AIB mortgage over-payments

pasquale83

Folks,

is there any forms for recurring over-payments for a mortgage with AIB bank?
My AIB representative told me there is none, just for lump sums.
In case I want to make recurring over-payments I have to request it in writing.

Thanks!

notsoyoungwan

When I did this, I had to write to them saying I wanted my monthly payments to go up to X amount. I have it in writing from them that I can revert to original payment amount if I need to.

I think if you want to make irregular/ad hoc lump sum payments there's a specific form you need to send each time but if it's going to be a monthly over-payment you write to them to set it up

iainBB

Very odd to be doing that each time it's like they don't want you to over pay and save a fortune on interest. We set it up once with our bank, the gave me a bank account to lodge into and we over pay anytime. I am with ICS.

NIMAN

I once changed from monthly payment to fortnightly, increasing the overall amount at the same time.

Had to be done in writing.

sunnyday1234

With AIB - i just added the mortgage account to my online banking and i can pay money off it whenever i want. No restrictions on ammount or frequency. its very handy

pasquale83

sunnyday1234 wrote: »

With AIB - i just added the mortgage account to my online banking and i can pay money off it whenever i want. No restrictions on ammount or frequency. its very handy

That's what I am going to do indeed.
Do you need to add any reference to the bank transfer?

sunnyday1234

nope. just transfer between accounts.

pasquale83

sunnyday1234 wrote: »

nope. just transfer between accounts.

thanks. where did you get the account IBAN?

sunnyday1234

cant remember to be honest but its made up of the BIC and AC number - if you ring internet banking then they will help you

notsoyoungwan

sunnyday1234 wrote: »

With AIB - i just added the mortgage account to my online banking and i can pay money off it whenever i want. No restrictions on ammount or frequency. its very handy

Are you sure that those over-payments go off the actual capital amount rather than just reducing the next scheduled payment? I asked if I could do this with my mortgage and was told that I couldn't do it that way.

sunnyday1234

yeah im sure. every time i knock some off then the ammount on principal comes down. This leads to a letter in the post later with my new reduced payment. i dont want to reduce the term - just the ammount per month

NIMAN

sunnyday1234 wrote: »

yeah im sure. every time i knock some off then the ammount on principal comes down. This leads to a letter in the post later with my new reduced payment. i dont want to reduce the term - just the ammount per month

You are saying the opposite to the question. Using online banking you reduce your monthly payment but your mortgage will not be paid off any earlier.

I think the previous poster wanted to pay online but reduce the time their mortgage had to run, happy enough to continue paying the same each month.

Tow

NIMAN wrote: »

Using online banking you reduce your monthly payment but your mortgage will not be paid off any earlier.

This is what currently happens if you just transfer money online into you mortgage account.

Up until a few years ago it would effectively reduce you term, as the payments remained the same, just the interest portion appeared to reduce as the balance reduced.

At one stage you had to send the money from another bank, as AIB had a block on their website to do it. I think the block is now gone.

They might be able to set a flag on the account to reduce the term. But there is nothing to stop you from increasing the over payments, as they reduce their direct debit amounts. Which has the same effect and gives you more control.

billyhead

Would it not make sense (with interest rates on mortgages currently a lot higher then deposit rates) for mortgage holders to make lump sum payments to the mortgage account to reduce the monthly mortgage payment amount rather then have the money saved away in the likes of AIBs online saver account or KBCs regular saver accounts etc etc?

notsoyoungwan

NIMAN wrote: »

You are saying the opposite to the question. Using online banking you reduce your monthly payment but your mortgage will not be paid off any earlier.

I think the previous poster wanted to pay online but reduce the time their mortgage had to run, happy enough to continue paying the same each month.

Yeah, that's what I was getting at. I'm over-paying so that my mortgage will be cleared earlier. If I keep up current level of repayments it'll be clear in half the original term, which is great. Doing online transfers wouldn't work for these kind of over-payments though, which is why I've gone the route of increasing my scheduled payment with the caveat I can revert to the original if needed

sunnyday1234

notsoyoungwan wrote: »

NIMAN wrote: »

You are saying the opposite to the question. Using online banking you reduce your monthly payment but your mortgage will not be paid off any earlier.

I think the previous poster wanted to pay online but reduce the time their mortgage had to run, happy enough to continue paying the same each month.

Yeah, that's what I was getting at. I'm over-paying so that my mortgage will be cleared earlier. If I keep up current level of repayments it'll be clear in half the original term, which is great. Doing online transfers wouldn't work for these kind of over-payments though, which is why I've gone the route of increasing my scheduled payment with the caveat I can revert to the original if needed

Doing online transfers would work. We move 500-1000 extra every month into the account which reduces the principal owed. Yes the term stays the same but if the 500-1000 continues every month then the principal would be cleared in a much shorter time frame so you still get the same benefit of the mortgage finishing early plus you also get the flexibility of reduced payments

If you continue doing it by over paying and reducing the term then if you ever run into financial trouble - you might need to go to the bank and arrange a restructuring of the mortgage to increase your term again but if you had the benefit of the lower payments then that would not happen

Dardania

billyhead wrote: »

Would it not make sense (with interest rates on mortgages currently a lot higher then deposit rates) for mortgage holders to make lump sum payments to the mortgage account to reduce the monthly mortgage payment amount rather then have the money saved away in the likes of AIBs online saver account or KBCs regular saver accounts etc etc?

It does of course, the only quid pro quo is that you lose liquidity (e.g. what if you need the money that you were saving for example for the 20% deposit if you wish to move house...)

notsoyoungwan

sunnyday1234 wrote: »

Doing online transfers would work. We move 500-1000 extra every month into the account which reduces the principal owed. Yes the term stays the same but if the 500-1000 continues every month then the principal would be cleared in a much shorter time frame so you still get the same benefit of the mortgage finishing early plus you also get the flexibility of reduced payments

If you continue doing it by over paying and reducing the term then if you ever run into financial trouble - you might need to go to the bank and arrange a restructuring of the mortgage to increase your term again but if you had the benefit of the lower payments then that would not happen

That was exactly the arrangement I initially wanted to make, but two separate people in AIB told me it wasn't possible, and all that would happen would be the next scheduled payment would reduce by whatever amount I'd transferred.

Audioslaven

notsoyoungwan wrote: »

That was exactly the arrangement I initially wanted to make, but two separate people in AIB told me it wasn't possible, and all that would happen would be the next scheduled payment would reduce by whatever amount I'd transferred.

If you make a lump sum payment on your mortgage you need to tell AIB to take it off the principal and keep your payments at the same rate. This is a pain in the ass if you are making a good few lump sum payments.

The other option is to make your lump sum payments and when they do a direct debit for the reduced monthly amount, do another transfer manually to keep the payments up to the original amount. This way you don't care what they do as you are always going to make the monthly payment that was agreed.

josephsoap

Is a mortgage a bit like a credit union loan in the way the quicker you can pay it back, the less interest you will pay?

alibab

I also want to overpay and reduce the term I mistakenly thought this would be easy it that I could adjust the direct debit up and the extra would come off the principal. It seems this is harder than I thought with AIB . I was 40 starting the mortgage and want to set it up to be paid in 15 years instead or 25 years . As I was a single applicant at the time AIB wanted the 25 year term and I thought no problem overpaying .

Do other banks do this easily because to be honest it's a deal breaker for me and I may look at changing mortgage from AIB now I have over 80 percent LTV . I suppose I could just pile into savings and then do lump sums but I would prefer the other option

NIMAN

Its easy enough with AIB.

You can send them a lump sum cheque with a form on their website, saying if you want to reduce term or monthly payments, and they will do the rest.

form here (safe to open):
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwiImbLCvY7PAhVMJMAKHY64ALUQFggeMAA&url=http%3A%2F%2Fwww.aib.ie%2Fservlet%2FBlobServer%3Fblobcol%3Durldata%26blobtable%3DMungoBlobs%26csblobid%3D1214417763172%26blobkey%3Did%26blobwhere%3D1214417763172%26blobheader%3Dapplication%252Fpdf&usg=AFQjCNHLHGJHS6nrCzs7474yPxxIaX5gww&cad=rja

sunnyday1234

notsoyoungwan wrote: »

sunnyday1234 wrote: »

Doing online transfers would work. We move 500-1000 extra every month into the account which reduces the principal owed. Yes the term stays the same but if the 500-1000 continues every month then the principal would be cleared in a much shorter time frame so you still get the same benefit of the mortgage finishing early plus you also get the flexibility of reduced payments

If you continue doing it by over paying and reducing the term then if you ever run into financial trouble - you might need to go to the bank and arrange a restructuring of the mortgage to increase your term again but if you had the benefit of the lower payments then that would not happen

That was exactly the arrangement I initially wanted to make, but two separate people in AIB told me it wasn't possible, and all that would happen would be the next scheduled payment would reduce by whatever amount I'd transferred.

I do this every single month. If you dont tell them anything then the amount will be taken off the principal , term stays the same but monthly payments are reduced. If you want term to be reduced then you need to write letter

Just ring online banking, they will tell you all of this. Some staff in the branches arent aware

adam88

Great to see people are finally copping on to clearing their mortgages early by reducing the term.

This is useful now as saving rates are so low.

One important thing to note is your mortgage is typically 3-4 % compared to your credit card 17-20% or credit union loan 7-8% so in theory your're actually wasting money if you're paying extra off your mortgage and nothing extra off the credit card or credit union

Tow

notsoyoungwan wrote: »

That was exactly the arrangement I initially wanted to make, but two separate people in AIB told me it wasn't possible, and all that would happen would be the next scheduled payment would reduce by whatever amount I'd transferred.

This is just the bank staff not knowing that they are talking about. Yes the next scheduled payment would reduced slightly, but not by what you overpaid the previous month. They will just recalculate monthly payment to take into account the reduced loan balance.

I did it regularly up to a few years ago, but I am on ECB + .6...

It is simple to test, just transfer money into your mortgage account.

pasquale83

Very interesting discussion folks and thank everybody for your contribution.

Just one last question...I can now see my mortgage account online. Can I transfer funds directly from another bank or should they go through my AIB current account first?

I have the mortgage account IBAN number, just wondering if it is under my name?

Thanks!

Dardania

pasquale83 wrote: »

Very interesting discussion folks and thank everybody for your contribution.

Just one last question...I can now see my mortgage account online. Can I transfer funds directly from another bank or should they go through my AIB current account first?

I have the mortgage account IBAN number, just wondering if it is under my name?

Thanks!

We transfer directly from another bank to the mortgage account. Just takes a day or two (not sure exactly, but always does arrive!)

Well done on doing this - it's a great move, and it is a great feeling to see the big number dropping down each time...

pasquale83

Dardania wrote: »

We transfer directly from another bank to the mortgage account. Just takes a day or two (not sure exactly, but always does arrive!)

Well done on doing this - it's a great move, and it is a great feeling to see the big number dropping down each time...

Thanks Dardania! Yes, but it is also scaring thinking that I have to give back all that cash and interests on top of it!

pasquale83

Hello Folks,

just coming back on this as I just made a lump sum over payment to my mortgage account.

As far as I have understood, by default my monthly repayment will be reduced keeping the duration the same (option 1).

I can request to keep the monthly repayment fixed and accordingly changing the duration of the loan (option 2).

One of you suggested to stay with option 1 and transfer additional sums monthly (option 3). Just want to be sure: is this option equivalent to option 2? Just more flexible as I can decide to stop overpaying without contacting the bank?

Thanks a million!

bk

pasquale83 wrote: »

One of you suggested to stay with option 1 and transfer additional sums monthly (option 3). Just want to be sure: is this option equivalent to option 2? Just more flexible as I can decide to stop overpaying without contacting the bank?

Yes, this is exactly what I did. Paid off the lump sum, stayed on option 1, but then set up a separate standing order to overpay the difference between what I was previously paying and the new lower payment.

If you keep up this overpayment, then effectively the mortgage will be paid off much sooner, the same as option 2.

This is by far the most flexible way to go IMO. Much easier to just drop the overpayment if you have a life change *, then ask the bank to extend the mortgage again.

* I wouldn't change it unless you had a major life change. That is why I set up a standing order to do it so I'm less tempted to just randomly change it.

pasquale83

bk wrote: »

Yes, this is exactly what I did. Paid off the lump sum, stayed on option 1, but then set up a separate standing order to overpay the difference between what I was previously paying and the new lower payment.

If you keep up this overpayment, then effectively the mortgage will be paid off much sooner, the same as option 2.

This is by far the most flexible way to go IMO. Much easier to just drop the overpayment if you have a life change *, then ask the bank to extend the mortgage again.

* I wouldn't change it unless you had a major life change. That is why I set up a standing order to do it so I'm less tempted to just randomly change it.

thanks bk!