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

[irbx]

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!

Something like this for me on 5 year fixed rate 2.35%, Was 4 months into it and asked for the Break fee which was 0. So emailed in the AIB amendment form to refix for another 5 years. Got a letter a week later confirming my new fixed period and the interest rate.

Thanks for making use aware of this

 

[Paul F]

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.

No harm in trying.

 

[help999]

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!

Hi thanks, i asked that very question in a different post, thanks for sharing your experience..

Breaking out of a 5 fixed rate term and refixing for another 5 years. AIB Green 2.15%

Hi, i am wondering, given the recent mortgage rates hikes and inflation etc. If one is in a fixed rate with AIB 5 year fixed at 2.15%. Say you are 1 or 2 or 3 years into that rate, can you break out of it and refix again for another 5 years. To take advantage of the low rate on offer for...

www.askaboutmoney.com

 

[The Oggster]

We've just switched to AIB 5-year rate at 2.1%. I know longer term fixed might have been better with €160k and 20 years left but I was thinking we could overpay and have less than €100k left after the 5 years.

What is the process for overpaying now? I know there should be no break fee but if we wanted to pay a regular overpayment rather than a lumpsum, do we need to request a break fee every month or if we just assume there will be no fee, just send the extra payment?

We could afford to increase our monthly payments by 50%.

I'm also planning on changing payments to fortnightly on the day we're both paid.

 

[Paul F]

We've just switched to AIB 5-year rate at 2.1%. I know longer term fixed might have been better with €160k and 20 years left but I was thinking we could overpay and have less than €100k left after the 5 years.

Note that having a balance of less than €100k will rule out the option of switching to Avant. That may or may not matter to you.

What is the process for overpaying now? I know there should be no break fee but if we wanted to pay a regular overpayment rather than a lumpsum, do we need to request a break fee every month or if we just assume there will be no fee, just send the extra payment?

See this post (question 3) and the next post.

It would certainly be safer to request the break fee quote each time before overpaying but nobody here can say for sure if it's an absolute requirement to do so.

You could be the guinea pig and see what happens if you make a (small) overpayment without having requested the break fee quote! I take no responsibility for any consequences

Or you could save up your overpayments and only make them once every ~3 months (after requesting a break fee quote). You won't save quite as much doing it this way but the difference will be fairly small.

Bear in mind that overpaying your mortgage may not be the best use of your money. Your priorities should usually be:

• Paying off expensive debt (credit cards, personal loans, car loans, etc.)
• Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
• Saving money for any expenses you will have over the next few years (kids; buying a car; childcare; home renovations; adult children going to college, etc.)
• Maxing out your pension contributions (very large tax relief is given)
• Overpaying your mortgage

in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.

 

[_OkGo_]

You could be the guinea pig and see what happens if you make a (small) overpayment without having requested the break fee quote! I take no responsibility for any consequences

We've done this recently. Made a small overpayment directly through online banking just to see what the default action would be.

As expected, we got a letter about 2 weeks later confirming no break fee and that the monthly payment would reduce going forward, i.e. the term was maintained.

 

[The Oggster]

We've done this recently. Made a small overpayment directly through online banking just to see what the default action would be.

As expected, we got a letter about 2 weeks later confirming no break fee and that the monthly payment would reduce going forward, i.e. the term was maintained.

That's good to hear. Do you do it regularly? I know most banks allow 10% overpayment without having to workout a break fee. Seems AIB don't have this?

I plan on doing it every month. Bit of a waste of paper (and time) them having to send the letter out every time.

 

[Jazz01]

@The Oggster - I had emailed AIB this morning on their options for me to pay a lump sum payment each year or to pay an increased payment in each month, to affect the principle, to bring down the years left on the mortgage. Once I hear back from them on that, I'll let you know.

I'm on the AIB 5 year "green" fixed 2.1% rate.

 

[_OkGo_]

That's good to hear. Do you do it regularly? I know most banks allow 10% overpayment without having to workout a break fee. Seems AIB don't have this?

I plan on doing it every month. Bit of a waste of paper (and time) them having to send the letter out every time.

No that was the first time we've done an overpayment like that and it was mainly to confirm the term was not reduced before we make further overpayments with online banking.

AIB don't have the 10% per say but if you go back through this thread, it is very unlikely that you'll have a break fee on certain fixed rates.

We won't be doing it every month but probably every 3/4 months to line up with bonuses/ESPP. But yeah it is a waste of paper and postage

 

[BigPineapple]

I've over paid every month since June, no penalty yet. Started the first one with small amount just to try it out. Since then I didn't bother with ringing up and so far so good. I guess once you work based on their formula and it comes out good, then you'd be fine.

 

[Merowig]

We've done this recently. Made a small overpayment directly through online banking just to see what the default action would be.

As expected, we got a letter about 2 weeks later confirming no break fee and that the monthly payment would reduce going forward, i.e. the term was maintained.

I do this for two years every month

 

[FrankJnr]

Silly question perhaps, but here goes....

If I was to submit a rate change application to restart my 5 year fixed rate with AIB today, what are the chances of AIB upping their fixed rates between now and say two weeks time when they get around to processing my application, causing me to end up fixing on a higher rate?

 

[Paul F]

If I was to submit a rate change application to restart my 5 year fixed rate with AIB today, what are the chances of AIB upping their fixed rates between now and say two weeks time when they get around to processing my application, causing me to end up fixing on a higher rate?

Difficult to say when AIB will put up their rates but @BigPineapple suggested:

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.

But we don't know if AIB would respect that instruction.

Ask yourself what you have to gain by doing this versus what you might lose if it goes wrong. E.g., another ~12 months on the current rate (if it gets processed in time) versus 5 years on the higher rate (if it goes wrong). Doesn't seem like a great bet.

 

[FrankJnr]

Difficult to say when AIB will put up their rates but @BigPineapple suggested:


But we don't know if AIB would respect that instruction.

Ask yourself what you have to gain by doing this versus what you might lose if it goes wrong. E.g., another ~12 months on the current rate (if it gets processed in time) versus 5 years on the higher rate (if it goes wrong). Doesn't seem like a great bet.

Thanks for the fast reply Paul.

I was thinking along the same lines as you, I just needed a second opinion I guess..... I have deleted the application form, let us never speak of this again!

I moved from BOI to AIB a few years ago and saved a load of money, then saved a bit more money by fixing earlier this year, I guess it's time to hold steady now, especially considering where I'd be if I had stuck with BOI.

Thanks again.

 

[andrew2000ad]

Thanks for the fast reply Paul.

I was thinking along the same lines as you, I just needed a second opinion I guess..... I have deleted the application form, let us never speak of this again!

I moved from BOI to AIB a few years ago and saved a load of money, then saved a bit more money by fixing earlier this year, I guess it's time to hold steady now, especially considering where I'd be if I had stuck with BOI.

Thanks again.

In case it helps yourself or anyone else.

I just completed a refix. Sent forms in mail late on 13th, and letter arrived today with change applying from 22nd.
So ~8 days to process if mine was typical.

 

[TedBishop]

I am currently on 3% with AIB. Tracker retention product, so originally it was 0.25 above the ECB, moved house and it turned into 1.25 above the ECB. Now with the rate increases it's 3%. With about 12 years and 80k left in an A rated house I am wondering should I move to the green 5 year fixed because if I can overpay without penalty then that would be perfect. I will be overpaying a lot, ideally monthly and with bonus.

 

[Paul F]

I am currently on 3% with AIB. Tracker retention product, so originally it was 0.25 above the ECB, moved house and it turned into 1.25 above the ECB. Now with the rate increases it's 3%. With about 12 years and 80k left in an A rated house I am wondering should I move to the green 5 year fixed because if I can overpay without penalty then that would be perfect. I will be overpaying a lot, ideally monthly and with bonus.

@TedBishop Please post your mortgage details in the following thread, in the format shown in the first post.

Key Post - I have an AIB tracker – should I consider fixing?

Some general comments which apply to most AIB cases. Apart from the shocking treatment of tracker customers, AIB has treated its mortgage customers fairly – well, fairly in comparison to other lenders. It does not maintain an artificially high default variable rate, and so lazy or busy...

www.askaboutmoney.com

 

[masterboy123]

I've over paid every month since June, no penalty yet. Started the first one with small amount just to try it out. Since then I didn't bother with ringing up and so far so good. I guess once you work based on their formula and it comes out good, then you'd be fine.

Could you please share the formula with me?
Also, their email address please where I can inform them not to proceed in the event fixed rates have gone up.

I requested a break fee about 6 weeks ago and never received letter from them.
I want to reduce monthly payments by paying a lump sump.
I am on AIB's 2.15% - 5 year fixed green rate.
Thank you

 

[BigPineapple]

Could you please share the formula with me?
Also, their email address please where I can inform them not to proceed in the event fixed rates have gone up.

I requested a break fee about 6 weeks ago and never received letter from them.
I want to reduce monthly payments by paying a lump sump.
I am on AIB's 2.15% - 5 year fixed green rate.
Thank you

Read the Early Repayment Charge Section.

Home-Mortgages-Regulatory-Information

aib.ie

Regarding the email ([email protected]), I was referring to just putting it as a note in the main body of your email when you send off the digital form, it is just their general home mortgage email. (For clarity, I have toyed with the idea of restarting the clock for 5 years but I have yet to actually do it myself)

 

[Paul F]

@masterboy123 It seems that there are two separate actions that you are considering taking.

1) You are thinking about attempting to "restart the clock" on your 5-year green fixed rate. This comes with a risk (that AIB will increase their rates between the time you send the form and the time that they process it), so think twice about doing this.

2) You want to pay a lump sum off your mortgage. See here for how to do that. Note that you will not lose your 2.15% fixed rate if you do this. You should get a break fee quote from AIB before you make the lump sum overpayment (but in your case the break fee is very likely to be zero).

Keep in mind that overpaying your mortgage/reducing your balance may not be the best use of your money. Your priorities should usually be:

• Paying off expensive debt (credit cards, personal loans, car loans, etc.)
• Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
• Saving money for any expenses you will have over the next few years (kids; buying a car; childcare; home renovations; adult children going to college, etc.)
• Maxing out your pension contributions (very large tax relief is given)
• Overpaying your mortgage

in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.