PTSB not allowing term reduction on mortgage

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 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.

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.

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

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.

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.

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?

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.

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.

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.

Newdawn11 wrote: »

Can you overpay if you are on a fixed rate?

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

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.

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.

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.