Irish permanent letters in post today

hilloftara

I have a loan i took out on 2008 due to finish in 2018 .got a letter today saying i will have a shortfall by the time it expires due to interest rates going up.it was a 10 yr loan as far as i was concerned on a fixed rate .i rang ip and looked for original contract so i can check it out.anyone else or just me

emeldc

Even if it wasn't a fixed rate surely the payments would fluctuate in line with the interest rate charges. Personal loan or mortgage?

hilloftara

emeldc wrote: »

Even if it wasn't a fixed rate surely the payments would fluctuate in line with the interest rate charges. Personal loan or mortgage?

It was a personal loan being paying back same amount for the last eight yrs monthly .

homer911

Did you miss any payments, even by a couple of days? There may be some penalty interest to pay..

emeldc

hilloftara wrote: »

It was a personal loan being paying back same amount for the last eight yrs monthly .

Sounds like it was fixed although 10 year fixed would be a little unusual, no?
You'll have to get a look at the original contract. Did they say how much the shortfall is.

hilloftara

emeldc wrote: »

Sounds like it was fixed although 10 year fixed would be a little unusual, no?
You'll have to get a look at the original contract. Did they say how much the shortfall is.

I just looked at the letter they are calling it variable term loan so not fixed ,I was so upset when I got the letter I didn't look at it properly just saw they want over 3000 euros extra off me,I have looked for original,seemly there's been a few calls, other people in the same boat.......😠

hilloftara

hilloftara wrote: »

I just looked at the letter they are calling it variable term loan so not fixed ,I was so upset when I got the letter I didn't look at it properly just saw they want over 3000 euros extra off me,I have looked for original,seemly there's been a few calls, other people in the same boat.......😠

Didn't miss any payments

emeldc

hilloftara wrote: »

I just looked at the letter they are calling it variable term loan so not fixed ,I was so upset when I got the letter I didn't look at it properly just saw they want over 3000 euros extra off me,I have looked for original,seemly there's been a few calls, other people in the same boat.......😠

If it's variable they should have adjusted the payments throughout the loan. I would want to know why this wasn't done. I would also want to know how they are calculating how much you owe them. It's hardly your fault if you are in arrears and so you shouldn't have to pay interest on them (the arrears). I'd even look for legal advice if I were you.

hilloftara

emeldc wrote: »

If it's variable they should have adjusted the payments throughout the loan. I would want to know why this wasn't done. I would also want to know how they are calculating how much you owe them. It's hardly your fault if you are in arrears and so you shouldn't have to pay interest on them (the arrears). I'd even look for legal advice if I were you.

I was thinking about that the solicitor .i will wait to see the contract i signed .thanks

coylemj

emeldc wrote: »

If it's variable they should have adjusted the payments throughout the loan.

Not necessarily. I recall getting a term loan a few years ago on a variable rate and at the time they asked me what should happen if interest rates changed - keep making the same repayments or have the monthly repayment adjusted up or down as the applicable interest rate changed.

Clearly if you elect to keep making the same repayment regardless of what happens the interest rate then the loan will be paid off early if rates go down but if rates go up then you will have to pay for longer to clear the balance.

emeldc

coylemj wrote: »

Not necessarily. I recall getting a term loan a few years ago on a variable rate and at the time they asked me what should happen if interest rates changed - keep making the same repayments or have the monthly repayment adjusted up or down as the applicable interest rate changed.

Clearly if you elect to keep making the same repayment regardless of what happens the interest rate then the loan will be paid off early if rates go down but if rates go up then you will have to pay for longer to clear the balance.

I suppose that would be covered in the contract, never heard of it myself and I've had a few loans in my lifetime. Would that mean that if the shortfall after year 1 was say, €100, that compound interest would be added and the borrower could end up owing multiples of that figure. It hardly seems fair if you're not aware of it.

coylemj

emeldc wrote: »

I suppose that would be covered in the contract, never heard of it myself and I've had a few loans in my lifetime. Would that mean that if the shortfall after year 1 was say, €100, that compound interest would be added and the borrower could end up owing multiples of that figure. It hardly seems fair if you're not aware of it.

Sort of, yes. It's not so much that there is a shortfall after a year and then they slap interest on it, the interest is effectively added daily. If rates rise above the original rate and the repayments remain the same then the balance will not reduce at the planned rate so you will end up paying more interest.