Changing from monthly payments to every two weeks.

everlast75

Just looking for some assistance please.



We got a mortgage with AIB through a broker a few years ago on a fixed rate.


Recently, as money was getting ever tighter, we asked them if we could change from monthly payments to every two weeks. This would serve two purposes;
1) We could budget our money better
2) We would save money on interest as the capital was being chipped away.


They wrote back and basically said “No”. Apparently, the system they have in there doesn’t allow them to accept payments other than on the basis of what was initially set up. We went through a broker and apparently this makes a difference.



I was considering what to do, when low and behold, a letter comes in from AIB, advising that they now had staff dedicated to working with customers and their mortgages to make sure that they were happy.


I therefore took the opportunity to contact them again and point out the apparent contradiction between rejecting my request and this recent letter.


Again, they came back with a flat no.


Has anyone encountered this?

We were thinking of contacting the Financial Regulator or alternatively, just cancelling the direct debit and set up a standing order, paying the money in every two weeks.


Many thanks.

BuffyBot

Making sure that they are happy may have limits. That's fluffy marketing speak, I don't think it implies they're going to be able to change the entire system.

I'm not sure on what grounds you could contact the regulator on (and anyway, you have to exhaust AIB's internal complaint procedure first before you can go that route) and whatever you do, do not take it upon yourself to change the frequency or schedule of repayments as you're then breaching what you've agreed to and that will only lead to further trouble in the long run.

everlast75

Thanks Buffybot!

I appreciate the bank has to have limits, makes sense. I spoke to one of their people when I received the letter and he actually agreed that it did not make much sense for them to be able to allow certain customers to use this, but not integrate past customers over to the system. The reality is, they lose out on interest paid so it suits them to say they cannot.

Re - contacting the Regulator, I have written to AIB and twice they have said no. I don't know how much further I can take it with them?

I do know of someone personally who did cancel their monthly payments (this person works in Financial Advice) and it worked out okay for them. That's where I got the idea from..

BuffyBot

If you want to go to the regulator, you need to write to AIB and request a final response letter. However, I'm not sure you wishing to make a change to an agreement for the reasons you've outlined is even something the FR will give much consideration to.

As to changing the payments: the problem is, you have a legal agreement to pay the bank X on day Y. If you break that, it a) places you on risky ground and b) gives the bank less grounds to work with you should your circumstances change for the worse again in the future. After all, if you break an agreement once, what's to stop you doing it again. Personally, I wouldn't remove that cushion from beneath me if I had a choice

I appreciate it's not what you *want* to hear, but you may end up having to to have to work with them, or just accept the deal you signed up with.

dobsdave

Sorry, bit confused here,
If money is getting tighter, how is paying more money out an advantage in the short term?

Cushie Butterfield

everlast75 wrote: »

I do know of someone personally who did cancel their monthly payments (this person works in Financial Advice) and it worked out okay for them. That's where I got the idea from..

They were probably on a variable rate, which allowed them to do this. When on a fixed rate you are more limited as regards paying early or paying lump sums.

everlast75

dobsdave wrote: »

Sorry, bit confused here,
If money is getting tighter, how is paying more money out an advantage in the short term?

Organizing our budget better... plus as I said above, saving about a month's interest each year

everlast75

BuffyBot wrote: »

If you want to go to the regulator, you need to write to AIB and request a final response letter. However, I'm not sure you wishing to make a change to an agreement for the reasons you've outlined is even something the FR will give much consideration to.

As to changing the payments: the problem is, you have a legal agreement to pay the bank X on day Y. If you break that, it a) places you on risky ground and b) gives the bank less grounds to work with you should your circumstances change for the worse again in the future. After all, if you break an agreement once, what's to stop you doing it again. Personally, I wouldn't remove that cushion from beneath me if I had a choice

I appreciate it's not what you *want* to hear, but you may end up having to to have to work with them, or just accept the deal you signed up with.

I appreciate that, thanks

I know my role in this relative to the bank, as in they have all the cards, but it seems to me that they can change the terms by offering to restructure the payments (I'd imagine meaning interest only) or extend the life of the mortgage, both of which suits them because they make more money out of us, but they can't alter the system it to assist me.

Their offer to "help" therefore in my view is pure aesthetics.

UDP

I used to get paid every 4 weeks by a previous employer. I went into BOI to get a loan and they said they could only deduct money from my account every month rather than every 4 weeks. Also they wanted the amount to come out of my bank account the day after pay day which meant that things didn't compute. Kinda ridiculus that they cannot do it by any other frequency other than monthly especially mathematically it is a stupid way to get paid and pay for services. In the end it turned out I didn't need the loan but was shocked how inflexible the repayment frequencies were.

3DataModem

everlast75 wrote: »

Organizing our budget better... plus as I said above, saving about a month's interest each year

Whatever calculation you have done is wrong. How does paying half your payments 2 weeks early equate to a saving of 1/12th the annual interest?

Unless your remaining term is very very short, this can't be right.

3DataModem

If your mortgage is 1000 per month and your interest rate is 3.60%, then paying 500 per half-month will save you;

500 x 12 x 3.60% x 1/24 = 9 euro per annum