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Can I credit money to my mortgage account?

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  • 29-12-2008 9:14am
    #1
    Ginger83
    Registered Users Posts: 3,504 ✭✭✭


    Hi all, looking for some advice!I have 12k in savings and wondering if there is some way I could lodge this into my mortgage account to allow it to reduce the interest I pay. I do not want to put it off my capital just at the moment because I wouldnt bet on having my job far into next year so could need the funds at any stage. Has anyone ever tried this or something similar? Thanks


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    #2
    Duckjob
    Registered Users Posts: 2,859 ✭✭✭Duckjob


    Only bank I've heard of allowing something similar to that is First Active with their "Current Account" Mortgage.

    Essentially, you paid interest on your mortgage balance less whatever you had in the account, but the deposit was still accessable at any time.

    It was a couple of years ago that they were plugging that though - don't know if they still offer it.


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    #3
    kenco
    Registered Users Posts: 1,080 ✭✭✭kenco


    Yes you can.

    Your lender can arrange for the remaining capital balance to be reduced by your lump sum and therefore you pay a less amount monthly for the period of time you have the lump sum 'deposited'.

    If you then continue to pay what you are currently paying on a monthly basis then you are overpaying and as long as you instruct them to use the overpay to further reduce the capital then in the longer term you will reduce your mortgage term.

    When you need to take the lump sum out you are effectively back to the start.

    Call your lender and if they are iffy about this insist on it as the facility is there to do it but they rarely (especially now) advertise it.


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    #4
    Duckjob
    Registered Users Posts: 2,859 ✭✭✭Duckjob


    kenco, is that a legal or regulatory requirement that they HAVE to offer that?

    If so, it's a handy one to know heading into a recession.


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    #5
    kenco
    Registered Users Posts: 1,080 ✭✭✭kenco


    Not sure exactly on the legal or stat side but as it is a loan you can make payments against the capital and repay the loan when you want as long as the interest is paid. Certainly on the systems side most of the lenders have this facility in place for Investors, etc.


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    #6
    BendiBus
    Closed Accounts Posts: 2,074 ✭✭✭BendiBus


    kenco wrote: »
    Not sure exactly on the legal or stat side but as it is a loan you can make payments against the capital and repay the loan when you want as long as the interest is paid. Certainly on the systems side most of the lenders have this facility in place for Investors, etc.

    You can pay a lump off the loan, but I don't think the bank is under any obligation to lend it back, which is effectively what this would mean.


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    #7
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    BendiBus wrote: »
    You can pay a lump off the loan, but I don't think the bank is under any obligation to lend it back, which is effectively what this would mean.

    yup, just send a them a cheque and written instructions on what to do. Make sure it is signed by all parties that are on the loan account.

    Generally, you will only be able to draw down funds like this if they are lodged as "funds not yet required" and you have a tranche drawdown facility.


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    #8
    Ginger83
    Registered Users Posts: 3,504 ✭✭✭Ginger83


    I just want to say I dont want to pay this 12k I have off the capital of my mortgage, I want to lodge it into my mortgage account and lets say my mortgage is 162k I want to know does it work that I would only pay interest on 150k??

    Has anyone ever done something similar? with Ulster Bank maybe?I didnt see anything on their website. I also want these funds to be available should I need them


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    #9
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    that depends on whether you ask them to reduce the capital or the term. Both are do-able. I don't know about Ulster Bank but would be extremely surprised if they would not do that for you.


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    #10
    gaeilgegrinds
    Closed Accounts Posts: 1,376 ✭✭✭gaeilgegrinds


    Similar position, 10k, wondering would AIB let me take it off the capital? Would make things a bit easier. Or am I better saving it for now?


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    #11
    hjsimpson
    Registered Users Posts: 34 ✭hjsimpson


    Similar case here,
    Have €90,000 20 year mortgage, with 14 1/2 years left to go.
    Balance currently at 72,000.
    Wanted to pay €10,000 off it but keep paying the same as now per month,
    Was told it would only shorten the term by 6/7 months...........surely this makes no sense ?


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    #12
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    gaeilgegrinds wrote: »
    Similar position, 10k, wondering would AIB let me take it off the capital? Would make things a bit easier. Or am I better saving it for now?

    Send your cheque to AIB Home Mortgages, Block L3, Bankcentre, Ballsbridge, D4 and include written instructions (regarding reducing capital) signed by all parties on the loan. You will get a letter back shortly after confirming the lodgment and your next repayment details etc.

    As regards whether you'd be better off saving it or not, I cant help ya there I'm afraid.


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    #13
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    hjsimpson wrote: »
    Similar case here,
    Have €90,000 20 year mortgage, with 14 1/2 years left to go.
    Balance currently at 72,000.
    Wanted to pay €10,000 off it but keep paying the same as now per month,
    Was told it would only shorten the term by 6/7 months...........surely this makes no sense ?

    same as above, send it directly to the home loans department of whatever financial institution you have your mortgage with along with signed instructions. 6/7 months is probably right when you take overall interest into account.


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    #14
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    by the way, it might be worth mentioning that if you have a home loan with a bank and you ned to amend/query your home loan in any way, don't go to your branch (unless it is your only option) you can save a lot of time by liaising directly with the home mortgage department of that particular bank. The branch often acts only as a middleman and only delay things after you have drawn down.


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    #15
    gaeilgegrinds
    Closed Accounts Posts: 1,376 ✭✭✭gaeilgegrinds


    How would I figure what my mortgage will be with a certain amount paid off? Trying to figure out if it is worth my while...


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    #16
    Pinkster
    Closed Accounts Posts: 15 ✭Pinkster


    Yes you can credit money to a mortgage account. If its a fixed rate you probably will be charged a penalty. You can't get it back should you need it in the future. It will reduce the interest as the interest accrues on the remaining balance.


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    #17
    rainbowtrout
    Registered Users Posts: 15,382 ✭✭✭✭rainbowtrout


    hjsimpson wrote: »
    Similar case here,
    Have €90,000 20 year mortgage, with 14 1/2 years left to go.
    Balance currently at 72,000.
    Wanted to pay €10,000 off it but keep paying the same as now per month,
    Was told it would only shorten the term by 6/7 months...........surely this makes no sense ?

    I figure that at an interest rate of approx 4%, you're probably paying about €550 per month, and reducing the balance from 72k to 62k and keeping the repayments the same you could knock about 2 and a half years off the mortgage. Those are only rough figures. I used the calculator below for them, stick in your figures and play around with it.

    gaeilgegrinds wrote: »
    How would I figure what my mortgage will be with a certain amount paid off? Trying to figure out if it is worth my while...

    Play around with the principal sum and term of the the mortgage here:

    http://www.jeacle.ie/mortgage/


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    #18
    mickoneill30
    Banned (with Prison Access) Posts: 3,073 ✭✭✭mickoneill30


    Ginger83 wrote: »
    I have 12k in savings and wondering if there is some way I could lodge this into my mortgage account to allow it to reduce the interest I pay.

    Ask your mortgage provider. Mine is with IIB (or KBC as they're called now). They let me pay off extra at any time and will give the extra back with 48 hours notice.


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    #19
    goldenhoarde
    Registered Users Posts: 859 ✭✭✭goldenhoarde


    gaeilgegrinds wrote: »
    How would I figure what my mortgage will be with a certain amount paid off? Trying to figure out if it is worth my while...


    Try the following site http://www.jeacle.ie and this will allow you to figure out what a prepayment will do for you

    There is an Irish calculator there you can use


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