Overpayment / re-fix flexibility of AIB's green 5yr fixed rate (and some other rates)

RedOnion said:
Yes, correct.


The 2nd calculation looks at market (inter bank) rates, but AIBs own variable rates don't factor.
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Thanks. And because AIB use whichever is favourable to the customer and the green rate is the lowest fix rate, we'll be fine.

Just saw on my account that the rate is now 3.65%, so it's fixed now. The first extra payment will be tomorrow.
 
Just made a lumpsum payment today.
I am on 5 year green fixed mortgage at 2.15%.
Now waiting games begin until I get a letter and hopefully it will be a zero break fees.
 
masterboy123 said:
Just made a lumpsum payment today.
I am on 5 year green fixed mortgage at 2.15%.
Now waiting games begin until I get a letter and hopefully it will be a zero break fees.
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It will definitely be €0. They have no rates anywhere near 2.15% now. The letter will only state your new monthly repayment.

If you want to, and it's easily affordable, you could pay the monthly reduction amount as an extra payment every month and it would still be €0 break fee each time.
 
I hope so also that it will be €0 break fee.
They do send out 2 letters—one with a new reduced monthly payment and the other stating that the break fee was zero. I got them letters in February this year.

Now the main question is:
Is it financially better to pay lumpsum every six months
Or
Increase the monthly repayment hoping the break fee will be zero.
Thanks
 
Interest in calculated daily so you're better off paying down a portion of debt earlier rather than later. However I'd caveat all that by pointing out a mortgage rate of 2.15% is exceptionally low in the current environment. Assuming you've good willpower and won't squander it, you'd be financially better off availing of some of the high rate fixed products mentioned in the best buys thread.

Best Buy - Term Deposits (Fixed Lump Sum Savings)

Rates are frequently updated. Information last changed: 28 October 2024. Highest Term Deposit Rates 3 Months - FCM Bank - 3.51% 6 Months - CA Autobank via Raisin Bank - 3.35% 1 Year - CA Autobank via Raisin Bank and Reitumu Banka via Raisin Bank - 3.30% 2 Years - CA Autobank via Raisin Bank...
www.askaboutmoney.com

With a fixed mortgages rate of 2.15% any deposit rate guaranteeing you better than 3.21% would leave you better off saving rather than paying down your mortgage.

Not for everyone but one that is worth considering before making any payments:

Better to save than to overpay a low fixed rate mortgage in some instances?

A recent post got me thinking are we close to the point where it makes financial sense to save rather than to pay down debt i.e., for some borrowers the return on savings (net of DIRT & PRSI) is greater than overpaying a fixed rate mortgage. There was a point in the past where this strategy...
www.askaboutmoney.com
 
Thank you for pointing me in the direction of deposits. I can see Raisin bank is offering highest rate, but I don't trust them but have trust issues with them. I have never heard of them on Irish media apart from some forums. I know they also offer 100k protection.
I am still thinking about whether to open an account with Raisin Bank, but I need to do my research first and check if there are any hidden fees or quarterly charges, etc.
I prefer to have cash ready in case of emergency. Would Raisin allow you to break deposits without penalty?

When I pay mortgage, at least I know it's for the ownership of my house irrespective of the economic crisis in the world. So there is a piece of mind.
 
I've set up a standing order to pay extra off our main mortgage and top up mortgage every 2 weeks (when we get paid). It's going to be a waste of paper sending out 4 letters every 2 weeks. Wish they would just do it by email or adding them to my account.
 
No fees or charges but like deposits with Irish banks there may be taxes similar to DIRT (which can be offset against Irish DIRT).

There are easy access options but those rates are very low.

Not sure the relevance of easy access. We're talking about money you would pay off your mortgage not emergency funds. Once you paid down part of your mortgage those funds would not be easily accessible anyway.

masterboy123 said:
When I pay mortgage, at least I know it's for the ownership of my house irrespective of the economic crisis in the world. So there is a piece of mind.
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It's a very remote chance but not zero that the bank you deposit with runs into issues. However, depending on the level of deposits, you should be covered by a deposit guarantee scheme.

Something to consider is how resilient are your personal finances to the same economic crises? The advantage of deferring mortgage payments to deposit at higher rates is that not only are you net better off but you also have access to those funds at the end of the term, should you need them (for something important) rather than being locked up in a mortgage you cannot access.
 
masterboy123 said:
Just made a lumpsum payment today.
I am on 5 year green fixed mortgage at 2.15%.
Now waiting games begin until I get a letter and hopefully it will be a zero break fees.
Click to expand...
Did this work out as expected?
I'm hoping to make overpayment soon and have the same mortgage rate as you. Did you submit overpayment form or just transfer in the app?
 
Ronan_M said:
Did this work out as expected?
I'm hoping to make overpayment soon and have the same mortgage rate as you. Did you submit overpayment form or just transfer in the app?
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You can just make a transfer. Do a test transfer of 100 if in doubt.
 
I do it through the AIB app, ive done lump of 2700 one month and I do at least 300 each month, because of the internet rate I’ve had no penalty .. so I make the payment and the letter arrives maybe 2 weeks later saying payment received , the new monthly mortgage payment and that there is no penalty but if I make another payment depending on rates there may be a penalty.. every month since I drew down last November..
 
thanks @orwell, going to do this through the app so. The thing I'm trying to avoid is losing the 2.15% rate but reading the replies above it seems like this won't happen.
The transfer between accounts behaves like option A on the overpayment form of "pay a lump sum and reduce your scheduled repayment amount"?
 
I’m the same, I’m on 2.1% green foxes for 5.. drawdown Last November, so from my understanding the fixed rates would have to be lower than 2.1% for me to be penalised by their calculations.. I think it’s specifically the 4 year fixed as I have 4.5 left on my fixed term, from what I read in the original thread on this…
I think you’re good to go cause there no rate next or near your 2.15
 
And yes I think so, I transfer between accounts and then the letter arrives saying my monthly payment the is reduced but I keep overpaying each month anyway..
 
RedOnion said:
Which rate is higher than what?
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Orwell mentioned his/her rate was 2.1.
If a person was fixed on a higher rate let’s say
4.2 would a break fee be due too AIB if they paid off either a small monthly overpayment of €150-€300 or a yearly once of payment of between €1500-€3000 ?
 
No, because AIB have since increased their rates again. There'd be no break fee.
 
Ronan_M said:
Did this work out as expected?
I'm hoping to make overpayment soon and have the same mortgage rate as you. Did you submit overpayment form or just transfer in the app?
Click to expand...
Yes, it worked out as expected.
I submitted the overpayment using the mobile app and received letter by post after a week or so. No break fee and monthly mortgage reduced.

I will make another overpayment later this year.
 
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