Overpaying on ub fixed mortgage.

tom1ie

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Hi all
I am in the process of switching to ulster bank from AIB.
I will be switching to the 2 yr fixed at 2.3%. I have been told by ub that I can overpay my mortgage by 10% of the initial mortgage balance over the course of the fixed rate.
I overpaid when I was with AIB and the amount overpaid went straight off the principle without me having to do anything and I also received a letter in the post confirming as much .
Is this the case with ub?

Also my repayment amount reduced month on month when I overpaid every month with AIB. This was with a variable rate. I presume the same will be true of the Ulster bank mortgage even though that's a fixed rate, and I'll be overpaying every month also?

Thanks for the help!
 

so-crates

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In terms of the overpayment, you should tell them you want it to be a principal overpayment.

In terms of the repayment amount reducing, I do not have a fixed rate mortgage with UB, I have a tracker with them. They only seem to recalculate the repayment amount on certain occasions (from memory... interest rate change events, change of overpayment and every January even if nothing else has happened). I don't know that the same will apply for a fixed rate rate mortgage.
 

tom1ie

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In terms of the overpayment, you should tell them you want it to be a principal overpayment.

In terms of the repayment amount reducing, I do not have a fixed rate mortgage with UB, I have a tracker with them. They only seem to recalculate the repayment amount on certain occasions (from memory... interest rate change events, change of overpayment and every January even if nothing else has happened). I don't know that the same will apply for a fixed rate rate mortgage.
So I plan on overpaying every month, I guess that means I'll have to ring up just as I go to transfer online.
The bank told me I can setup my mortgage account for online transactions, have you availed of this?
Thanks.
 

so-crates

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I have authorised UB to directly debit it from my current account. In order to overpay, I wrote to them and instructed them to increase the debit by €xxx and to take it off the principal. They debit the whole amount so I don't have to do anything else.
 

tom1ie

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Ah I see. I don't want to set up a direct debit as I can't guarantee I'd have it every month so I was hoping for a more informal setup of transfer it online when I have it .
 

HollowKnight

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Ah I see. I don't want to set up a direct debit as I can't guarantee I'd have it every month so I was hoping for a more informal setup of transfer it online when I have it .
I have a fixed mortgage with UB. Currently I have a standing order set up to over pay by a comfortable amount each month. I only recently switched (2 months ago). So far, the direct debit I set up on opening the mortgage is still taking the same amount as agreed when we switched.
 

tom1ie

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I have a fixed mortgage with UB. Currently I have a standing order set up to over pay by a comfortable amount each month. I only recently switched (2 months ago). So far, the direct debit I set up on opening the mortgage is still taking the same amount as agreed when we switched.
Does your monthly amount (not the amount you overpay) reduce at all? For example with aib if my repayment was 1000 in January and I paid 2000 (1000 repayment plus 1000 overpayment) , in Feb my repayment amount would be 995. Is this the case with ub?
 

HollowKnight

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Does your monthly amount (not the amount you overpay) reduce at all? For example with aib if my repayment was 1000 in January and I paid 2000 (1000 repayment plus 1000 overpayment) , in Feb my repayment amount would be 995. Is this the case with ub?
I've only had two regular payments and overpayments and so far no.
So it may in the future. But if it doesn't, I'm okay with it.
 

so-crates

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Ah I see. I don't want to set up a direct debit as I can't guarantee I'd have it every month so I was hoping for a more informal setup of transfer it online when I have it .
I suspect then that you will need to inform them for each transfer you make.
 

so-crates

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I'm on an Ulster Bank variable rate and overpay each month.

If you wish for overpayments to reduce the term of the mortgage, you need to ring them and ask for mortgage term to be re-calculated based on overpayments made to date.

You can also check what term is left here

https://www.switch.ulsterbank.ie/MMMWeb/ubr/faces/login.jsp
My reading of the OP's post is that (s)he does not wish the term to be recalculated, rather (s)he wishes the repayment to be automatically recalculated over the same term. I suspect the same approach though will probably do the trick.
 

tom1ie

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My reading of the OP's post is that (s)he does not wish the term to be recalculated, rather (s)he wishes the repayment to be automatically recalculated over the same term. I suspect the same approach though will probably do the trick.
Yeah exactly, I want the term to stay the same but all extra payments to come off the principle.
With a variable mortgage that means the next month's mandatory payment is recalculated to a lower payment but with a fixed I presume the repayment amount stays the same . Which leads to the question if on a variable my mandatory payment would have reduced (eg 1000 down to 995), when on a fixed, the repayment stays at 1000 no matter how much extra money you are throwing off the principle, are you losing out?
 

RedOnion

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are you losing out?
No.
All the banks calculate interest on the daily outstanding balance.

Yeah exactly, I want the term to stay the same but all extra payments to come off the principle.
You're confusing terminology.
ALL overpayments reduce the principle balance.
But when fully processed, as it's an annuity loan, the bank needs to adjust either the repayment amount or the term. I suspect that UB don't trigger the recalculation on a fixed mortgage.
 

tom1ie

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No.
All the banks calculate interest on the daily outstanding balance.


You're confusing terminology.
ALL overpayments reduce the principle balance.
But when fully processed, as it's an annuity loan, the bank needs to adjust either the repayment amount or the term. I suspect that UB don't trigger the recalculation on a fixed mortgage.
Sorry red I ment to say that if a mortgage repayment is 1000 than any extra money I pay on top of that 1000 goes off the principle. But what I'm getting to is with a variable that means the next month's payment is reduced slightly due to the extra payment from the previous month, but with a fixed I presume this doesn't happen?
 

username123

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I am in the process of switching to ulster bank from AIB. I will be switching to the 2 yr fixed at 2.3%.
I'm thinking of doing similar myself, via BOI variable first, for cashback. Just wondering what swayed you to the 2 year fixed vs the 4 year? The 2 year is 2.3% and the 4 year is 2.6% - did the extra 0.3% do it over the extra 2 years of fixed price security? I'm humming and hawing about both and see Michael Dowling saying (https://www.irishexaminer.com/breakingnews/business/fixed-rate-mortgage-warning-on-ecb-rate-rise-861492.html) back in August that it would be better to fix for longer term to avoid coming off the fixed term just as rates rise, as we assume they will in a year or so. Anyone thoughts on how "best" fixed term, with 5 years probably being the upper limit? I'd be doing similar to the OP, overpaying by the 10%.
 

tom1ie

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I'm thinking of doing similar myself, via BOI variable first, for cashback. Just wondering what swayed you to the 2 year fixed vs the 4 year? The 2 year is 2.3% and the 4 year is 2.6% - did the extra 0.3% do it over the extra 2 years of fixed price security? I'm humming and hawing about both and see Michael Dowling saying (https://www.irishexaminer.com/breakingnews/business/fixed-rate-mortgage-warning-on-ecb-rate-rise-861492.html) back in August that it would be better to fix for longer term to avoid coming off the fixed term just as rates rise, as we assume they will in a year or so. Anyone thoughts on how "best" fixed term, with 5 years probably being the upper limit? I'd be doing similar to the OP, overpaying by the 10%.
Well I was attracted to the lower rate and listening to a lot of commentary out there the EU economy doesn't seem to be going as strong as they hoped what with the Italian economy Brexit etc. So I don't think they'll raise interest rates in the next 2 years but then again I could be completely wrong .
I just went for the lowest rate available on the market while still being allowed to over pay.
 

RedOnion

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@tom1ie
A bit off topic, but might be interesting to post to the switcher forum.
If I remember correctly you had a payment holiday in your mortgage. Did that cause any troubles switching to UB? E.g. did you gave to show 6 months repayments before you could switch?
 

tom1ie

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@tom1ie
A bit off topic, but might be interesting to post to the switcher forum.
If I remember correctly you had a payment holiday in your mortgage. Did that cause any troubles switching to UB? E.g. did you gave to show 6 months repayments before you could switch?
Yeah had the payment holiday from march to August 2018 and then I'm showing 6 months payments from August to Jan . I'll be signing tomorrow so nothings been brought up yet.
 

username123

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Well I was attracted to the lower rate and listening to a lot of commentary out there the EU economy doesn't seem to be going as strong as they hoped what with the Italian economy Brexit etc. So I don't think they'll raise interest rates in the next 2 years but then again I could be completely wrong .
I just went for the lowest rate available on the market while still being allowed to over pay.
Cheers, the lower rate is definitely a massive draw, 0.65% drop vs 0.35% drop for me.
 
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