TRS does not add up

Hi - I recently got a letter from my bank stating that my mortgage is now (sample figures given) 1000 per month cos of the latest hike in interest rate and that it would be reduced by TRS where applicable. So I presumed that I would get my trs of 133.33 (I'm ftb in third year of mortgage) reducing this to 866.66. However there is a discrepancy of about €17 over this amount (i.e my payment was 882) and I've checked the payments pre April and there appears to be about €16 overpaid in them too. Before I go chasing the dreaded bank on this is there something obvious I'm missing. Some possible reasons I think meself is that I may have to re-apply for trs since budget change last december or perhaps my 133.33 for ftb is based on new ftb's ?

Are you sure that you're paying €8K or more in interest and thus entitled to the maximum relief?

Also (probably would not explain your discrepancy) but do lenders calculate the relief on a calendar monthly or a daily basis? For example if you are entitled to the full €8K @ 20% = €1,600 p.a. is this applied as €1,600 / 12 = €133.33 p.m or could it be (€1,600 / 365) * x where x is the number of days in any particular month?

Are you sure that you're paying €8K or more in interest and thus entitled to the maximum relief?

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Ah I knew there was an obvious reason - thanks. Interest is about 5k. I dont suppose there's a calculator somewhere or maybe an example of how this is calculated (for dummies) to get the exact figures based on my interest payments ?

You don't need a calculator. If your maximum relief was on €8K but you actually pay less than that then you just get relief on the lower amount. If your interest bill for the year was actually €5K then you would get relief on that only. €5K @ 20% = €1K p.a. or €83.33 p.m. Not sure if this adds up or if you are posting actual figures but that's how the calculations should work anyway. You can use Karl Jeacle's mortgage calculator to estimate the annual interest and capital bills on a mortgage (enter the mortgage amount, term, rate - and start date if necessary and then use the Annual Table button) but it does not take account of interest relief.

Well with the last 2 years of interest rate hikes the figure was constant as long as the interest was always > 4k so no calculator would be needed but now that the interest figure is fluctuating its impossible to say you're interest at the end of this years is 5.5k so we devide that by 12 to get trs (unless the interest > 8k). The interest paid by Dec could be totally different than current rate. I was just wondering how the bank /revenue guesstimate as to what your trs is gonna be as they appear to be different each time there's a hike.

Madra said:

I was just wondering how the bank /revenue guesstimate as to what your trs is gonna be as they appear to be different each time there's a hike.

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I would imagine that they give you full relief on the amount of interest paid each month unless it exceeds 1/12th of the maximum relief (in your case €8K / 12 = €666.67) in which case they apply a cap? (To be precise they may operate on a daily basis of ((€8K / 365) * x) where x is the number of days in the month in question).

Ah slowly it starts making sense so they take the monthly interest (where interest < 8k p.a.) and deduct this from €666.67 (8k/12 max monthly relief) and muliply by .2 (20%) to get your monthly relief.
Thanks the penny has pinged.

Madra said:

so they take the monthly interest (where interest < 8k p.a.) and deduct this from €666.67 (8k/12 max monthly relief) and muliply by .2 (20%) to get your monthly relief.

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Huh!?? No - they take the interest that you pay and, subject to a cap of (in your case) €666.67, they calculate 20% of it and deduct the resulting amount from your monthly repayment. I don't know what you're on about deducting the interest payable from €666.67 above.

Ooops yes I meant they take my monthly interest and mulitply by .2 to get my trs relief for that period. Ta

Madra said:

Ooops yes I meant they take my monthly interest and mulitply by .2 to get my trs relief for that period. Ta

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Yes - subject to the relevant cap. At least I assume that they do it this way and it seems to make sense and not rely on any a priori knowledge of what the annual interest bill will actually end up being since, with rate changes, it's impossible to predict. As I say they may actually do it on a daily rather than calendar monthly basis. If you ask your lender they may be able to explain their process for this. On the other hand you could get blank stares too...