# Overcharging payment options



## corktim (15 May 2018)

Hi all,

Can you insist that all of the overcharged interest is paid back to you and not used to reduce the capital balance.


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## peemac (17 May 2018)

No - the mortgage must be returned as close as possible to the state it would have been if no over charge was applied.

Its just "over payments" that are refunded

If you think about it - you can't be refunded something you haven't given.


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## Stillwaiting (17 May 2018)

Peemac - seems one organisation just refunded the whole lot and never reduced the mortgage back to what it should've been if there was no overcharge. I thought Central Bank guidelines stated that the banks must do this.


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## corktim (17 May 2018)

Mine is an interest only mortgage so would have thought that all they can do is repay the interest overcharged.may be the same for above.


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## Brendan Burgess (17 May 2018)

Stillwaiting said:


> seems one organisation just refunded the whole lot and never reduced the mortgage back to what it should've been if there was no overcharge. I thought Central Bank guidelines stated that the banks must do this.



peemac is correct. 

Bank of Ireland refunded the full overcharge which is in clear breach of the Posting Guidelines. 



corktim said:


> Mine is an interest only mortgage so would have thought that all they can do is repay the interest overcharged



Think about it and I will exaggerate to make the point clear. 

You started with a mortgage of €200,000 

You were charged a total of €20,000 interest. 

You never made any repayment at all so your balance before the correction had risen to €220,000 

They interest should have been €15,000 so they overcharged you by €5,000. 

They now correct your balance to €215,000 which is correct.

You want them to refund you the €5,000, so your balance would stay at €220,000

The bizarre thing, which is rarely pointed out is that the compensation was based on the overcharge and not on the overpayments. 

Brendan


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## corktim (17 May 2018)

Hi Brendan 

You might be a bit off with above. Paying interest only means the capital balance stays the same but it doesn’t increase.

Taking above if I was charged €20k interest and the correct amount was €15k they should refund the €5k to me in full no? I’m still making payments but only the interest.

If this is an investment property they reduce the capital balance and I sell it then I pay CGT on any gain as opposed to getting the interest paid back to me tax free.

This is my take but I may be wrong.


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