Bank closed my mortgage account with no communication with me

J

John Mc

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Hello, can I ask some of you AAM mortgage experts a question please. My bank closed my mortgage account with absolutely zero communication with me.

I have been overpaying over the years and made my last overpayment last week leaving a small (intentional) balance of less than €100. Usually when I make an overpayment I get a letter a week later acknowledging it and saying it has reduced the capital and my new repayment is €x.

However, I logged on this morning to check if wages went in and spotted a small credit balance on the mortgage account. When I went in to the account there was a credit to it with the transaction description “To Close”. There has been no debit (yet) from any of my accounts into my mortgage account for this transaction. I’m assuming the small credit balance remaining is the accrued interest which will be debited in the coming days.

There are over 11 years left on the mortgage term and I had every intention to let it run the course for my own reasons. Is this usual practice and are they actually allowed to clear small mortgage balances. I looked at T&Cs in mortgage agreement and couldn’t spot anything. I will speak with the bank but it’s just a bit frustrating as clearing a mortgage is a land mark occasion for most and I didn’t even know when it happened. Plus, I’m not in a position to carry out what needs to be done on clearing a mortgage at the moment – collecting deeds, land reg. etc. I expected only to have to do this 11 years down the line.

Thanks for any comments.

PS, I know I’m lucky in today’s environment but it did take huge sacrifices over the years.
 
Hi John

You paid too much into your mortgage account, so they owe you a small amount of money.

Seriously, what do you expect them to do?

Hold onto the credit balance for the next 11 years?

You cleared your mortgage, so they should close your account and return the deeds.

Well done on clearing it so much ahead of time.

Brendan
 
Brendan, sorry if I wasn't clear. I didn't pay it in, the bank did and without any communication with me.
 
John Mc said:
Brendan, sorry if I wasn't clear. I didn't pay it in, the bank did and without any communication with me.
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Maybe the bank has a policy of writing off any outstanding mortgage amounts of less than €100 and close the account there and then.
Not unreasonable to be honest, as there is literally nothing in it for them.
I would check the letterbox over the next few days and look for the "Good News! You are mortgage-free" letter.

Congratulations!
 
Thanks newirish, yes that could be vey possible - normally used to banks trying to fleece me though!

Coyote, ha ha, it's like you know me :). Yes that was one reason, other was refund of quarterly fees for current account as mortgage was been paid from that.
 
Not too small though! Even if I left €1k in it it would have been beneficial. Doubt the bank would be too quick to write off that amount!
 
What happens if the OP wanted to get a top up loan in the future? Rather than take out a full new mortgage the bank could just give the top up using the existing account. Use the existing deeds held as security for the loan rather than go to the trouble of taking the deeds as security....again?
 
Slug, that was another small consideration but hopefully I will never have to but life throws curve balls from time to time.

I'll write to them and tell them Brendan B told me to o_O
 
SlugBreath said:
What happens if the OP wanted to get a top up loan in the future? Rather than take out a full new mortgage the bank could just give the top up using the existing account. Use the existing deeds held as security for the loan rather than go to the trouble of taking the deeds as security....again?
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Why would you think the bank would entertain that? All the money they realistically make from a mortgage has been made. Nobody cares about a few thousand Euro mortgages. Not worth the hassle.
Keeping accounts open for a very remote chance of some potential few quid of top-up mortgage?

If that's the customer expectation for banks here, I am not surprised that KBC and Ulster are shutting up shop.

"Sure I'll keep my mortgage account to a few hundred Euro so I don't have the hassle of looking after the deeds myself"
 
I appreciate the dialogue but I hoped my original question was a simple one as I couldn’t find an answer, it wasn’t intended to cause any angst - “Is this usual practice and are they actually allowed to clear small mortgage balances”. It shouldn’t matter about my reasons. They obviously do care about a few thousand euro mortgages as when I made the previous overpayment to bring the balance below €3k they sent the usual letter with a revised repayment amount over the remaining term.

My only expectation, as ever, is when I enter into an agreement with somebody it’s honoured by both parties. I agreed to borrow X amount from the bank and repay it over a period of time from A to B. The bank has now unilaterally changed B to C. It is/was a variable rate mortgage so overpayments/out of course payments were fully acceptable and all terms were met by me since drawdown.

Maybe they need to start putting warnings on paying down variable rate mortgages early as it may financially impact you negatively in a similar manner to the way they do about paying fixed ones early -:)

Anyway, at best my error of judgement might inform other readers here if they’re lucky enough to be in that position. Have a good week end and thanks to AAM for advice over last 20 years.
 
Why not just leave the loan at 5k and pay that over the 11 years? You could have fixed it if worried about interest rates!Leaving 100 euro is farcical. That's around 1 euro a month the direct debit and cost of holding deeds and sending you an annual statement would cost more than that.
 
Because I can overpay what I want as per the agreement as it was a variable loan. The bank are moving the goalposts unless it’s in the T&Cs which was my initial question and I’ve queried it with them too. If looking after my family’s best financial interests is farcical, then I’m happy to be a farce. Simple maths, balance of €5k x 2.75 % = annual interest of €137.50 pa, €100 balance = €2.75 interest pa. Concerns about interest rate increases were never a factor to pay it down when I started, although it would be now. Have a good evening.
 
newirishman said:
Why would you think the bank would entertain that? All the money they realistically make from a mortgage has been made. Nobody cares about a few thousand Euro mortgages. Not worth the hassle.
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A property extension would be a lot more than a few thousand Euro. Borrowing against the property to fund a holiday home abroad or similar.
 
You can overpay what you like on a fixed rate loan too certainly with the mainstreet banks. Boi simply has a lodgement slip you stick your mortgage account number on it and hand it to the cashier and they work out if they have suffered a loss and add to your mortgage balance later and send you a letter. If wholesale rates are higher than when the loan was taken out then there is no charge. You just pay the difference if the wholesale rates are lower. All things being equal then there should be no charge.

137 euros of interest should offset the cost of managing your account. You have to give something back in order to take. And you do have the use of 5k. The S and P 500 has increased at something like more than 3 times the the 2.75 when averaged over many years. Live a little:)
 
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I can see where John Mc is coming from, I actually have the same idea a while ago (Although mine is at least a 2-3 years away)

It is not just interest on the mortgage though to consider, it is the free banking aspect too. If he is paying €2.75 p.a. in interest only from the €100 balance, he is making a lot more back from bank fees over the 11 remaining years.
 
John Mc, can you keep us updated regarding the response you get from the bank. I'm curious to know.

One thing that crossed my mind was whether after the last letter you got after the overpayment being €3K, did you happen to allow it time to process the new amount before making further overpayment?

Example (Random figures w.r.t. monthly payment): You have €3K balance after overpayment, you get the letter to say next direct debit payment is to be €200 on xyz date, you made overpayment of say €2.9K prior to that date so they ended up logging €2.9K and taking the €200, thus giving you credit.


Could that have happened I wonder?
 
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