paid lump sum off mortgage; bank can't reduce term

L

luckystar

Registered User
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Sorry, title may be a little confusing!

I paid a lump sum off my mortgage and specifically requested that it reduce the term not the repayments. Bank (one of main 2) says they can't do this (ie monthly amount has reduced) and the only way is to make monthly overpayments.

Anyone else come across this? I wanted to know how many years the amount would have reduced the term by and they couldn't tell me this either.
 
I had a similar experience, couldn't change term and could only make overpayments in lump sums >€1,000
In the end I setup a deposit account as a feeder, and put my over payments in there monthly and transferred over lumps periodically.
 
Permanent TSB get you to fill out a form stating if you want the montly payments reduced or the capital reduced. Did your bank get you to fill out a similiar form. Did you make it clear and put it in writing to your bank before you lodged the money that you wanted the term reduced? if so then it sounds like they had a duty to infom you of this at the time.
 
Hi Luckystar

Is it AIB by any chance? I had heard that they must issue new contracts if someone wants to extend the term, so it might be the same if you want to reduce the term.

But with any bank, you can set up a standing order and pay whatever you want off the mortgage. This will reduce the amount outstanding and hence the term.

if you go to Karl Jeacle's mortgage calculator you will be able to do the calculations yourself.

Brendan
 
I paid lump sum, electronically, off my tracker with AIB and they automatically reduced monthly payment. However, when I contacted them they had no issue in reducing the term.

I requested the new end date which they sent in writing. This was in May 2008, perhaps things have changed since then.
 

I had the same thing, but I just asked to increase the monthly payments and reduce the term. There was no problem at all, but I did this at the end of 2008.

I'm guessing they just don't like the extra paperwork!
 
I asked AIB about doing this in the last year or so and was told I can't do it using my online banking - I would have to save an amount and then come into branch and they could take a lump sum off my mortgage account.

They also asked me to NOT try to do it every month with say €100 - instead gather a bigger amount of say €1000+ and then do it less often. They said it needed to be calculated manually and they would get a bit miffed at HQ if they were getting small amounts thrown at them too often.

Have yet to do it, but I would be worried that they might now use any overpayment as a breach of contract to get me out of my tracker !!
 
Hi two

That is a useful link. It seems absolutely clear that an AIB borrower can increase their mortgage repayments:
Therefore, increasing your mortgage repayments and reducing the term of your loan may save you money in the longer term as you pay less interest over the life of your loan.
Click to expand...

So maybe luckystar is with Bank of Ireland?

Brendan
 
Yes Brendan it is bank of Ireland. They have no problem accepting a lump sum payment or monthly overpayment. Just frustrating that they can't give me a new end date. I use the jeacle calculator (find it really useful) but with the changing interest rates, lump sum payment and overpayments it seems impossible to figure it out. Anyone know of a calculator where you can put in ALL info and get the answer? Also, from looking through bank statements I'm wondering if it's calculated correctly. Have always assumed it has to be but figures don't seem to add up. If i wanted this independently checked who would I use?

Anyway, hope this makes sense. Btw I'm on a .7 tracker so don't want to upset this!!
Also, thanks to this site I'm going to stop overpayment and put it into savings account.
 
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