Key Post ptsb has some very attractive penalty-free overpayment options on fixed rate mortgages

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This thread applies to pure ptsb mortgages only. If your mortgage transferred from Ulster Bank, check that the same rules apply.

The rules apply to home loans only.



1. If you change your fixed interest rate during the fixed period, break fees may apply.
2. If you pay off fully during fixed period, break fees may apply
3. If you overpay and keep your payment the same, no fees apply. This is the default option if you overpay. The overpayments build up in a credit account, and reduce the interest charged. You can also use overpayments to subsequently fund a payment holiday. You can't get them refunded back to you though.
4. (There is some doubt about this point) If you overpay and reduce payments no fees apply. In this case you no longer have credit in your account, the credit had been applied to your mortgage balance. If you want to use this option be even more careful to check with PTSB, as all ts and cs indicated that break fees could be applied in this case.
 
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This is a very attractive and distinctive feature of ptsb mortgages and needs to be more widely known.

There are two separate, but related, aspects to this.

1) Overpayments on your ptsb mortgage are put into a credit account

With all other lenders, if you pay a lump-sum off your mortgage, they will either reduce the repayment and keep the term the same or keep the term the same, but reduce the repayment. If you subsequently need a payment break or can't meet your repayments, you go into arrears, even though you are ahead of schedule in repaying your mortgage.

But ptsb puts any overpayment into a "Credit Account" which is the opposite of arrears.
This means that if you subsequently want to take a break from your repayments, you can do so until you have used up the credit on your account. Let's say you lose your job. You can just stop paying your mortgage. Let's say you want to buy a new car. You can stop paying your mortgage and build up your savings to do so.

2) If you have a fixed rate mortgage, you can use this facility to overpay your mortgage without penalty

With all the other banks, if you have a fixed rate and want to pay a lump-sum off it, you may face an early repayment penalty. With ptsb, you can overpay the mortgage using the above facility and won't face an early repayment penalty.

However, early repayment penalties do apply in the following situations

1) If you break out of a fixed rate to switch to a different rate with ptsb.
Say you fix at 5% and mortgage rates fall to 4%. If you break out of your fixed rate, they will apply an early repayment penalty.
2) If you pay off your entire fixed rate mortgage early.
Say you fix at 5% and want to trade-up, then ptsb will apply an early repayment penalty.
Say you fix at 5% and want to switch to another cheaper lender, ptsb will apply an early repayment penalty.

3) If you overpay your mortgage and ask them to reduce your repayments.
I don't know why you would choose to do this. You can take a break whenever you like if you overpay your mortgage, so there is no need to reduce your repayments.
 
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Notes

There are never any early repayment fees on variable rate mortgages
All of the above comments refer only to fixed rate mortgages. If you are on a variable rate, there is no early repayment fee.


If there is an early repayment fee, how much would it be?
It depends on a few factors:
  • The amount of time left on your fixed rate term. If you have only one month to go, the fee will be negligible, but if you have 5 years left, it could be substantial.
  • The amount you are repaying early.
  • If interest rates have risen since you fixed, there probably won't be an early repayment fee.
  • If interest rates have fallen since you fixed, there probably will be an early repayment fee.
 
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