Bank of Ireland - Overpayments

michaeloswald128

Hi,

I'm hoping someone will have some experience of this and be able to help. I'm planning to call up BOI again but advice would be appreciated.

We recently remortgaged to Bank of Ireland, a 5 year fix at 2.49%. Because this brought our payment down by over £150, we are going to start overpaying.

In the original offer, it said we could only overpay by £500 at a time so I planned on opening a separate bank account, transferring in 1/3 £500 per month and overpaying every quarter. To double check it though, I called BOI. The lady explained that because of the mortgage we have, the minimum is £500 however we can make the payment on a monthly basis and once it reaches £500 they will apply it to the account. She said we could call up and pay monthly, but I suggested i'd prefer a standing order so have been given the details for that.

Today I received the letter detailing our first payment (large because of date of transfer etc.) and in it the following is stated:

Overpayments
Overpayments are permitted on this mortgage.

A lump sum overpayment can only be made by cheque and is any amount that you pay us in addition to the monthly payment due. When we receive a lump sum overpayment we recalculate the amount you owe and the amount of interest you pay with effect form the following day. This means you get the benefit of paying less interest straight away.

Regular overpayments can only be made by standing order and are amounts that you pay to us each month in addition to the normal monthly payment. When we receive a regular overpayment we recalculate the amount you owe and the interest you pay from the 1st of the month after we receive the overpayment. The amount you owe will not be reduced immediately.

On this mortgage, early repayment charges may apply and we charge an administration fee (currently £50) on each occasion - please refer to section 10 of your offer for details. However, during each financial year you can make lump sum and/or regular overpayments that will not incur an early repayment charge or an administration fee providing that 1) each lump sum overpayment is not less than £500 and 2) the total amount repaid does not exceed 10% of the amount owed at 1 April (ha not much chance of that!). If an overpayment is made which causes the total amount overpaid to exceed 10% then the whole of that overpayment will be subject to any early repayment charge due and an administration fee will be payable.

I read the above as contradicting itself but I'm hoping that I just don't get it and someone can explain it to me? It's making me think my plan to keep the money aside and pay £500 per quarter is better but I am not 100% sure I will be that strict with myself.

Any advice appreciated.

Thrugelmir

If you exceed the annual overpayment allowance, thereby incurring an Early Repayment Charge, you will be charged a £50 administration fee. The fee will be charged on each occasion that you do so. You aren't impacted by this in making regular small overpayments.

While monthly overpayments are not credited to your mortgage account until they reach £500 in total. The amount of interest you are charged does reduce from the 1st of the month following. Setting the standing order to leave your account later in the month before therefore seems better. (Say 18/19/20th). As allows time for the transfer to be processed and makes allowance for the variable working days in the month.

Hughsey65

Hi, just wondered if you got any further with this? We have just experienced the exact same problem. Thanks