How to overpay mortgage

Hello all,

I would appreciate advice on the following.

I have a variable rate mortgage with AIB.

I want to overpay by X amount per month in order to clear the mortgage quicker.

I want to retain the option to switch back to the current agreed payments if my finances change and I cant afford the overpayment.

I would like AIB to increase the monthly direct debit that they currently take by X.

If anyone could let me know what I ask AIB in a letter to effect the above I would appreciate.

I apologize if i am asking a stupid question, its just I am always nervous with banks.

Thank you.

I would be more inclined to leave the direct debit alone and if possible, all depends on their systems, to set up a separate standing order for the extra you want to pay. That way the extra is under your control and you can cancel the standing order at any time. You just want to be careful that they do not reduce your term officially and then run into trouble if you need to extend it back to original again, while they should in theory be able to increase the direct debit without this happening you just never know with banks!

Hi Afterflood - This is the wording I have used with the AIB "Please can you increase the payment on my Mortgage A/C XXXXXX up to the amount of €XXX Fixed per fortnight going forward until further notice; please take the overpayments from the capital amount". Each time i have faxed this to them they replied with a letter a few weeks later with the revised schedule and amount. I have confirmed verbally with them that i can revert back to the original payments and remaining term also by instructing them to do so. Hope this helps -Gal1

-Gal1:
You need more than verbal from a Bank. From experience their verbal confirmation is not worth anything, they will deny that agreement in future if it suits them.

just by paying extra does not mean the contracted term or repayments have been changed. It just means you are paying more.
I would like a letter from them to that effect.

Ps , good work in paying more.

Be very careful and make sure very explicit in writing that you want to be able to revert to original agreement. I had a battle with EBS (if you search you will find my thread on it). Had been overpaying for years increasing every so often, always put it in writing and always confirming that yes could revert to original agreement. About 2 years ago decided that i wanted to revert to original payment. EBS claimed i could not as i had changed the terms of my repayments! I was asked to fill out an SFS form and submit to head office for 'consideration' of 'reduced payments'!!
Naturally i was fuming, in fact i remember a heated row with local Branch Manager with me going 'give me back my money'!! I threatened legal action and had a letter for Head Office and they subsequently backed down...(there was a similar incidence where the customer went to the papers and there was an article about this in the Indo). I got it sorted, not sure what AIB are like but make sure you get written confirmation that you are voluntarily overpaying and that the original agreement has not changed.
Was not a pleasant experience. I certainly feel sorry for those in genuine difficulties if a customer in no financial distress was treated in such a manner. And they wonder why we harbour such negative feelings towards banks.......!!

You could also simply get your mortgage account number and sort code and add it to your current account as a beneficiary bank account to make payments to.
This way you have no standard payment or anything remotely like a contracted change, but can make regular unscheduled payments whenever suits you. Once or twice a year, simply write asking for the term to remain as is and a recalculation of payments to be made.

I would advise that you set up a savings account. Put the extra in there every month. At the end of the year, send the money to the bank with a letter saying that it is a capital repayment. This will avoid the issue that the previous two posters had and keep the situation completely in your control.

Have requested this three times without any issue (I have not attempted yet to reduce it - however it is always marked as a capital overpayment on my mortgage statement). Generally I word it something like this:

I want to make a fixed monthly capital overpayment without changing the term of my mortgage in addition to my regular mortgage payment, from dd/mm/yyyy until further notice in the following amount: €xxx.

Please confirm this in writing.

Regards,
...

I funnily enough actually have the last response from UB with me here so I have transcribed it below:

"You contacted us to increase the monthly step-up payment on your mortgage account.

We've done that for you now. Your increased step up of €xxx will start on dd Month yyyy.

If you regularly overpay your mortgage, we credit your account immediately and the overpayment will reduce the balance, but not the term, of your mortgage. It will also have the effect of adjusting your interest.

If we change your rate, your normal monthly repayment will change automatically, but any regular overpayment you have in place will remain the same unless you ask us to change it.

If you have any questions...

If you feel you may have difficulty ..."