ptsb wants €12k to redeem a mortgage with a balance of €6k

C

Cabo2000

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Hi all,

Looking for some advice. I have spent the last year focused on paying down my mortgage and I am pretty much done - with €6k remaining. I asked PTSB for a settlement statement this week - the estimate they gave me to close the mortgage is ~€12k.

I had previously closed a mortgage with PTSB on the same amount ~€200k balance and it only cost me €1k. The terms were different the original was a tracker, the current one is a fixed rate of 2.8% with 2.5 yrs remaining on the rate.

My question is the €6k reasonable - or should I try and challenge it?

Any guidance appreciated.
 
Cabo2000 said:
Looking for some advice. I have spent the last year focused on paying down my mortgage and I am pretty much done - with €6k remaining. I asked PTSB for a settlement statement this week - the estimate they gave me to close the mortgage is ~€12k.
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My understanding with PTSB is they have very generous terms for pre-payment, which from previous posts, it appears you have availed of.
I believe they seek to charge the full early redemption charge (on total outstanding, excluding any early repayments) if you move from merely a prepayment to full clearance.

This might be why you’re seeing the very high charge (relative to what you see as the ‘outstanding balance’). If so, suggest you just wait until the fixed rate ends, move to a variable, then clear it in full with guaranteed no charge.

On 6k balance you’ll be paying negligible interest so no point hurrying to clear it.
 
This does not make any sense to me.

Where are you getting the balance of €6,000 from?

If the balance is €6,000, then the redemption figure should be €6,000 + possibly a few hundred euro if you are breaking out of a fixed rate early.

So ask ptsb for an uptodate statement, or can you print one off online?

Then ask them for a settlement figure in writing and to show the calculation.
 
Zion2022 said:
This might be why you’re seeing the very high charge (relative to what you see as the ‘outstanding balance’). If so, suggest you just wait until the fixed rate ends, move to a variable, then clear it in full with guaranteed no charge.

On 6k balance you’ll be paying negligible interest so no point hurrying to clear it.
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Or dare I see see if you can reduce it further by paying some more early. 2.8% on 1k is €28 a year.
 
Could it have something to do with the strange but usually very beneficial way in which ptsb treats overpayments?

With every other lender, they reduce the balance.

But with ptsb they put overpayments into a credit account, so your mortgage might be €200k with €194k credit.

And there is a break fee calculated on the €200k.

Seems unlikely that this is the reason, but if the numbers are as your suggest, then it might be.
 
If my explanation is correct, then leave things as they are until the fixed rate ends in 2.5 years.
Switch to a variable rate.
There is no penalty for clearing a variable rate mortgage early.

Brendan
 
elcato said:
Or dare I see see if you can reduce it further by paying some more early. 2.8% on 1k is €28 a year
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I’d argue not worth the hassle. Throw the €6k into AIB 2 year fixed @ 2.75% (less dirt) and you’re talking pennies.

OP has overused overpayments. PTSB don’t reduce your monthly repayment for early repayments. Merely reduce interest charge. So by end of fixed term (whenever that is) the OP is likely to be in credit. I assume PTSB will refund the overpayment at that stage but I’d assume won’t credit him interest on it. A fairly unique situation I imagine.
 
I think to avoid issue above, if you cancel your monthly mortgage standing order, that PTSB ‘use up’ your prepayments rather than seeing you in arrears.
I’d call them to confirm but this might be the best course of action. Stop all payments. Use up your prepayments. Go variable when the fixed rate ends and clear your 6k + interest with no early redemption penalty worries.

Otherwise you’re likely to end up with a significant negative mortgage balance at the end. Worse case scenario whenever your regular monthly payments clear the 6k they could deem the mortgage fully cleared and enforce the early redemption penalty

Definitely worth a call with PTSB to confirm this is an appropriate course of action.
 
Cabo

The key issue here is to understand exactly what ptsb is doing.

I am only speculating. And others are speculating as well.

Get a written confirmation of the actual balance and a written calculation of the redemption fee and report back.

ptsb has made system errors before and it's possible that this is a systems error or an unintended outcome of their unique repayments system, so it would be useful for us to know about it to help others.
 
ptsb seems to reserve the right to charge early repayment penalties on fixed rate mortgages, but I don't think that they charge them in practice?



B: Overpayment Options

1. Overpayment Option 1: Lump-Sum Payments

(i) Lump-sum payments of any amount (where payment is made by cheque, the cleared funds) will be:

(a) applied, at the option of the applicant, to reduce the applicant’s monthly repayments and to continue to repay the loan over the remaining term or;

(b) in the case of annuity mortgages applied, at the option of the applicant, to reduce the loan term or;

(c) credited to the mortgage account thus reducing the loan balance outstanding and either allowing the funding of future underpayments or payment holidays with
overpayments. C:

(ii) Interest may be adjusted, in the case of monthly rest accounts, on the first day of the month following receipt of payment of the lump-sum and in the case of daily rest accounts, on
receipt of payment of the lump-sum.

(iii) 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).
 
Brendan Burgess said:
, I would get it in writing.
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I agree, but I would be calling first thing Monday morning also. Depending on the size of the OPs regular monthly repayments, he could be seen to be fully redeemed in a short time frame. Not sure how long a written correspondence could take.

I would be slightly concerned the knowledge of a random call centre person for such a niche situation so I would pursue both avenues simultaneously.
 
OK, I agree. Stop making any repayments so that the mortgage is not deemed paid off early and you end up with a €6k penalty.
 
Sue Ellen said:
  • 6 Months 1.50%
    1 Year 2.00%
    2 Years 2.27%
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Ah, must have been reduced in the past couple weeks/months. I put money away at 2.75% to match my mortgage hence fresh in my head

Either way, the point stands. The quantities of money at play are irrelevant. The only relevant consideration for the OP is to avoid the quoted early redemption charge of €6k.
 
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