Calculate how much you can overpay monthly on Fixed Mortgage

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MMG1987

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Apologies if wrong forum but as an original Ulster bank mortgage which was moved to PTSB I hope someone here might have expertise.

Might be a stupid question but will ask anyway. Recently my fixed mortgage moved over from Ulster to Permanent TSB and it has got the facility to overpay by 10%.

I am just wondering if I am overpaying monthly and I want to pay the max amount without being penalised is there a simpler way of working this out or would I need to regularly change the overpayment amount. My thinking is if your allowed to overpay 10% of the balance but every single month the balance of the mortgage will change. Maybe I am missing something or its the balance on a certain date.

Eg simple example.

I have a mortgage for €100,000 and have a balance of €80,000 that I owe.

I am repaying €400 a month without overpayment.

10% of €80,000 is €8,000 and then divide by 12 months = €666

So can I pay €400 + €666 = €1066



Then the next month my balance is €80,000 - €1066 = €78934 and lets say €200 interest = €79134

Now your monthly 10% is going to be less than the €666 and you will have to call the bank and get your overpayment amended and that would be every month if you wanted to pay the absolute max. overpayment.

I am wondering am I misunderstanding something or is my logic above incorrect. I don't mind changing it time to time but don't want to do it that often but equally don't want to get penalised. It was simpler to change with Ulster online, not so with Permanent TSB.
 
Contact PTSB and ask them if there is a break fee.
I might have misinterpreted, but I think they might be waiving any break fee during the current fixed period.
 
RedOnion said:
Contact PTSB and ask them if there is a break fee.
I might have misinterpreted, but I think they might be waiving any break fee during the current fixed period.
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I will contact and ask. Does that in theory mean I can overpay as much as I want without penalty up to whatever I can afford?
 
MMG1987 said:
I will contact and ask. Does that in theory mean I can overpay as much as I want without penalty up to whatever I can afford?
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Just confirm it with them. I'm not a customer, but if what I heard is correct, then yes.

Either way, because interest rates have increased you should be able to overpay without penalty regardless.
 
@MMG1987 I believe that the balance that Ulster Bank (and now PTSB) use is your outstanding balance as it was at the start of the current calendar year, but I can't find this in writing at the moment. So it doesn't matter that your balance is reducing as a the year progresses – they always use the same figure when calculating the limit.

In any case, as @RedOnion says:
  • PTSB may be waiving break fees for UB customers (but confirm this with them)
  • And even if they aren't, the penalty to overpay is very likely to be zero in your case
 
Thanks both for the information. @Paul F yes that I thought they would go on a balance on a certain date I was thinking maybe the anniversary of the mortgage or it could be the start of calendar year as you said. Hard to find this stated clearly. I will contact them and try to get clarification. Thanks.
 
MMG1987 said:
I will contact them and try to get clarification.
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You may have a hard time getting information about the balanced used: you will probably be talking to PTSB staff, who are unlikely to know the ins and outs of the UB overpayment facility.

Edit: this thread confirms that the limit is 10% of the outstanding balance as it was at the start of the current calendar year:

Ulster Bank 10% overpayment option?

Hi We are on an UB fixed rate of 2.5% through to Sept 2023. Outstanding balance is circa 470K. We may be in a position to over-pay in the next year or so. How does UB calculate the 10% overpayment? Is it 10% of the balance at the time or is it 10% of the original balance when the mortgage was...
www.askaboutmoney.com

But if you can get information on whether or not break fees are being waived, and for whom, that will help others here.
 
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