Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

[FrankJnr]

I think you can, see the first part in red below says "the applicable interest rate offered by the bank at the time the mortgage load is repaid or converted". It then point you to note 3 and Note 3 says they will use the one that generate the lower ERC if there is more than one applicable fixed rate. That would be my read of it.


but how would that work for you?? I can only see two combinations:

1. 5 years green and 5 years LTV
OR
2. 4 year high value and 4 years LTV

Both kinda need to be higher than 5 years to begin with, so you only have 7 years LTV or 10 years LTV as option to choose from.
But 7 years LTV or 10 years LTV are both higher than them.

So the figure will be higher rate minus lower rate, meaning you still have to pay a charge based on the formula, no?




Reference: https://aib.ie/our-products/mortgages/Home-Mortgages-Regulatory-Information

Thanks for the reply

If I'm on the standard <50% LTV 5 year fixed @ 2.35%, and the green rate is 2.10%, there is a positive 0.25% difference that will lead to a small ERC.

However, am I right in saying that if I wait until at least 6 months into the 5 year fixed rate before making an overpayment that I'll fall between the 4 and 5 year rates, or even into the 4 year rate, and the 5 year green rate becomes null and void with regards to the calculations?

 

[BigPineapple]

Yes, any time between the start of 5 years you have and the first 6 months i think, your assumption should be correct based on the below from the same extract of the link I posted.

If you do it within the first 6 months, it should be 2.35%-2.35% for the "D" portion of the formula.

I would suggest to err on the safe side and do it by month 5 (Keep in mind you still have to make a request to bank to confirm the ERC for you (Takes about 5-10 days). It will only be valid for a about a week from when they issue it. The good thing about AIB is that you can email the overpayment form in.

Tip: Not sure if they are just busy or something is happening to the post, make sure to call them say a week later to follow up if you didn't get the letter. In my case I called on the 7th, letter was supposedly issued on the 14th (Valid until 21st is what they told me). Today is the 20th and I have yet to physically receive it. So had I not called on 16th, I would not have known and by the time I get the letter, it may have expired already.

2. When the remaining term does not exactly match a term for which there is a rate available, we will use the two closest rates and apply the most beneficial to you. For example, if you have 18 months remaining on your fixed term, we will use the more beneficial of the 12 and 24 month rates in our calculations.

 

[FrankJnr]

Yes, any time between the start of 5 years you have and the first 6 months i think, your assumption should be correct based on the below from the same extract of the link I posted.

If you do it within the first 6 months, it should be 2.35%-2.35% for the "D" portion of the formula.

I would suggest to err on the safe side and do it by month 5 (Keep in mind you still have to make a request to bank to confirm the ERC for you (Takes about 5-10 days). It will only be valid for a about a week from when they issue it. The good thing about AIB is that you can email the overpayment form in.

Tip: Not sure if they are just busy or something is happening to the post, make sure to call them say a week later to follow up if you didn't get the letter. In my case I called on the 7th, letter was supposedly issued on the 14th (Valid until 21st is what they told me). Today is the 20th and I have yet to physically receive it. So had I not called on 16th, I would not have known and by the time I get the letter, it may have expired already.

"Keep in mind you still have to make a request to bank to confirm the ERC for you"

Is this really a "must-do" requirement, even if my calculation says no fee is due? Is this to avoid the bank declaring I've broken the fixed rate and moving me on to variable rate?

I emailed both AIB Mortgages and the local AIB mortgage advisor, asking questions about overpayment and breakage fees (I switched to using email after being on hold for ages with the bank, and the advisor was on holidays), but no one has bothered replying.

It all sounds like the place moves at a snails pace and if at all possible, I'd like to avoid being left on hold for ages or waiting weeks for a letter to arrive.

 

[BigPineapple]

"Keep in mind you still have to make a request to bank to confirm the ERC for you"

Is this really a "must-do" requirement, even if my calculation says no fee is due? Is this to avoid the bank declaring I've broken the fixed rate and moving me on to variable rate?

I emailed both AIB Mortgages and the local AIB mortgage advisor, asking questions about overpayment and breakage fees (I switched to using email after being on hold for ages with the bank, and the advisor was on holidays), but no one has bothered replying.

It all sounds like the place moves at a snails pace and if at all possible, I'd like to avoid being left on hold for ages or waiting weeks for a letter to arrive.

It is not a must do but as others have said before, it is more for a peace of mind to confirm.

I'd say after you do it once or twice and the rate doesn't change, you should be good to go.

Email doesn't really work with them, I'd guess it is probably due to lack of staff and probably everybody having a mad rush to switch to fixed etc.

Call at 9am, works for me every time so far, get through within about 10-15 mins, it is at least quicker in my experience and you actually get to talk to an actual person.

 

[FrankJnr]

It is not a must do but as others have said before, it is more for a peace of mind to confirm.

I'd say after you do it once or twice and the rate doesn't change, you should be good to go.

Email doesn't really work with them, I'd guess it is probably due to lack of staff and probably everybody having a mad rush to switch to fixed etc.

Call at 9am, works for me every time so far, get through within about 10-15 mins, it is at least quicker in my experience and you actually get to talk to an actual person.

Thanks for the tips, much appreciated, will give it a try, I just hope they switch me to to a fixed rate mortgage now.

 

[Cathbarr]

Just an update on my issues with AIB. I got a letter last week and we received a refund of our over paid interest and also a refund of the difference between our requested payments. (We paid a lower repayment in June than we were supposed to due to the process taking so long so they reduced the mortgage by the difference). We also got a €50 goodwill gesture. So we were happy with the end result.

Mortgage fixed now for another 5 years at 2.35%! The entire process from start to finish took almost 2 and half months however. The person in the complaints department did tell me that things are taking around 4 weeks (20days) now rather than then 5 to 10 working days.

 

[Merowig]

Thanks for the reply

If I'm on the standard <50% LTV 5 year fixed @ 2.35%, and the green rate is 2.10%, there is a positive 0.25% difference that will lead to a small ERC.

However, am I right in saying that if I wait until at least 6 months into the 5 year fixed rate before making an overpayment that I'll fall between the 4 and 5 year rates, or even into the 4 year rate, and the 5 year green rate becomes null and void with regards to the calculations?

If you are on the standard 5 year fixed - I would have imagined they can't compare it to the green rate as the green rate is not generally available?

My understanding was be if you fix for 5 years with AIB - you do not have any break fee - as the rates for 1,2,3,4 years are the same or higher than the rate for 5 years. Or did I get this now completely wrong?

 

[FrankJnr]

That's my understanding also.

And for infinfwhen my rate change confirmation letter arrived it said that overpayments can not be used to reduce the term length, I can just reduce the monthly payments even though I've only fixed for approximately half the remaining tell of the mortgage.

 

[Merowig]

Reducing the monthly repayments is the way to go anyway - you can increase your overpayments by the reduction - you will get better cashflow with time - and at the end the term is reduced anyway as the mortgage will be paid off quicker.

 

[FrankJnr]

Reducing the monthly repayments is the way to go anyway - you can increase your overpayments by the reduction - you will get better cashflow with time - and at the end the term is reduced anyway as the mortgage will be paid off quicker.

You are probably right, but my personal preference is to reduce the term, and to see it reducing, I'm sure I'll eventually get used to that not happening though

Besides, I only fixed for 5 out of 10 years, so if the desire to reduce the term is still there, I'll still have the opportunity once I exit the fixed rate, unless I decide to extend the fixed rate that is.

 

[Merowig]

Brendan explained it much better here:

Key Post - "Overpaying my mortgage - should I reduce the term or the monthly repayment?"

This question comes up in a variety of ways and the threads often go off topic with irrelevant calculations. The interest charged each year is exactly the same - we will return to this. Reducing the repayment is simply reducing the payment you are contractually obliged to make under your...

www.askaboutmoney.com

The term will be reduced automatically at the end if you continue to overpay.

 

[FrankJnr]

Brendan explained it much better here:

Key Post - "Overpaying my mortgage - should I reduce the term or the monthly repayment?"

This question comes up in a variety of ways and the threads often go off topic with irrelevant calculations. The interest charged each year is exactly the same - we will return to this. Reducing the repayment is simply reducing the payment you are contractually obliged to make under your...

www.askaboutmoney.com

The term will be reduced automatically at the end if you continue to overpay.

Thank you, I'll give that a good read later when I finish work.

 

[masterboy123]

Hi All,

I am with AIB 5 year fixed green rate. I made the switch earlier this year.
Is there a way to check for break fee online?

I want to pay a lumpsump and reduce the monthly payments.

Thanks

 

[FANTANA]

Hi All,

I am with AIB 5 year fixed green rate. I made the switch earlier this year.
Is there a way to check for break fee online?

I want to pay a lumpsump and reduce the monthly payments.

Thanks

No you have to call them, they wouldn’t tell
Me over the phone either so had to wait a few days for a letter. When I was with PTSB they did tell me over the phone.

 

[masterboy123]

No you have to call them, they wouldn’t tell
Me over the phone either so had to wait a few days for a letter. When I was with PTSB they did tell me over the phone.

Is the break fee quote valid for 10 days?
Also, did you reduce the monthly repayment or overall term?

 

[masterboy123]

No you have to call them, they wouldn’t tell
Me over the phone either so had to wait a few days for a letter. When I was with PTSB they did tell me over the phone.

Is the break fee quote valid for 10 days?
Also, did you reduce the monthly repayment or overall term?

 

[FANTANA]

Is the break fee quote valid for 10 days?
Also, did you reduce the monthly repayment or overall term?

Think it was only valid for like two days after I got the letter. Nope same rate and repayment, just fixed for another 5 years (instead of 2 of 3 years left).

 

[BongoBangoBingo]

2 years in to the 5 year Green rate, I sent an email to AIB requesting a breakage quote.
About a week later I got a response via post with a quote of €0
Immediately sent in the rate change form selecting the same rate
Got correspondence via post about a week after that confirming my new 5 year term, expiring in 2027

Many thanks to all in this thread for raising awareness of this possibility!

 

[Paul F]

2 years in to the 5 year Green rate, I sent an email to AIB requesting a breakage quote.
About a week later I got a response via post with a quote of €0
Immediately sent in the rate change form selecting the same rate
Got correspondence via post about a week after that confirming my new 5 year term, expiring in 2027

Just a warning to anybody else considering doing this at the moment: AIB's mortgage amendment form says the following:

The interest rate you have selected may change between the time you complete this application form and the time we process it. The interest rate applicable at the time we process the application form will be applied to the loan.

So if you were to post the form before AIB announced any rate increases but they only process it after those increases become effective, you will be moved to the increased rate.

That is less of an issue if your current rate is very high (because you may still end up on a better rate even if your form doesn't get processed before any rate increases).

 

[BigPineapple]

I wonder if you can put in an instruction in the email when submitting, to say that if the rate has changed between when it was submitted and when they process it, that you don't want them to proceed.

i.e. you only want them to process it if it is the same rate as what you are expecting, I wonder will they entertain that.