AIB "How much will I get?"

[Brendan Burgess]

AIB has agreed to implement the Ombudsman's decision in Karen's case

1) They will write down the value of your mortgage by 12% of the amount you owed when your fixed rate ended.
2) They will refund you the interest charged on that write down


If you had a mortgage balance of €100k when your fixed rate ended, your mortgage balance today will be written down by €12k.

If you want to work out how much interest was charged, you will need a big Excel spreadsheet, and the dates of every interest rate change since you came off the fixed rate.

If you don't fancy doing that, then, my very rough approximation is that it will be about a further 4% of the balance on your mortgage when the fixed rate ended.

This would depend on a few factors. If your fixed rate ended before 2010, it will be a bit more. If it ended after 2010, it will be a bit less.

Just to be absolutely clear, the 4% is my estimate. The Ombudsman's decision is to refund the interest charged on the write-off.

 

[Brendan Burgess]

Let's deal with the first part - the write down.

We will assume that your fixed rate ended in July 2011

If your mortgage was €100k in July 2011, your mortgage today will be written down by €12k.

So if your mortgage balance today is €62k , they will write it down by €12k and you will only owe €50k

Not sure that I can make this any simpler?

Brendan

 

[Brendan Burgess]

How much will my monthly repayments fall by?

So if your mortgage balance today is €62k , they will write it down by €12k and you will only owe €50k

Because your mortgage is smaller, your repayments will also fall.

The mortgage balance today is being reduced by 20% ( €12k is 20% of €62k)

So your mortgage payments will fall by about 20%.

This will depend on a few issues:

1. The term of the mortgage
2. How long you were on a fixed rate for
3. What interest rate you were on
4. Whether you are in arrears or had a restructuring.

But 20% is the rough order of the reduction.

 

[Brendan Burgess]

To calculate how much the cash payment will be you need to know what interest you paid on the €12,000 since July 2011.

You will need to know the actual interest rate - this will vary from person to person , depending on your Loan to Value and whether you fixed or not.

If will also depend on when your fixed rate ended. If it finished in October 2008, you will be getting 12 years' interest. If it finished in 2012, you will be getting 8 years interest so it will be less.

If you have all this information, you can work it out exactly, but if you don't, you can use 4% as a very rough estimate.

Here is a typical case for the guy whose €100k mortgage came off a fixed rate in July 2011 and has been on the SVR since. For simplicity , I have used the average SVR for each year.

So he paid €4,314 interest on the €12,000 write down.

His mortgage was €100k, so that works out at 4.3% of the balance.

Brendan

 

[43220039]

Hi Brendan

many thanks for all your hard work on this matter , it’s much appreciated .

with regards to the refund of interest charged - we drew down our mortgage in feb 2009 and fixed it for a year and then fixed again for 5 years and then in 2015 we moved to bank of Ireland .. does the interest refund only apply to the years you have been with AIB ?

many thanks
Marie

 

[David_Dublin]

Thanks Brendan, until I read this I was still a bit clueless of how it actually worked, particularly the 4%. The many other posts you and others have contributed now make sense, but the above helped the penny finally drop.

 

[Brendan Burgess]

we moved to bank of Ireland .. does the interest refund only apply to the years you have been with AIB ?

I don't see why it should.

If AIB "owed" you €30k in 2015, you have paid 5 years interest to BoI since on that money.

I think that they should refund you that as well.

But let's wait until you see the announcement.

Brendan

 

[Billy0464]

Thank you so much for your work in this area - it is much appreciated

 

[tnegun]

I'll preface this by saying that my financial education stopped at Junior Cert level so this could be compete nonsense!! I created this spreadsheet to figure out my own so could can someone sanity check it? It assumes you came off the fixed rate on 01/01/2010. You'll need to add your own balance at that date under Principal plus figure out how many months remaining you had and update the Remaining Term. The interest rates are taken from my own statements LTV >80.

 

[aibredress]

@tnegun , the sheet looks great but 1 major thing, it does not take account of the repayments that you are making on the account, which would, in turn, reduce the amount of interest on the 24,000.00 you have noted. Looking at the rough figure from Brendan, you would be due €8,600.00, your figure is over €11,000.00, that is a significant amount of money.
Everyone's situation is different.
I think the best thing is to do is wait and see what figure AIB comes back with. If people think they are going to get more then they could be disappointed if it comes in less, but if people think they are getting less and get more they will be happy.
Let the bank do their calculations and then people can appeal if they wish.
Just a thought.

 

[Brendan Burgess]

Hi tnegnu

I think you are making this way too complicated.

I have explained the calculation in this post, and I have now attached the underlying spreadsheet.

Just to explain it again.

This person had a balance of €100k
in July 2011 when their fixed rate ended.
They got a write down of €12,000 as of July 2011.

So the only question is : How much interest did AIB charge on that €12,000 since then?

I have used the average SVR. But you should use the actual rate you were charged.

In words...
In the first year, the average SVR was 3%, so he was charged €360 on the €12,000
At the start of the second year, the balance was €12,360
The average SVR was 4%. So the interest charged that year was € 494 - 4% of €12,360

Look at it another way, your balance today is too high by €16,314 because of the "overcharge" of €12,000
So they write down your balance by €12,000
and refund you the difference of €4,314

You could of course do it more accurately by working out the daily interest rate but it would not be that different.

Brendan

 

[tnegun]

@tnegun , the sheet looks great but 1 major thing, it does not take account of the repayments that you are making on the account, which would, in turn, reduce the amount of interest on the 24,000.00 you have noted. Looking at the rough figure from Brendan, you would be due €8,600.00, your figure is over €11,000.00, that is a significant amount of money.

Just on this point I don't see how the mortgage repayments would affect the interest accrued on the 24k write down? I think the differences between myself and Brendans figures are a combination of using yearly average interest rates vs the actual monthly rate take from my statements particular to my mortgage.

 

[tnegun]

You're absolutely correct Brendan my sheet is overly complicated for this. I pulled it from a larger one I created to manage my own finances where I wanted to see the impacts of rate changes and additional principal payments over time rather than relying on some of the online calculators.

 

[Shay75]

Hi tnegnu

I think you are making this way too complicated.

I have explained the calculation in this post, and I have now attached the underlying spreadsheet.

Just to explain it again.

View attachment 4618

This person had a balance of €100k
in July 2011 when their fixed rate ended.
They got a write down of €12,000 as of July 2011.

So the only question is : How much interest did AIB charge on that €12,000 since then?

I have used the average SVR. But you should use the actual rate you were charged.

In words...
In the first year, the average SVR was 3%, so he was charged €360 on the €12,000
At the start of the second year, the balance was €12,360
The average SVR was 4%. So the interest charged that year was € 494 - 4% of €12,360

Look at it another way, your balance today is too high by €16,314 because of the "overcharge" of €12,000
So they write down your balance by €12,000
and refund you the difference of €4,314

You could of course do it more accurately by working out the daily interest rate but it would not be that different.

Brendan

I am okay with words, but absolutely awful with numbers.

I've read this email 20 times and cannot figure it out. This is my fault btw, not yours.

My mortgage was €380k at the relevant time when we came off the fixed.

Can someone with the slightest grasp of mathematics calculate roughly what the payout would be, if AIB followed Karen's resolution. (I know that reads like an inter-cert maths question!)

Sorry and thank you

 

[bungaro]

I am okay with words, but absolutely awful with numbers.

I've read this email 20 times and cannot figure it out. This is my fault btw, not yours.

My mortgage was €380k at the relevant time when we came off the fixed.

Can someone with the slightest grasp of mathematics calculate roughly what the payout would be, if AIB followed Karen's resolution. (I know that reads like an inter-cert maths question!)

Sorry and thank you

Going on Brendan's calculations I'd be thinking your mortgage will be written off by 45k (12%) and then possibly another 15k in cash from the interest but as there is no exact breakdown don't quote me on that

 

[tnegun]

@Shay75 when did you come off the fixed rate?

 

[Shay75]

@Shay75 when did you come off the fixed rate?

November of 2011 I believe

 

[Brendan Burgess]

I've read this email 20 times and cannot figure it out. This is my fault btw, not yours.

OK, I have made the opening post even simpler and tried to use words more than numbers. Does this explain it?

AIB has agreed to implement the Ombudsman's decision in Karen's case

1) They will write down the value of your mortgage by 12% of the amount you owed when your fixed rate ended.
2) They will refund you the interest charged on that write down


If you had a mortgage balance of €100k when your fixed rate ended, your mortgage balance today will be written down by €12k.

If you want to work out how much interest was charged, you will need a big Excel spreadsheet, and the dates of every interest rate change since you came off the fixed rate.

If you don't fancy doing that, then, my very rough approximation is that it will be about a further 4% of the balance on your mortgage when the fixed rate ended.

This would depend on a few factors. If your fixed rate ended before 2010, it will be a bit more. If it ended after 2010, it will be a bit less.

Just to be absolutely clear, the 4% is my estimate. The Ombudsman's decision is to refund the interest charged on the write-off.

 

[Shay75]

OK, I have made the opening post even simpler and tried to use words more than numbers. Does this explain it?

AIB has agreed to implement the Ombudsman's decision in Karen's case

1) They will write down the value of your mortgage by 12% of the amount you owed when your fixed rate ended.
2) They will refund you the interest charged on that write down


If you had a mortgage balance of €100k when your fixed rate ended, your mortgage balance today will be written down by €12k.

If you want to work out how much interest was charged, you will need a big Excel spreadsheet, and the dates of every interest rate change since you came off the fixed rate.

If you don't fancy doing that, then, my very rough approximation is that it will be about a further 4% of the balance on your mortgage when the fixed rate ended.

This would depend on a few factors. If your fixed rate ended before 2010, it will be a bit more. If it ended after 2010, it will be a bit less.

Just to be absolutely clear, the 4% is my estimate. The Ombudsman's decision is to refund the interest charged on the write-off.

Thanks Brendan.
That reads clearer to me.
However, that does not mean that your original post was not clear.
It just means I'm not the sharpest knife in the drawer! Thanks again

 

[tnegun]

November of 2011 I believe

@bungaro 's figures are spot on using the average interest rates for a 380k when you exited fixed

Using Brendan's illustration/rates

Year Ending	Opening Balance	Average %	Charged	Closing Balance
2012​	EUR 45,600.00​	3.00​	EUR 1,368.00​	EUR 46,968.00​
2013​	EUR 46,968.00​	4.00​	EUR 1,878.72​	EUR 48,846.72​
2014​	EUR 48,846.72​	4.00​	EUR 1,953.87​	EUR 50,800.59​
2015​	EUR 50,800.59​	4.00​	EUR 2,032.02​	EUR 52,832.61​
2016​	EUR 52,832.61​	3.40​	EUR 1,796.31​	EUR 54,628.92​
2017​	EUR 54,628.92​	3.40​	EUR 1,857.38​	EUR 56,486.30​
2018​	EUR 56,486.30​	3.15​	EUR 1,779.32​	EUR 58,265.62​
2019​	EUR 58,265.62​	3.15​	EUR 1,835.37​	EUR 60,100.99​
2020​	EUR 60,100.99​	3.15​	EUR 1,419.89​	EUR 61,520.88​
Write down		EUR 45,600.00	​
Potential Refund due		EUR 15,920.88​