AIB A quick way to calculate how much you will get

I am getting a headache

Can someone here give me a rough figure on the cash compensation someone could expect if they were due 30000 to be removed from the mortgage principal please ?

You had a mortgage of €250k

I have used the rough guide of 4% of the capital sum .

So you should expect a cheque in the order of €10k

Brendan

Brendan
If I had a mortgage of 230k in 2009 that would work out at €27600 And 4 % of this would be €1102 x 11 yrs = €12k approx

Trackscandal said:

I agree it could be interpreted either way.

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Sorry, I can't see any room here for different interpretations.
They refer to "that" 12%. The interest charged on the amount that they are refunding at the date you came off the fixed rate. It's really simple in my view.

Daithib said:

Brendan
If I had a mortgage of 230k in 2009 that would work out at €27600 And 4 % of this would be €1102 x 11 yrs = €12k approx

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No, Brendan is saying roughly speaking it'll be 4% of the balance at the time your fixed rate ended. So 230k * 4%.

The 4% is a 'rough estimate' the actual figure might be higher or lower, depending on the rate you were charged, and how long it's been since your fixed rate ended.

If you want to work it out accurately, it'll be 230k * 12%, and then work out the interest accrual on that amount, at the rates you were charged since, compounded quarterly.

RedOnion said:

No, Brendan is saying roughly speaking it'll be 4% of the balance at the time your fixed rate ended. So 230k * 4%.

The 4% is a 'rough estimate' the actual figure might be higher or lower, depending on the rate you were charged, and how long it's been since your fixed rate ended.

If you want to work it out accurately, it'll be 230k * 12%, and then work out the interest accrual on that amount, at the rates you were charged since, compounded quarterly.

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Hi Redonion

so my view is that my mortgage was 230k in 2009 when my fixed rate finished and I was on a combined variable and fixed since then...so is it 230k written down by 12% = 27600
Then the interest on this amount 27600 @4% approx = per year 1102 x 11 years = 12000 approx

Hi Daithi

I will say it again.

If you want to work it out exactly, then go back over your statements and find the actual interest rate charged and add this to the €27,600 - but compounding it each year.

This happens to work out at around 4% of €230k or €9k - but that is very rough.

But your estimate that the average interest rate was 4% over ten years is even rougher. You need to look at the actual interest rate charged if you want to be more accurate than my €9k.

Brendan

If you can't find the rates applicable to your mortgage over the period there are some here for LTV > 80% https://www.askaboutmoney.com/threads/history-of-aib-svr-and-ecb-since-2008.217107/

Hi Scandal

It just occurred to me that AIB has agreed to implement the Ombudsman's decision. So it is the wording the Ombudsman used which will determine it. Here is the actual wording:

(a) apply a once off reduction (write down) of 12% off the capital balance on the
mortgage loan account as it stood at the end of the fixed interest rate period which
expired on 29 April 2010; and

(b) repay the Complainant, to an account of her choosing, the difference between (1)
the amount of interest she actually paid from 30 April 2010 to date, and (2) the
amount of interest that she would have paid on the reduced (written down) capital
balance from 30 April 2010 to date.

I hope that concludes this discussion?

Brendan

Hi Brendan,

Thanks for sending the Ombudsman decision on.

I was debating whether I would respond or just leave it but if you read the quote below and see my comments included in bold then I still feel AIB might use the method I suggested. This would obviously be disappointing as the refund amount will be less.


(b) repay the Complainant, to an account of her choosing, the difference, (this is comparing the two scenarios), between (1)
the amount of interest she actually paid (this in my view could only mean the historical interest that was charged i.e. that would be the interest in the $100k scenario or the actual interest paid on the loan before adjustment), from 30 April 2010 to date, and (2) the amount of interest that she would have paid on the reduced (written down) capital (this would be the $88k loan scenario) balance from 30 April 2010 to date.

The term "reduced (written down) capital" in my view can only mean the €88k amount and not the $12k reduction as it would not make sense to compare the interest on the $100k amount and the interest on the $12k amount and refund the difference. The difference in the two scenarios will be 12% of the interest actually paid.


(a) apply a once off reduction (write down) of 12% off the capital balance on the
mortgage loan account as it stood at the end of the fixed interest rate period which
expired on 29 April 2010; and

The way the Ombudsman has written this part seems to suggest that $12k will be loan reduction amount. The question is whether it is taken off the loan balance in 2010 or in 2020. If AIB reduce it from the 2010 balance and rework the loan as set out in part two of the calculation above then the reduction from the 2020 balance will not be 12% .

I realise you have stated elsewhere that Karen got the equivalent of the $12k reduction now and compounding interest on same in the intervening period. I just feel AIB will interpret the decision to their advantage and try and pay as little as possible. Maybe the calculation they use will differ from what they gave Karen.

I hope I am wrong, and if so at least we will have considered the worst case scenario.

It will probably have been agreed with the central bank by now.[/QUOTE]

How can the calculation be different to the one they gave Karen if they are, as they said, implementing the Ombudsman’s decision to all other customers in the cohort? They cannot calculate it one way for one member of the cohort and differently for others.

Trackscandal said:

The term "reduced (written down) capital" in my view can only mean the €88k amount and not the $12k reduction as it would not make sense to compare the interest on the $100k amount and the interest on the $12k amount and refund the difference.

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I'm really struggling to see why you keep going back to this.

Let's go back to your 100k annuity example.

Look at the interest on that over the period.

Then separately calculate the interest on 88k, but reducing that by the actual repayments made by the borrower (i.e the repayment based on 100k annuity).

Then compare the interest charged between the 2.

Guess what? It's exactly the same as if you took a 12k balance and compounded the interest on it.

There is no other way for AIB to do this. There is no wriggle room for interpretation.

October has published the correct way to do it here: