Interest Only after paying extra?

I

ImARebel

Registered User
Messages
43
Hi there,

When we got our mortgage first we paid extra off it. At one point in time we were paying double due to the interest rates going down and not amending the standing order amount with the bank

We have since moved to the base repayments ie interest + capital at today's borrowing rate (we have a tracker mortgage)

Anywa we would like to go interest only on this mortgage now, until we have reclaimed the "extra" that we have paid in. We would like to go interest only until we have returned the mortgage to the same term, we took the mortgage for originally (it was a 29 year mortgage, but we had cut the term significantly due to the overpayments)

I'm just not sure how I word it for the bank?

We do not want to go into arrears, we do not want to go beyond the original term of the mortgage etc

Equally we don't want to affect our tracker.

Could they try and take us off it if we go interest only for a period?

Or is the way I explained it enough? Will the bank accept our request? Do you have to state a reason for going interest only? Will the fact we've paid extra for 2 years count for anything?

I don't want to go to the bank and get turned down as I've worded it wrongly.
 
The first issue you need to address is, whether your monthly loan repayments were reduced as a result of the extra repayments. If so, then the current repayments will be tiered at a level where the loan will be repaid at the original maturity date. I.e. If you are looking for a capital payment holiday, then the Bank are entitled to refuse you, or insist on you applying through tyhe MARP requirements.
If your repayments have remained at original level (other than reductions due to change in rates) then you are entitled to reduce your monthly repayments until the benefit of the increased repayments has been wiped out.
Check your loan repayments post the period of additional reductions to see were they reduced (most banks have an automated repayment schedule that will do this automatically). If you are happy that you have not got the benefit of the increased lodgements then you will need to identify when these payments were made and the amount of the surplus to the Bank, in order to strengthen your case for the temporary payment reduction.
 
I am almost 99% sure that we cut the term of the mortgage. In that we took time off the end of it, we never had cut down payments

We only ever either paid the exact amount required or the extra amount

When we came off paying the extra I specifically said in my letter all payments were to be interest + capital in accordance with the current base rate

Maybe they did something at this point that I didn't spot, but I do think it's the latter case.

I will double dig out my documentation and take a look tonight

Actually now I'm worried. I didn't want them to do the "reduce the payments but keep the term the same" the whole idea of paying off the extra was to reduce the term.

I'm going to feel like a right fool if it's the loan repayments that were reduced, this isn't what I wanted at all, in fact I didn't know they would do that at all :(

Do you mind me asking how I double check that first repayment amount after the extra payments - just get out the calculator?

I'm getting a sinking feeling now. We didn't want reduced payments ever :(
 
44brendan said:
If your repayments have remained at original level (other than reductions due to change in rates) then you are entitled to reduce your monthly repayments until the benefit of the increased repayments has been wiped out.
Click to expand...


Sorry to jump into this thread but can I ask where this statement comes from? We made a large out of course lump-sum payment a few years ago and we have written to our mortgage provider last week asking them to suspend capital repayments until we are back on the original schedule (we are on MARP interest-only at present but our finances may take longer than the 12 months to recover).

If they refuse to restore the original schedule, is this "entitlement" something I could use to force them?

Thanks
 
It's a little confusing but there are two main things, if you asked the bank to reduce the term due to the overpayments at the time and it was officially reduced so that you had a lesser term on it than when you started then it is not as straightforward as you will be asking them to increase the term again.

If you overpaid and then changed to normal payments based on the amount and term remaining then there is no surplus as such, you are just paying the remaining balance with the same term, payments would be lower than they would have been if you had not made the overpayment.

Best solution would be if you had just made overpayments and they remained as a credit on the account without you officially changing the term, then this credit/overpayment may be available to you now.
 
oldnick said:
Why don't you pick up the phone and talk to them?
Click to expand...

Because as I said in my OP, I wasn't exactly sure what to say to them (or ask them)

but thanks to the posts here I understand what happens regarding term vs reduced payments something I wouldn't have had a breeze about had I spoken to someone

At least now I can just ask them what was done and take it from there.

Going through my statements and trying to do the sums at the mo. I still can't see if we got reduced payments or not...I can't seem to reconcile what was taken from me versus what should have been taken

thanks to everyone. I understand the principle of it now...

Edited to say: looking at my statements it doesn't look like the number of repayments has reduced ie if you add up the remaining number of payments it brings you to the end of the original end payment date. That said while we were paying the extra off we never got a statement with a reduced number of payments on it either. I'm just looking at them now.

This to me says it was either reduced or maybe sitting there in credit? Although the statements don't point to that you can see the monthly DD bringing down the total owed

I'm with AIB if that helps
 
Last edited:
ImARebel said:
Do you have to state a reason for going interest only? Will the fact we've paid extra for 2 years count for anything?

.
Click to expand...

Of course you'll have to give a reason for going interest only. And your 2 years of extra payments amount to zero in the banks decision to grant you interest only.
 
Yeah but we're not going interest only and then extending the term of the mortgage. We are going interest only only to the point where we bring the loan back to the original terms of our agreement

We just need a bit of breathing space plus given the house is now worth less than half of what we paid for it, we would like to get the extra out that we put in. Simple as that

That's why I was wondering how I should word it. I didn't know if I could ask them straight out what the story was because obviously they are going to give us an answer that best suits them and not us.
 
it's relevant to us ...

I'm not going to say that to the bank. I'm just giving you our reasons for wanting to go interest only for a period of time.

Speaking honestly we are really regretting paying the extra off. We broke our backs trying to do it at the time, thinking we were doing good and trying to get ahead.

now we're stuck in a house we can't sell, in a town we don't want to live in

We want to get back the "extra" we paid in (if it's possible).

It might not be but we're going to try.

As I keep saying we don't want to go into arrears or even fall outside the terms of our original agreement

Anyway I'm ringing the bank this morning and going to find out what way the calculations went when we came off paying the extra

All this might discussion might be for nothing if we are on reduced payments and can't get the extra back out.

And the reason for all of this is so we can get out of dodge and move back to civilisation and have a life again. Because we are cracking up at the moment.
 
You must log in or register to reply here.
Back
Top