Interest only mortgage, how do I pay capital?

Hi,

I'm on an interest only mortgage at the moment and would like to pay some off the capital. I've rang my bank (PTSB) and they've told me that I can't pay anything off the capital, it will basically sit in arrears until my interest only term runs out and then it will come off my capital. Is this correct?

Thanks.

Is your mortgage fixed or variable rate at present? Is it your family home?

I'm on a tracker mortgage +.75% above the ECB. My investment property and home are on one mortgage. They are not covered by two separate mortgages.

As you're on a variable rate, there should be no difficulty with Permanent TSB taking your lump sum and paying it straight off the capital of the loan.

We've been on a variable rate interest-only mortgage (BOI) for a number of years and paid off prinicpal in lump sums, no problem.

I'm with PTSB too and have the same rate as you, and I've reduced the capital without any problem - however, I'm on variable rate. I'm not exactly sure about the interest only rate - can you be paying a tracker rate on an interest rate only mortgage? I'm not sure, but if you can maybe that's where the problem/issue is - and you'll end up paying off the interest first. If you don't get anywhere with whomever you contacted at your branch it might be worthwhile speaking to a manager. I'd find it hard to believe that a bank won't 'accept' money from someone willing to reduce the capital on a mortgage these days - but you never know, it's worth asking again I think. Let us know how you get on.

Yep, I'm on a tracker and interest only. I went to my branch the other day and filled out the form to send it off. Got a call this morning advising me that I can't pay it off the capital so I've told them that I've checked this out a few times with their phone banking and also the branch when I went in the other day and they both said it was fine. I was told that it would come off the capital (not the interest). The amount of incorrect information that bank has given me over the last year or so is unreal.

Since you have your mortgage account number, and your banks sort code, why don't you just use 24 hour banking to transfer the money straight off the principal.

It wouldn't matter what anyone did or didn't tell you then.

When I try that, it sits in a section on my bank account that will just build the money up until I come off the interest only period and then it will allow me to transfer it off. Thats what originally happenened, I had presumed it would come off the principle until I noticed it wasn't and then tried to go into the branch to pay it off...where I filled out the forms and then they told me it would come off. If I either sent them a letter or filled out the documentation.