Bank won't revert mortgage term - advice please!

Hi all

Would greatly apppreciate your advice on my tracker mortagage, I rang the bank hoping to restore the term to it's orginal duration but BOI are playing hard-ball, saying it's not my decision!

I drew down the mortagage (of about 270,000) in mid-2004. The term was originally 35 years. A few years ago, I requested that the term be reduced to 20 years and that the payments be adjusted accordingly. I then went further a couple of years ago and requested that my repayment be upped to 2,000/month.

I just checked with the bank and we've knocked a fair deal off the capital at this stage. Current oustanding balance is around 175,000. I asked how much my monthly repayments would be if I restored the term to its original 35 years and it appears it would be around 675/month.

The extra cash we would save would really come in handy as my wife and I are trying to save for a new house in the near future, we desperately want to move out of the apartment!

Just two questions from me:

1) The bank say that, even though I have a contract stating a term of 35 years, the decision to restore the term to this lies with the underwriters and that I need to request a change in writing!! Can they do this?

2) Would I be better off continuing to repay the mortgage at my current level or would I be better off putting the extra money into a deposit account instead?

Thanks very much for your advise, curious as to what others would do in this situation!

The bank are right. Once you requested the mortgage term to be changed instead of just making extra payments, you changed the contract. It is up to the bank whether to allow you back to the original terms.

The second part depends on what rate you are paying on your mortgage.

My mortgage is a tracker - ECB + 1.1% I think.

On the first point, I requested the change to the term over the phone, not in writing. A verbal request can't be binding, can it?

Hi All
I am in a similar boat as Ardent - Drew down mortgage (Tracker Mid 2006 with a 35 Year Term) Have overpaid for the last 3 years and current term is 14 Years, if I continue with the same level of overpayment.
Wording used in a Fax to bank was as follows.
"Please can you increase the payment on my Mortgage A/C XXXXXX up to the amount of €XXX Fixed per fortnight going forward until further notice; please take the overpayments from the capital amount".
Was of the option that if income was to reduce then I could always go back to the original payment with out any question from the bank.
Thanks
-Gal1

Ardent said:

A verbal request can't be binding, can it?

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To be honest, it can - a verbal contract is binding, but in this case, it's not clear that the bank has done it's best to make sure you knew what you were getting into. If that's the case you may still have something to argue with them. Can you remember exactly what you asked for? Did you ask them to change the term, or arrange a simple overpayment? The overpayment would have the same effect, but is something you should then be able to cease at will.

Did the bank accept the verbal order to change the term on it's own? Did they write to you afterwards to confirm the change to your contract? If not, then I think your original terms would still apply, and you can argue them back to what you both have in writing.

-Gal1 said:

Hi All
I am in a similar boat as Ardent - Drew down mortgage (Tracker Mid 2006 with a 35 Year Term) Have overpaid for the last 3 years and current term is 14 Years, if I continue with the same level of overpayment.
Wording used in a Fax to bank was as follows.
"Please can you increase the payment on my Mortgage A/C XXXXXX up to the amount of €XXX Fixed per fortnight going forward until further notice; please take the overpayments from the capital amount".
Was of the option that if income was to reduce then I could always go back to the original payment with out any question from the bank.
Thanks
-Gal1

Click to expand...

No, you can stop the extra payments anytime you want. The issue with the OP is that it sounds like she changed the actual length of the mortgage term to 20 years and now wants to extend it.

-Gal1 said:

"Please can you increase the payment on my Mortgage A/C XXXXXX up to the amount of €XXX Fixed per fortnight going forward until further notice; please take the overpayments from the capital amount".

Click to expand...

Your wording sounds fine. Are the bank refusing to allow you to revert to the original payment amount?

If so, you'll have to dive into your terms and conditions to find out for sure, but I think you'll have an easy time convincing the Ombudsman if it comes to it.

brianb said:

Did the bank accept the verbal order to change the term on it's own? Did they write to you afterwards to confirm the change to your contract? If not, then I think your original terms would still apply, and you can argue them back to what you both have in writing.

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Bank accepted the verbal request to change the length of the term. I was always of the understanding that I could revert if my circumstances changed! I didn't recieve any correspondance in the post regarding the change.

Ardent said:

Bank accepted the verbal request to change the length of the term.

Click to expand...

Wow. Seriously poor practice on their part.

Ardent said:

I was always of the understanding that I could revert if my circumstances changed! I didn't recieve any correspondance in the post regarding the change.

Click to expand...

Time to get talking with them, and point this out. In the absence of any written communication by them clarifying how they viewed it, I think your old contract is the one that will stand up. At least they'll have to dig out an audio recording of your verbal order, and see if they can construe their side of things from it.

Don't be shy of pointing out that they've behaved inadequately by not communicating with you in writing on this.

Hi Sunny / brianb
Thanks for the reply - not looking to change at the moment but who knows what is down the road!
Thanks
-Gal1

There is a difference between reverting back to the original monthly PAYMENTS (adjusted for interest rate change between then and now) and reverting back to the original TERM of the mortgage. As your overpayments reduced the principal considerably, if you revert to the original monthly payments, the term will still be less than the original 35 years.

The bank may be more willing to allow you to revert back to the original payments rather then to the 35 year term. It will still result in lower monthly payments for you, though not as low as if the term was extended to 35 years.

I think that it's entirely reasonable of the bank to ask you to put your request in writing.

Years ago we were in a similar situation with EBS, as we were overpaying and then wanted to reduce the overpayments in order to save for a house in the UK (were relocating). EBS had no problem reducing the monthly payments to the original amount but not extending the term back to the original length. We accepted that as it still allowed us to save and buy a house in the UK.

Later we were overpaying our UK mortgage as well, and the UK bank was always showing what our required payments would be - it was always prepared to allow us to revert back to the original term, with much smaller monthly payments.

So it seems that it depends on the bank's policy - some banks will allow you to revert to the original repayments only, while some are also prepared to allow you to go back to the original term of the mortgage.

However, it would be unusual, I think, to allow neither.