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PTSB not allowing term reduction on mortgage

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    #32
    Citygirl1
    Registered Users Posts: 297 ✭✭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.


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    #33
    dev_ire
    Registered Users Posts: 157 ✭✭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?


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    #34
    dev_ire
    Registered Users Posts: 157 ✭✭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?


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    #35
    kippy
    Registered Users Posts: 18,394 ✭✭✭✭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.


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    #36
    august12
    Registered Users Posts: 1,275 ✭✭✭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


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    #37
    Citygirl1
    Registered Users Posts: 297 ✭✭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.


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    #38
    AnRothar
    Registered Users Posts: 540 ✭✭✭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.


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    #39
    DM1983
    Registered Users Posts: 219 ✭✭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.


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    #40
    theteal
    Registered Users Posts: 7,593 ✭✭✭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.


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    #41
    Shoden
    Registered Users Posts: 90 ✭✭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.


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    #42
    poker--addict
    Registered Users Posts: 1,702 ✭✭✭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.

    😎



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    #43
    Shoden
    Registered Users Posts: 90 ✭✭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.


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    #44
    Financesetc.
    Registered Users Posts: 50 ✭✭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


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    #45
    tomfoolery60
    Registered Users Posts: 290 ✭✭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)


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    #46
    tomfoolery60
    Registered Users Posts: 290 ✭✭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.


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    #47
    Financesetc.
    Registered Users Posts: 50 ✭✭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.


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    #48
    Marcusm
    Registered Users Posts: 10,184 ✭✭✭✭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.


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    #49
    AnRothar
    Registered Users Posts: 540 ✭✭✭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.


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    #50
    Financesetc.
    Registered Users Posts: 50 ✭✭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


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    #51
    Sarn
    Registered Users Posts: 3,059 ✭✭✭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).


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    #52
    Financesetc.
    Registered Users Posts: 50 ✭✭Financesetc.


    Sarn wrote: »
    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).

    Do you have to tell them you want it to be paid off the capital.


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    #53
    Sarn
    Registered Users Posts: 3,059 ✭✭✭Sarn


    Financesetc. wrote: »
    Do you have to tell them you want it to be paid off the capital.

    Probably best to double check.


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    #54
    AnRothar
    Registered Users Posts: 540 ✭✭✭AnRothar


    Financesetc. wrote: »
    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
    We signed the fixed term contract and the overpayment at the same time.
    So I cannot comment as to what is permitted once the start date has passed.

    Regarding your second question we were late to the overpayment party so we are only saving around 18 months by my calculations.


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    #55
    Francie Barrett
    Registered Users Posts: 16,375 ✭✭✭✭Francie Barrett


    Marcusm wrote: »
    It’s not but from the lender’s perspective it’s effectively a new application to be considered under CBI rules.
    This exactly.

    Overpayments will achieve the same thing as changing the term.


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