# KBC allows mortgage holders to redraw overpayments - is this still available?



## gnf_ireland (22 Jul 2015)

I submitted a request to KBC to overpay my mortgage by a predefined amount each month last week. I got a letter this morning confirming the request, which had a very interesting paragraph on it :-

_"The extra amount is deducted from your capital balance and will result in an interest saving for you. Please note: the term of your mortgage will not be reduced with this method of overpayment.

*If you wish to redraw these funds at any time please send us a written instruction* signed by all parties to the mortgage. Please be advised, if you redraw funds from your mortgage account you capital balance will increase thus increasing your scheduled monthly repayment"_

I was surprised at this. When I overpaid with Bank of Ireland, I don't remember having the flexibility to redraw the funds down again. There was definitely nothing in the letter I got from them confirming the overpayment. Is this redraw option 'standard', and has anyone any experience using it ? 

It would seem like it is similar in nature (although not the same obviously) to the offset mortgages of boom time era. Given the really low interest rates for deposits and the high DIRT tax associated with it, is this a better option for savers?

It would depend on how easy it would be to withdraw the funds, which I will enquire about, but it did get me thinking this morning

Any experience others have with the redraw option would be most appreciated. 

It may just be another valid reason to switch to KBC !!


----------



## 44brendan (22 Jul 2015)

Very unusual!! I have never seen this option given before. You are correct, it is an extraordinary generous offer for savers as potentially you can input additional cash during the year to your mortgage and draw it out again to go on your holidays! From a banking perspective it does appear to be very unusual and there must be some restrictions on the ability to lodge/withdraw funds!


----------



## mickoneill30 (22 Jul 2015)

Yep. I'm with KBC and use my mortgage as a savings account. The good side of KBCs high interest for existing customers is that any money I throw into the mortgage saves me 4.3% and there's no DIRT as I'm not saving money in a bank. I'm paying off a loan. 

My mortgage comes out on the 1st of every month. I have to send the cheque about the 10th for it to impact on the next months payment. If I sent it after 20th, the cheque definitely arrives next day (as it goes from my account) but it doesn't make a difference to the next payment on the 1st. It has to wait until the next payment.

It's very easy to pay into the mortgage. I just write a cheque and a letter and send it in. You have to keep an eye on this as sometimes KBC have put this into a savings account for me (which I didn't ask for). But that's sorted very easily with a phone call. 

To take the money out you just write a letter, signed by the names from the mortgage and nominate how much to take out and which account to put it into. I've done this twice, the first time I did it took about 3 weeks. The second time took about a week from the time I posted the letter.


----------



## gnf_ireland (23 Jul 2015)

Thanks all for the commentary on this. I have paid some lump sums payments in, but have not received the letters yet confirming the details. Will be interesting to see if the option also exists on the lump sum !

It does make an interesting means of holding 'rainy day funds' so to speak!


----------



## jim (23 Jul 2015)

Hi,

I too have availed of this facility with kbc insofar as i have overpaid my mortgage and instructed kbc to reduce the capital with the overpayment. I also confirmed with kbc that i could re draw down any overpayment although have not yet done this.

I think it a brilliant option to have though and an effective way to save your extra euros.


----------



## Brendan Burgess (24 Jul 2015)

44brendan said:


> You are correct, it is an extraordinary generous offer for savers



I think it's a great facility and I have no idea why all banks are not doing it automatically.  

I have argued that someone who has overpaid their mortgage, should not be considered to be in arrears if the balance outstanding today is lower than it would have been at the beginning of the mortgage. 

I would not classify it as generous. KBC are relending money at a mortgage rate which is fleecing their customers. 

I wonder does it apply to people who have overpaid their trackers.  Again, I have suggested to lenders that they could encourage overpayment of trackers by allowing borrowers to withdraw the overpayment at any time. 

Brendan


----------



## ronaldo (24 Jul 2015)

Brendan Burgess said:


> I would not classify it as generous. KBC are relending money at a mortgage rate which is fleecing their customers.



It's generous to a certain extent. Customers with significant savings but no ability to use them to pay down the money that you've lent to them represent a much lower risk, in general, to customers that you are likely to re-lend that money to if you allow the customer to use it as a mortgage over-payment.


----------



## gnf_ireland (24 Jul 2015)

I agree with @ronaldo here. If a customer has overpaid by say 25% of the mortgage over a number of months, they are obviously a lower risk as their LTV is lower. However certain customers do not want to do this as they want to maintain a level of 'rainy day funds' for a variety of reasons. If you have access to these funds now via a redraw option, this is a reasonable saving for the customer - given current mortgage, deposit and DIRT rates.

I would also agree with @Brendan Burgess that it would make logical sense that a customer is not in arrears until the amount outstanding is more than what the standard mortgage amortisation amount should be based on the interest rate and mortgage duration agreed. 


I also agree that in a 'fair world', it would not be classified as overly generous, as they are effectively only giving you your money back that you overpaid, but we can all agree Irish banking and mortgages in particular could hardly be classified as 'fair' at the moment.

For me, it is much better to be not paying 3.55% on "rainy day funds" than getting ~1.5% on a notice account and paying DIRT and PRSI on the interest earned. I will take this as a 'nice surprise' and it would encourage me to continue to overpay the mortgage


----------



## Gerard123 (24 Jul 2015)

Its a great facility.  Though the use of it requires strong discipline as there can be a temptation to withdraw repeatedly which partly defeats the purpose of seeking to overpay a little.  Good for lump sums and 'rainy day'.

Frankly I don't see it as generous in the slightest.  People should be entitled to repay their loans whenever they want without any obstacles from Banks.  This is only possible if the loans are variable rate.  Bit much for Banks to charge 3-5% on mortgages and then only offer half a per cent if even that much on deposits.


----------



## todo (2 Feb 2016)

gnf_ireland said:


> "The extra amount is deducted from your capital balance and will result in an interest saving for you. Please note: the term of your mortgage will not be reduced with this method of overpayment.
> 
> *If you wish to redraw these funds at any time please send us a written instruction* signed by all parties to the mortgage. Please be advised, if you redraw funds from your mortgage account you capital balance will increase thus increasing your scheduled monthly repayment"



Is this facility still available with KBC, does anyone do it regularly?


----------



## qwerty5 (2 Feb 2016)

Yep. It's part of the terms of the mortgage. I used it pretty frequently last year. I used it as a savings policy. Anything I put onto the mortgage is saving me 4.1% off the interest. If you put the same money into the bank you get shag all and then get charged DIRT. This is just a plain 4.1% saving for me.
It's pretty straightforward to take the money back. Just send them a letter saying you want to transfer X to your bank account. Normally it takes them about a week.


----------



## todo (2 Feb 2016)

Great thank you for the response.


----------



## Gordon Gekko (2 Feb 2016)

This is a huge thing that I was unaware of. So basically, if I owe KBC €500k and I have €100k sitting on deposit earning nothing, I can pay the €100k in, leaving €400k outstanding, but with scope to access the €100k virtually on demand?

This is like the offset mortgages of years gone by.


----------



## gnf_ireland (2 Feb 2016)

Gordon Gekko said:


> This is like the offset mortgages of years gone by.



@Gordon Gekko  Yes, this is the way I understand it. I have never attempted to redraw the money, but might do it some day soon just to see how it works. But ultimately, this is what my original letter states, as I quoted in the original post. I have been assured by the bank and by others this is how it works !


----------



## Sarenco (3 Feb 2016)

This really is a significant feature of the KBC offering that I wasn't aware of.  I wonder why KBC don't make a bigger deal of this?


----------



## gnf_ireland (3 Feb 2016)

Sarenco said:


> This really is a significant feature of the KBC offering that I wasn't aware of.  I wonder why KBC don't make a bigger deal of this?



@Sarenco We can agree on something  But yes, I was surprised as well, hence the original thread. I am surprised this is not very high on their advertising, as it is a major attraction to people who also have savings and want to keep the cash buffer !


----------



## qwerty5 (3 Feb 2016)

Gordon Gekko said:


> This is a huge thing that I was unaware of. So basically, if I owe KBC €500k and I have €100k sitting on deposit earning nothing, I can pay the €100k in, leaving €400k outstanding, but with scope to access the €100k virtually on demand?



Yep it's exactly that. I've withdrawn amounts of up to €10K and they never gave any hassle. All they needed was a letter signed by me and my wife with an instruction to transfer back to our account. The max it ever took was two weeks with one week being more standard.

It's the only benefit of being an existing customer with KBC. I'm saving 4.09% on any money I put in. Which is great. 
I'm also paying 4.09% on my mortgage which is not so great.


----------



## Brendan Burgess (3 Feb 2016)

permanent tsb allows borrowers who have overpaid to take a payment holiday,but they can't get a refund, like they can with KBC. 

 [broken link removed].


----------



## letitroll (4 Feb 2016)

To just clear something up. So I'm 100% clear on this. 

Lets say I have 150k in cash. Looking at a house for say 220k. I'm conscious that I don't want to lock away the full 150k in an illiquid asset like a home maybe I'd like to invest it in the future, buy car, help relatives with extensions, deposits for them to buy house, renovations. Any big ticket item.

Therefore I sign a 30yr mortgage with a 10% deposit (22k down) with KBC. Leaving me 128k in cash but 198k mortgage. From what your saying I can then turn around and place the 128k in cash against the mortgage - the mortgage account showing a balance of 70k? Correct?

Q - does this shorten the term of the mortgage or reduce the monthly mortgage payment to KBC?
Q - does the LTV interest also fall in line with the overpayment. Going from their 80% LTV rate to their <50%?

Cheers


----------



## Brendan Burgess (4 Feb 2016)

letitroll said:


> Q - does the LTV interest also fall in line with the overpayment. Going from their 80% LTV rate to their <50%?



No, and this is the biggest weakness of your plan.  So only borrow enough to get you into the lowest LTV. 

After that, your plan works fine. 

Brendan


----------



## letitroll (7 Feb 2016)

Thanks Brendan - makes sense on the ltv

Would the term of the loan or the monthly payment be altered by the overpayment?


----------



## gnf_ireland (7 Feb 2016)

letitroll said:


> Would the term of the loan or the monthly payment be altered by the overpayment?



@letitroll  the answer to your question is in the original post I made on the issue. I even quoted the letter from KBC



gnf_ireland said:


> _"The extra amount is deducted from your capital balance and will result in an interest saving for you. Please note: the term of your mortgage will not be reduced with this method of overpayment._



There are options with KBC to reduce the term of your loan if you wish to avail of them, in particular for regular overpayments. However I have always elected to maintain the term of the loan with any I have selected and reduced the amount. That said I continue to overpay, so will have the same net effect in reality


----------



## Leaky1 (8 Feb 2016)

EBS allow this facility also, or at least they did last time I checked (in approx. 2012). However I've not seen it written down anywhere. When I took out my SVR mortgage with EBS in 2007 the manager in Baggot Street mentioned verbally that any overpayments to the account would be used to reduce the interest charged but would not be applied to reduce the capital until I specifically requested it.  She expressly stated that I could therefore withdraw the overpaid amounts if I wished, as long as I had not applied it against the capital.

It's not a facility I've used though.


----------



## jim (8 Feb 2016)

But the kbc facility allows the overpayment to come off capital, not just interest, and then be redrawn back down if necessary.


----------



## WorstPigeon (8 Feb 2016)

This is a very nice feature; given that I plan to overpay fairly aggressively, but will also be keeping some savings around, just in case, I'm half regretting not going with KBC now, though I don't like their policy of not applying rate reductions to existing customers (I'm sure they'll be more than happy to apply rate increases when the time comes...)

Are there any limits on this policy? Is it actually in the mortgage agreement, or just something they do out of goodwill?


----------



## letitroll (9 Feb 2016)

One other Q on this as can't seem to find a mortgage calculator online that can model the effect of this. If anyone has a link to one it would be great.

Lets say my outstanding loan with KBC is 250k with 25yrs left to run @ 3.4% (<50% LTV) - meaning a monthly payment of 1238.19euro

I come into 230k and decide to overpay KBC 230k on the loan -  leaving a capital balance of 20k. The term of the mortgage isn't reduced, as per the above, therefore the payments are reduced would the result look like this: 

20k balance (250k - 230k overpayment) @ 3.4% over 25yrs = 99.06 p/m for 25yrs?

The benefit being then that at any point I could ask KBC for the full 230k to be returned to me if needed?


----------



## gnf_ireland (9 Feb 2016)

@letitroll  to be fair you are at the extreme in terms of overpayment here, so I think it would be wise to contact KBC directly and ask them to confirm their policies to you in writing. I am sure there are some restrictions on this, that would push the overpayment into coming off the term rather than the amount at some point.

I paid over 30% of the mortgage amount off in lump sum overpayments within 4 months of taking it out and that was not an issue. None of this came off the term. You are proposing to overpay by 92%, which is a different ball game

Strongly recommend you discuss with KBC and get in writing, as I imagine you want to maintain access to the 230k and if it backfires on you, you would not be happy !


----------



## letitroll (9 Feb 2016)

@gnf_ireland thanks! Agree I would need lock tight confirmation on the policy from them. 

However my view would be that the terms & conditions of the over-payment, regardless of the over-payment amount (as long as below capital amount), should still stand. Unless of course there is some sneaky T&C's somewhere


----------



## gnf_ireland (10 Feb 2016)

@letitroll  I have never been able to find the T&C's on this feature. I have only been able to see what was returned to me on the letter when I made the initial overpayment

As we all know, mortgage contracts are weighted heavily in favour of the bank, and I have found no reference to this 'policy' in my mortgage agreement. You may well take the stance above, but would be interested to know how you plan to get this confirmed in your mortgage agreement with KBC. Please do keep us updated on your efforts


----------



## letitroll (19 Feb 2016)

In checking this with two separate KBC phone reps they now say that the redraw facility is something they USED to provide to customers but going forward it will not be available for new mortgage business

Disappointing and would make you wonder how long they might facilitate this for existing customers if it isn't stated in their T&C's. Something to bear in mind for those thinking about overpaying on an existing mortgage


----------



## todo (19 Feb 2016)

letitroll said:


> In checking this with two separate KBC phone reps they now say that the redraw facility is something they USED to provide to customers but going forward it will not be available for new mortgage business
> 
> Disappointing and would make you wonder how long they might facilitate this for existing customers if it isn't stated in their T&C's. Something to bear in mind for those thinking about overpaying on an existing mortgage




Thanks for posting this. This puts kbc way down the list for me.


----------



## letitroll (19 Feb 2016)

todo said:


> Thanks for posting this. This puts kbc way down the list for me.



Indeed and something new entrants to the mortgage market (The Frank Mortgage etc.)  should consider adding as a feature of their product................cash back deals are old hat and you would hope don't fool many!


----------



## Brendan Burgess (20 Feb 2016)

Has anyone checked if this is in the mortgage offer currently being made? I would prefer to rely on the wording of the contract rather than on the word of a call centre


----------



## Berneseduke (7 Mar 2016)

Was reading through the whole thread, delighted to see a kind of offset mortgage! Pity they seem to be doing away with it!


----------



## Cilar (10 Mar 2016)

I phoned KBC and they are not longer allowing to redraw overpayment. I got my mortgage with them in 2014. Their 'flexible repayment' form still states that they allow to redraw overpayment, but it's not really the case according to what they said over the phone.

Interestingly the bank account to make a lump sum overpayment is a Ulster Bank account. I suppose they're paving the way to get acquired by UB later this year.


----------



## dovetail (12 Mar 2016)

Cilar said:


> I phoned KBC and they are not longer allowing to redraw overpayment. I got my mortgage with them in 2014. Their 'flexible repayment' form still states that they allow to redraw overpayment, but it's not really the case according to what they said over the phone.
> 
> Interestingly the bank account to make a lump sum overpayment is a Ulster Bank account. I suppose they're paving the way to get acquired by UB later this year.



I just received mortgage approval from KBC during the week and also asked them by email  if I could redraw over payments, they said 'any over payments would not be able to redrawn at a later date'......Cilar, is it definite that Ulster Bank plan to acquire KBC this year?


----------



## tommyryan55 (12 Mar 2016)

KBC have used UB accounts for a number of years, going back to when they were not a clearing bank.


----------



## Rob F (21 Mar 2016)

I have recently switched my mortgage to KBC. I set up a standing order to make a monthly over-payment. A few days after each payment I received a letter from KBC telling me my monthly repayment would reduce by a few euro. I rang and they told be that the term was fixed and they were reducing the repayment to match the term. She explained that I would need to fill in a Flexible Repayment Instruction form requesting a fixed monthly amount. I got the form today, on this form it clearly states that over-payment can be redraw at a later date.


----------



## Cilar (22 Mar 2016)

Rob F said:


> I have recently switched my mortgage to KBC. I set up a standing order to make a monthly over-payment. A few days after each payment I received a letter from KBC telling me my monthly repayment would reduce by a few euro. I rang and they told be that the term was fixed and they were reducing the repayment to match the term. She explained that I would need to fill in a Flexible Repayment Instruction form requesting a fixed monthly amount. I got the form today, on this form it clearly states that over-payment can be redraw at a later date.



It's still indicated on their form, but it is actually not available. See a few post above. I got the same form, and when querying them on the "term and conditions" attached to this, they mentioned that the redraw facility was not longer available.


----------



## Sarenco (22 Mar 2016)

Would somebody be kind enough to post the exact wording from the form?  

It's hard to imagine that a redraw entitlement contained within the form does not constitute a contractual agreement, which makes anything said by an individual employee of KBC, frankly, irrelevant.


----------



## gnf_ireland (24 Mar 2016)

To be fair the "Flexible Repayment Instruction" actually states:

*The funds will be available to redraw at a later date subject to KBC Homeloans Terms and Conditions. *


----------



## Sarenco (24 Mar 2016)

Well, are there any restrictions on the availabity of the redraw facility in the KBC Homeloans Terms and Conditions?


----------



## gnf_ireland (5 Apr 2016)

hi all,

I rang KBC there (for another matter) and asked for clarifications on this. Seemingly anyone who has drawn down their mortgage since 2013 is not available to use this facility. I queried the content of some of the letters I have been issued, and was given the opportunity to redraw all overpayments to date, but would not be allowed to redraw any more overpayments made. 

I have asked for a complaint to be raised on this for processing - since I have clear letters stating draw was possible (without any caveats). We will see what the outcome of this is, but given KBC's track record of treating existing customers I would not be hopeful.

However, looks like the main benefit for me to remain with KBC is now gone, so time to start looking elsewhere.


----------



## tereyk (5 Apr 2016)

gnf,
Is it just the monthly overpayments that you can't redraw? Presumably, you can still redraw the deposit amount(s) that you have lodged against your capital?


----------



## gnf_ireland (5 Apr 2016)

@tereyk to be honest I understand any overpayments made now are not available for redraw, whether they are once off or regular payments

I have asked for a formal complaint to be raised - so will see what comes from that, but for the moment I am assuming any further overpayments made are not available for redraw. We are likely to have a dispute on the older stuff, but will see what happens next


----------



## jim (6 Apr 2016)

I drew down a mortgage with kbc 13 months ago and have overpaid a significant amount on that mortgage on the basis of the advice I received from the Bank which was that I could overpay and if I wanted could redraw the overpaid amount in the future. So it made absolute sense for me to overpay as much as I could.

I found out last week when I phoned the bank also to query something else that this was a mistake and that whilst I could redraw back down the overpaid sum I could no longer continue this facility and in fact I should not have been allowed in the 1st instance.

I was advised many times by phone that I could do this because I did question it with them when the question was previously raised in this forum. So they messed up here.

I will need to redraw my funds back down but am disappointed that this facility is no longer available as I very much valued it!

What, if anything, should be my next step (other than redraw my money which I need to do)?


----------



## gnf_ireland (9 May 2016)

As a follow-up on this one, I had a response to my formal complaint from KBC. The summary is:

1. Regular Overpayments made via Flexible Repayment Instruction are still available for re-draw as per the confirmation letter from KBC. I have this in writing so it is clear enough. I had been incorrectly advised this was not available for re-draw

2. Lump Sum overpayments made are NOT available for redraw, and this facility was removed for any customers taking out mortgages after September 2013. I don't have any written record on these ones, but have asked for them to review the phone records for July 2015 to confirm my understanding I was informed that the funds would be available for redraw.

Either way, from my point of view, the principle benefit of being with KBC is now gone, so its now a matter of assessing what to do next. I really valued the redraw option personally, but at least I found out before I made another lump sum overpayment


----------



## jim (9 May 2016)

Hi GNF,

what does your first point mean? is it that if you overpay your monthly repayment you can redraw that back down? if so, could you overpay by any amount and if so does this not mean the facility is effectively still there?


----------



## gnf_ireland (9 May 2016)

@jim 
I am only going on the response to my internal KBC complaint. My Flexible Repayment Instruction was processed in July 2015. Under the terms I signed up to, I have the ability to redraw these funds. I have written confirmation of this in the response letter(s) from KBC.
However, they have advised they are reviewing these terms currently. My 'historic' instruction agreement still stands, and therefore I can continue to redraw these funds as long as the instruction is not modified.

I would advise to contact KBC and ask about what the terms are for the Flexible Repayment Instructions currently, and you can base your decision on this.


----------



## desmondo (23 Jan 2018)

I want to overpay my mortgage, drew down my mortgage in Dec 2015, got form that I can redraw money back today, if you have say 12k, do 4 months of 3k, if you can’t do lump repayments 

Will that work? (Appears to be good deal)


----------



## gnf_ireland (24 Jan 2018)

@desmondo I answered the same question in the other thread


----------



## gnf_ireland (24 Jan 2018)

All, as an update on this issue since May 2016
I ended up going through a lengthy internal complaints/dispute process with KBC on this issue for a good 6 months in 2016. The agreed outcome in the end was I could redraw the regular over-payments and lump sum payments made in 2015, but was not permitted to redraw any further over-payments made from 1st January 2016. This agreement suited me, as I had made considerable over-payments in 2015, and gave me access to a reasonable emergency reserve fund. I should add I also made further over-payments in 2016 and 2017, but these are not available for redraw. This agreement was also formally included in a FSO mediation resolution agreement on another issue in 2017, so I am pretty confident there is no chance it will not be honoured.

I am not sure why I was given the concession by KBC. Initially the only option available to me was to redraw all of the overpaid funds immediately. My argument was that I had received a letter from them confirming I could overpay the mortgage and redraw the funds at a later point. I had then checked this with the mortgage team and they confirmed I had this facility available to me - in an email. I then made a clear decision to liquidate other investments and paid a considerable lump sum against the mortgage - based on the facts they had given me in writing. I had also said that if the issue had not been resolved satisfactorily I would have brought it to the FSO for resolution.

I recently moved to a 10 year fixed rate with KBC, and I was advised at the time that the redraw is not affected by this and I simply pay 2.95% on any increased mortgage balance post redraw.

So the only advice I have for anyone who feels they may be in the "grey territory" here is to confirm what written confirmation you have around the redraw facility, what validation you done to ensure you were eligible etc. I would be suspicious that you will have any success in disputing this unless you validated with KBC that you were eligible. If you wish to PM me on anything further I am happy to discuss.


----------

