Over paying my mortgage.

c-dog

Hi,

I rang the EBS and asked could I set up a standing order to go directly off the capital amount on the mortgage. The girl on the phone said that this standing order would stay as a credit on my account and they can transfer it off the capital when I wanted, I thought this was strange or is this normal can I not just pay it directly off the capital does it have to stay on credit, do I need to clarify this with the bank or is this normal for the amount to stay in credit in the account. The reason im doin this is to reduce the term on the mortgage so just want to know if im going about it correct.
Sorry for all the questions and thanks for any advice offered.

homer911

I used to have my mortgage with EBS and I remember they do things a bit differently... I understand that with them all interest calculations are based on the balance at the start of the year, so paying extra during the year wont impact the basis of the interest calculation until the start of the next year. I was once advised by someone who claimed to be in the know to make a large lodgement to my EBS mortgage just before year end and ask them to treat it as advanced repayments. (eg 5 x monthly instalments). This would have the almost immediate benefit of a capital reduction for interest calulation purposes, but also meant I could take a 5 month repayment holiday - the best of both worlds. I did this for a few years and it did actually save a lot of interest. Not sure if this is still the case of course, but it sounds like it probably is..

outeverynite

I have my mortgage with EBS also. I too want to reduce the term of my mortgage. I transfer extra money to my mortgage account every so often. It goes off the total Balance when lodged and in the statement part it says €XXX credit. Interest is added daily and you see this bringing the balance back up daily if you check online.

I keep on putting money off it until I've built up to €3,000 credit on the account, which in my case reduces my mortgage term by 1 year. I then do up a redemption letter and send it in by fax to my local branch asking them to do a partial redemption on the account and that the redemption is taken off the term of the mortgage.

They take the credit amount of money out of the account and apply the redemption by paying it off balance. All it looks like on the statement is them taking the money out and putting it back in again but you no longer have any credit amount on your account. I can go into then my account information online and I see my term has reduced by 1 year.

homer911

outeverynite wrote: »

I have my mortgage with EBS also. I too want to reduce the term of my mortgage. I transfer extra money to my mortgage account every so often. It goes off the total Balance when lodged and in the statement part it says €XXX credit. Interest is added daily and you see this bringing the balance back up daily if you check online.

I keep on putting money off it until I've built up to €3,000 credit on the account, which in my case reduces my mortgage term by 1 year. I then do up a redemption letter and send it in by fax to my local branch asking them to do a partial redemption on the account and that the redemption is taken off the term of the mortgage.

They take the credit amount of money out of the account and apply the redemption by paying it off balance. All it looks like on the statement is them taking the money out and putting it back in again but you no longer have any credit amount on your account. I can go into then my account information online and I see my term has reduced by 1 year.

That sounds like their systems havent changed - it would be interesting to see at what stage the daily interest accrual drops - when you lodge the extra money, request the partial redemption, or at the start of the next year?

outeverynite

I'm not sure at all and yes I'd like to find out also seeing as I'm building up credit on my mortgage account so I should be benefiting from a the daily interest also reducing in line with the payments. But that may not be the case....

I'll have to wait for my 2011 mortgage statement to come out and have a look and see...I'll check the months I put nothing extra in and see how much the interest reduced by then against months where I put extra savings in...failing that I'll give them a buzz to see what they can tell me!

c-dog

I rang the EBS back and asked was there any other way of overpaying rather then letting the money build up in credit. The girl told me to send in a letter saying i want to 'pay a fixed re-payment of x amount per month' and the amount over the normal amount. So for example lets say my repayment is 1500p/m I have to say i want to make a fixed re-payment of 2000p/m which means an overpayment of 500 and to specify its to come of the capital to reduce the term of the mortgage. She also said I can stop this overpayment by just sending in another letter. Seems very complicated to do a simple request!!