PTSB not allowing term reduction on mortgage

jayjay2010

My 3 year fixed rate finished in Oct. I want to reduce my remaining term down by a couple of years and fix again at new 3 year rate, however PTSB are saying this is not possible. The only way around is it so set up an overpayment.

Surely this can’t be right?? I called shortly before 5pm so I think the guy on the phone was just trying to get me off the phone.

I know overpaying is the same (and preferred) option, but I WANT to reduce my term.

Help anyone?

AnRothar

Ask to move to the banking forum.
You will get a better answer there.

Oral Surgeon

jayjay2010 wrote: »

My 3 year fixed rate finished in Oct. I want to reduce my remaining term down by a couple of years and fix again at new 3 year rate, however PTSB are saying this is not possible. The only way around is it so set up an overpayment.

Surely this can’t be right?? I called shortly before 5pm so I think the guy on the phone was just trying to get me off the phone.

I know overpaying is the same (and preferred) option, but I WANT to reduce my term.

Help anyone?

Surely if you overpay for long enough then you will pay off the loan sooner than your contract says and effectively will reduce your term?
Is it not the same difference??

jayjay2010

Oral Surgeon wrote: »

Surely if you overpay for long enough then you will pay off the loan sooner than your contract says and effectively will reduce your term?
Is it not the same difference??

My mortgage is relatively low as it is, and I would prefer to have my term reduced in years. I have never read anywhere before that banks wouldn’t allow this, so I want to see if anybody has experienced anything similar

kippy

jayjay2010 wrote: »

My mortgage is relatively low as it is, and I would prefer to have my term reduced in years. I have never read anywhere before that banks wouldn’t allow this, so I want to see if anybody has experienced anything similar

If they will let you overpay - what is the issue? Is it not the same difference?
With the added benefit of a safety net should your circumstances change and you not being able to pay the increased amount.
I suspect they are not eager to reduce the term as that is essentially a completely different contract and would include, most likely, the need to re-mortgage and all that goes with that.

cannotlogin

So you get the same result either way but you want to do something that requires a new application and paperwork even though it doesn't change the result?

I don't understand.

omegab

As the posters above say it is to your advantage to have it as long a period as you can in case something happens to your income.

jayjay2010

cannotlogin wrote: »

So you get the same result either way but you want to do something that requires a new application and paperwork even though it doesn't change the result?

I don't understand.

I have over 30 years left and I wanted to switch and drop to approx 23 years. I’ve looked into switching and they are asking for a million things so I don’t want the hassle at the moment.

Instead of switching I thought I’d just update my term to 23 years, fix for 3 years etc but I didn’t think it would require new paperwork etc let alone not being able to do it.

Even with the drop to 23 years I plan to overpay on TOP of that, I just want a lower mortgage term.

It might make no sense to some of you but it makes sense to me. Like I said my mortgage isn’t huge so the numbers don’t change dramatically either way!

punisher5112

Would you consider switching, some are doing deals still where you get cash back too.

cannotlogin

jayjay2010 wrote: »

I have over 30 years left and I wanted to switch and drop to approx 23 years. I’ve looked into switching and they are asking for a million things so I don’t want the hassle at the moment.

Instead of switching I thought I’d just update my term to 23 years, fix for 3 years etc but I didn’t think it would require new paperwork etc let alone not being able to do it.

Even with the drop to 23 years I plan to overpay on TOP of that, I just want a lower mortgage term.

It might make no sense to some of you but it makes sense to me. Like I said my mortgage isn’t huge so the numbers don’t change dramatically either way!

Calculate what your payments would be if over 23 years and ask for your direct debit to be set up for that amount. (May not be possible if fixing the mortgage - if not calculate the overpayment you would make during the 3 year fixed term and split the mortgage between fixed and variable and pay of the variable part with the 3 years. Then rinse and repeat when the fixed rate expires).

All you really need is to run the figures and make the changes. This will reduce the term automatically.

I tend to do this with my mortgage but want the longest term possible to that if I ever find myself unemployed or in financial difficulties, I can switch back to making the minimum until I'm back on my feet.

Ice Storm

Your mortgage was approved based on your repayment capacity over 30+ years. You can't just knock 7 years off the term, which will increase your repayments without the bank reassessing, which means paperwork etc.

Just ask them to adjust your direct debit to overpay as much as you want, as has been suggested.

Newdawn11

Can you overpay if you are on a fixed rate?

kippy

jayjay2010 wrote: »

I have over 30 years left and I wanted to switch and drop to approx 23 years. I’ve looked into switching and they are asking for a million things so I don’t want the hassle at the moment.

Instead of switching I thought I’d just update my term to 23 years, fix for 3 years etc but I didn’t think it would require new paperwork etc let alone not being able to do it.

Even with the drop to 23 years I plan to overpay on TOP of that, I just want a lower mortgage term.

It might make no sense to some of you but it makes sense to me. Like I said my mortgage isn’t huge so the numbers don’t change dramatically either way!

Why do you want a lower mortgage term?
What benefit does this give you over overpaying to the same amount as a shorter term would be costing you monthly?

Switching is a new contract essentially as is trying to reduce the term in the manner you are trying to do.

I’m struggling to see why people are questioning the op’s rationale for reducing the term and paying off a lump sum. I have done this in the past twice, once with BoS and once with AIB, neither had any issue whatsoever with it. In fact, BoS when they were here gave me a better tracker rate when I reduced the principal by paying off a chunk of it. By reducing the LTV, the op may be able to get a better interest rate and by reducing the loan by paying it off sooner, pays less in interest.

dev_ire

Is a lump sum not allowed without setting up a new mortgage? Is this not what OP is asking? Not asking to reduce term per se but a lump sum which therefore leads to less time to pay off?

august12

Dav010 wrote: »

I’m struggling to see why people are questioning the op’s rationale for reducing the term and paying off a lump sum. I have done this in the past twice, once with BoS and once with AIB, neither had any issue whatsoever with it. In fact, BoS when they were here gave me a better tracker rate when I reduced the principal by paying off a chunk of it. By reducing the LTV, the op may be able to get a better interest rate and by reducing the loan by paying it off sooner, pays less in interest.

Paying off a lump sum and changing the terms of the mortgage contract are two very different things,

august12

Newdawn11 wrote: »

Can you overpay if you are on a fixed rate?

With Ulster Bank you can but only allow up to a certain percentage of outstanding balance, each bank would it's own terms and conditions to repayments.

dev_ire

august12 wrote: »

Paying off a lump sum and changing the terms of the mortgage contract are two very different things,

Ok but does paying a lumpsum not decrease the term or just decrease the payment amount each month? Overpaying can decrease the term so I assume lump sum would do the same but could be better depending on your circumstances?

tom1ie

Some banks such as UB allow you to overpay up to 20% of the outstanding balance while you are on a fixed rate.

Personally I would push the term of your mortgage out as long as possible which reduces the monthly payment the bank requires. Let’s say the bank looks for 500pm over 30 years.

Then just pay the 500+ whatever you are overpaying which goes off the principle, which reduces the amount outstanding which reduces your term anyway as you’ll run out of money that you owe.

Batgurl

One drawback of overpaying vs reducing, I know of one person who had overpaid enough to cover 2 years. The bank refused to hand over the deeds until the full mortgage term was up. I can see the OP’s logic.

Ice Storm

Ice Storm wrote: »

Your mortgage was approved based on your repayment capacity over 30+ years. You can't just knock 7 years off the term, which will increase your repayments without the bank reassessing, which means paperwork etc.

Just ask them to adjust your direct debit to overpay as much as you want, as has been suggested.

Interest rates on savings are at 0% at the moment so having a lump sum sitting in a bank account isn’t smart. Of course you can knock time off the term by paying off a lump sum of the capital and keeping repayments at the same level. Banks don’t usually refuse money so if I was the op, I’d be making an appointment with the manager to discuss why they aren’t accepting his/her money. So what if there is some paperwork.

As I said, I did it twice, both required a phone call to the banks and cheques being posted to them.

Op, it is a straightforward procedure to change lender, see if there are better rates in other banks and tell PTSB you are going to move your mortgage unless they pull their finger out.

Citygirl1

Batgurl wrote: »

One drawback of overpaying vs reducing, I know of one person who had overpaid enough to cover 2 years. The bank refused to hand over the deeds until the full mortgage term was up. I can see the OP’s logic.

That doesn't sound like correct information. What bank was this? And had the person re-paid the full balance? Was it a fixed rate or variable rate mortgage?

I repaid my mortgage early, a few years ago. Once the balance was cleared, the bank (Permanent TSB) closed the account automatically. And within a month or so reached out to me to confirm where they should return my deeds to?

What benefit would it be to the bank to retain the deeds, if there was no balance due to them?

tomfoolery60

Newdawn11 wrote: »

Can you overpay if you are on a fixed rate?

Not with PTSB you can't (unless you pay break fees)

august12

dev_ire wrote: »

Ok but does paying a lumpsum not decrease the term or just decrease the payment amount each month? Overpaying can decrease the term so I assume lump sum would do the same but could be better depending on your circumstances?

You can do both, regular overpayment and a lump sum, so both will do the same thing but you generally have to let bank know which option you want, because if left to them, they will reduce the monthly payment as opposed to reducing the term as they make more from you by reducing the monthly payment. All subject to banks terms which generally are no restrictions on a variable mortgage but limits on a fixed rate.

august12

dev_ire wrote: »

Ok but does paying a lumpsum not decrease the term or just decrease the payment amount each month? Overpaying can decrease the term so I assume lump sum would do the same but could be better depending on your circumstances?

You can do both, regular overpayment and a lump sum, so both will do the same thing but you generally have to let bank know which option you want i.e. reduce monthly payment or mortgage term, because if left to Bank, they will reduce the monthly payment as opposed to reducing the term as they make more from you by reducing the monthly payment. All subject to banks terms which generally are no restrictions on a variable mortgage but limits on a fixed rate.

Batgurl

Batgurl wrote: »

One drawback of overpaying vs reducing, I know of one person who had overpaid enough to cover 2 years. The bank refused to hand over the deeds until the full mortgage term was up. I can see the OP’s logic.

What?

When you sell a house and the loan is repaid, the bank doesn’t hold onto the deeds for another 10 years until the term ends.

Batgurl

Trust me, I know it’s mad and illogical but I’ve witnessed it first hand.

It was a decade or so ago, so may be changed in more recent years but one of Ireland’s biggest banks refused to hand over the deeds for 18 months when a mortgage was overpaid early.

Batgurl

Batgurl wrote: »

Trust me, I know it’s mad and illogical but I’ve witnessed it first hand.

It was a decade or so ago, so may be changed in more recent years but one of Ireland’s biggest banks refused to hand over the deeds for 18 months when a mortgage was overpaid early.

I find that hard to believe that a bank hold on to the collateral deeds when the loan has been repaid in full and there is no longer a debt.

Batgurl

Dav010 wrote: »

I find that hard to believe that a bank hold on to the collateral deeds when the loan has been repaid in full and there is no longer a debt.

I would have agreed with you if I didn’t seen it happen myself first hand.

Batgurl

Batgurl wrote: »

I would have agreed with you if I didn’t seen it happen myself first hand.

Sorry, I just can’t see how that would be possible if the bank had no hold over the deeds when the debt is repaid. This is akin to the band refusing to hand over the deeds when a house is sold and the mortgage cleared.

jayjay2010

I don't want to lock myself into another fixed rate period with a low payment over 32 years with a limit on how much I can overpay when I could just reduce the term to 23 years, increase the payments to what I ACTUALLY want to pay and then I can still overpay on top of that.

Surely someone reducing a term on a mortgage is nothing too outlandish :-(

Citygirl1

jayjay2010 wrote: »

I don't want to lock myself into another fixed rate period with a low payment over 32 years with a limit on how much I can overpay when I could just reduce the term to 23 years, increase the payments to what I ACTUALLY want to pay and then I can still overpay on top of that.

Surely someone reducing a term on a mortgage is nothing too outlandish :-(

I think you would be best to look at moving to the variable rate, rather than locking yourself in with another fixed rate over defined period. This will give you the flexibility to overpay, as you have the money. And each time you do this, the bank will give the option to reduce the monthly payment or the term.

If doing the above, I'd actually recommend you take their option to reduce the monthly payment, which would give you flexibility if you face a financial shock at some stage (not unlikely, over a period of 32 years). But, assuming all goes well, just arrange to make regular overpayments, to reduce your interest cost, and term, at your convenience.

dev_ire

august12 wrote: »

You can do both, regular overpayment and a lump sum, so both will do the same thing but you generally have to let bank know which option you want, because if left to them, they will reduce the monthly payment as opposed to reducing the term as they make more from you by reducing the monthly payment. All subject to banks terms which generally are no restrictions on a variable mortgage but limits on a fixed rate.

Does this apply to overpaying also or just lump sum?

dev_ire

Citygirl1 wrote: »

I think you would be best to look at moving to the variable rate, rather than locking yourself in with another fixed rate over defined period. This will give you the flexibility to overpay, as you have the money. And each time you do this, the bank will give the option to reduce the monthly payment or the term.

If doing the above, I'd actually recommend you take their option to reduce the monthly payment, which would give you flexibility if you face a financial shock at some stage (not unlikely, over a period of 32 years). But, assuming all goes well, just arrange to make regular overpayments, to reduce your interest cost, and term, at your convenience.

This leads to you paying more as variable rates seem to be more than fixed rates? Surely you can make a lump sum payment once and then fix if you want after?

kippy

jayjay2010 wrote: »

I don't want to lock myself into another fixed rate period with a low payment over 32 years with a limit on how much I can overpay when I could just reduce the term to 23 years, increase the payments to what I ACTUALLY want to pay and then I can still overpay on top of that.

Surely someone reducing a term on a mortgage is nothing too outlandish :-(

You are looking at a fundamental change in the terms of the mortgage.

august12

dev_ire wrote: »

Does this apply to overpaying also or just lump sum?

Lots of info here:

https://digital.ulsterbank.ie/personal/mortgages/secure/mortgage-overpayment-tool.html

Citygirl1

dev_ire wrote: »

This leads to you paying more as variable rates seem to be more than fixed rates? Surely you can make a lump sum payment once and then fix if you want after?

Certainly, variable rates will be higher than fixed rate. However, the overall interest cost will depend on how much and when OP can afford to overpay. Reducing the capital regularly, will help eat away at the interest bill, over the time of the mortgage.

If OP keeps his fixed rate and payment, but is also putting away savings regularly, he's paying, say 3% on the mortgage, but getting virtually 0% on the savings. Better to put this money into the mortgage account (allowing for a rainy day fund), on a regular basis.

AnRothar

tomfoolery60 wrote: »

Not with PTSB you can't (unless you pay break fees)

We are with PTSB on a fixed rate and we are overpaying.

Have done so since we fixed.

Sent back a form at the time.

DM1983

Not sure if people realise this but breakage fees are not something to be worried about in the current low interest rate environment. The breakage fee for every bank is a multicomponent calculation but one of the factors is the banks borrowing rate from the ECB. Call your bank and ask what is costs to pay a chunk off a fixed rate mortgage. Its peanuts. I'm a big advocate of paying down debt rather than building big savings but get your mortgage interest rate as low as you can as a basic rule. Forget variable.

theteal

jayjay2010 wrote: »

I don't want to lock myself into another fixed rate period with a low payment over 32 years with a limit on how much I can overpay when I could just reduce the term to 23 years, increase the payments to what I ACTUALLY want to pay and then I can still overpay on top of that.

Surely someone reducing a term on a mortgage is nothing too outlandish :-(

They give 32 year low fixed rates??? Sign me up!

OP, we generally get the usual 2-5 year fixed rate, pay the permitted 10% in on top, save everything else we want to go towards the mortgage and then before signing to the next fixed period, pay that lump of savings off on the mortgage. It has the same effect as reducing the term and leaves a lot of wiggle room in case if any drastic changes in lifestyle. If they let you reduce term and something unforeseen happens, good luck trying to get it lengthened again.

Shoden

OP,

The sticking point here is that you are essentially looking for a new mortgage in trying to alter the terms. They would have to do a full underwriting procedure to see if you can afford the shorter term within the central bank rules. So I understand them not wanting to take that on when they are offering you a good alternative.

If this alternative of either paying the max overpay or sticking to a variable with high interest rates don't suit you then I think the cheapest way of you getting the terms you are looking for would be switching, which you don't want to do. So I don't think you will get the advice you are looking for.

poker--addict

I think people are conflating different things. Many banks allow people to pay off a lump sum and reduce the term while maintaining the current payment amount. Options to overpay every month will depend on the type of mortgage. I don’t believe my provider allows any additional payments during the fixed period. You can do what you like during a variable period- reduced term or reduce payments by paying excess.

You could pay off a lump sum now and refix for another 2-3 years then pay off another lump sum.

If you are likely to be able to pay lumps off then moving around between periods of fixed rate may prove fruitful too given the cash back schemes.

Shoden

poker--addict wrote: »

I think people are conflating different things. Many banks allow people to pay off a lump sum and reduce the term while maintaining the current payment amount. Options to overpay every month will depend on the type of mortgage. I don’t believe my provider allows any additional payments during the fixed period. You can do what you like during a variable period- reduced term or reduce payments by paying excess.

Not correct, a few of the banks I've been dealing with allow you to overpay by 10% during the fixed period.

Financesetc.

AnRothar wrote: »

We are with PTSB on a fixed rate and we are overpaying.

Have done so since we fixed.

Sent back a form at the time.

Can i ask how much you can overpay by with ptsb. Im taking out a 3yr fixed with ptsb over 30 years 290k mortage. And want to overpay for the years to reduce the term while i have good employment.
Also can you tell me do you know does the overpayment go off the interest or the principal, do you have to pick or do they decide.
Also lets say im 2 months into my fixed can i still start overpaying for the rest of that year.
Sorry now about all the questions i have a good knowledge but that is my sticking point.
Thanks

tomfoolery60

AnRothar wrote: »

We are with PTSB on a fixed rate and we are overpaying.

Have done so since we fixed.

Sent back a form at the time.

Fair enough but as a switcher this year I was told in no uncertain terms that you cannot overpay in fixed without break fee calculation.

It may be a feature of new contracts or the specific new customer high value deal PTSB have. Quite possible the contracts have changed in the way that KBC did a few years back (with KBC you used to be able to redraw your overpayments - no longer the case)

tomfoolery60

Financesetc. wrote: »

Can i ask how much you can overpay by with ptsb. Im taking out a 3yr fixed with ptsb over 30 years 290k mortage. And want to overpay for the years to reduce the term while i have good employment.
Also can you tell me do you know does the overpayment go off the interest or the principal, do you have to pick or do they decide.
Also lets say im 2 months into my fixed can i still start overpaying for the rest of that year.
Sorry now about all the questions i have a good knowledge but that is my sticking point.
Thanks

You should just ask PTSB - they will tell you straight away. You must have an adviser if you are already taking out the three year fixed? My understanding is you can't overpay at all, absent break fees. However others seem to have been able to overpay on a fixed, maybe it's a historical thing no longer available.

Financesetc.

tomfoolery60 wrote: »

You should just ask PTSB - they will tell you straight away. You must have an adviser if you are already taking out the three year fixed? My understanding is you can't overpay at all, absent break fees. However others seem to have been able to overpay on a fixed, maybe it's a historical thing no longer available.

I have asked AnRothar.
As they have first hand information.
Thanks all the same.

Marcusm

jayjay2010 wrote: »

I don't want to lock myself into another fixed rate period with a low payment over 32 years with a limit on how much I can overpay when I could just reduce the term to 23 years, increase the payments to what I ACTUALLY want to pay and then I can still overpay on top of that.

Surely someone reducing a term on a mortgage is nothing too outlandish :-(

It’s not but from the lender’s perspective it’s effectively a new application to be considered under CBI rules.

AnRothar

Financesetc. wrote: »

I have asked AnRothar.
As they have first hand information.
Thanks all the same.

We are with the PTSB.

When we wanted to fix our mortgage we spoke to the mortgage department on the phone.

They sent us out the contract to fix for 5 years and a booklet.
The booklet had different forms for over payment types. Fixed amount/lump sum/and others.

We filled out the page which allowed us to overpay by a set amount per month and sent it back with the contract.

Financesetc.

AnRothar wrote: »

We are with the PTSB.

When we wanted to fix our mortgage we spoke to the mortgage department on the phone.

They sent us out the contract to fix for 5 years and a booklet.
The booklet had different forms for over payment types. Fixed amount/lump sum/and others.

We filled out the page which allowed us to overpay by a set amount per month and sent it back with the contract.

Was there an option to overpay once you sign the fixed rate. If i am months into my fixed can i start overpaying then or do you have to decide when signig the fixed rate.
Also, does it say how many years your term will be reduced by over paying over the 5 years. Basically after the 5years over paying how many extra years will you have shaved off the mortgage term.
Thanks

Sarn

As mentioned above, the main thing is that the overpayment is applied to the capital. There is little point in overpaying if they just set the money aside and only apply it at the end of the fixed term (apart from locking the money away).