Had to add the mortgage account as a payee (just entered the account number and it appeared) but that was it. Been doing this for a year; no problems so far.

    When I rang them up I was told this wasn't possible, but the AIB support on boards.ie say it is, and it seems to work.
     
    Merowig likes this.
  16. celticbhoy32

    celticbhoy32 Registered User

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    Thanks for the reply. Spent last two days ringing bank of ireland. They've now come to the conclusion that the iban can not be added. I've (hopefully) worked around it by using revolut to transfer a test amount to the mortgage account (40 euro) if this goes through without issue I'll transfer larger sums and overpayments on a regular basis
     
  17. pclarkeo

    pclarkeo New Member

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    Last edited: Mar 6, 2017
    I was in AIB recently asking this very question. I'm on a variable rate.
    I was told if I pay off a lump sum in the first year a large proportion would just be interest. I was surprised by this after reading some points on here, namely the above and one poster saying that a great guaranteed return on your money would paying off a lump sum of your mortgage.

    Does anyone have experience with this?
     
    Last edited: Mar 6, 2017
  18. WorstPigeon

    WorstPigeon Frequent Poster

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    This _sounds_ incorrect. Definitely my overpayments have just come off the principal.
     
    Merowig likes this.
  19. pclarkeo

    pclarkeo New Member

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    Ya its doesn't sound right to me.

    With your overpayments, do you do overpay monthly and if so did you keep the same term? Is the new repayment amount recalculated monthly also?

    Just wondering how long it takes to recalculate. Say if I overpayed by 100 each month, would the recalculation happen before the next payment is due, adding to the over payment.
     
  20. WorstPigeon

    WorstPigeon Frequent Poster

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    Yeah, I overpay monthly, keeping the term the same. My mortgage payment's taken around the middle of the month, I'm paid at the end of the month, and normally overpay once I'm paid. By the time the next payment is due the payment is automatically reduced. Then they send me out a letter confirming the overpayment; if I keep it up for the whole term I'll have killed a small tree doing this... I've never tried overpaying just before the payment is due, so not sure how long it takes to take effect.