Mixed messages on paying mortgages fortnightly
MANY MORTGAGE holders have been told by their banks that they cannot start paying their loans fortnightly rather than monthly because internal systems did not allow it.
This is despite the fact that banks have assured this newspaper that such switching was possible.
By paying a mortgage fortnightly instead of monthly, more than €50,000 can be knocked off a €300,000 mortgage over the course of a 30-year term.
A report in this newspaper’s Pricewatch section yesterday incorrectly stated these savings would come at no additional immediate cost to the mortgage holder.
The savings outlined only accrue because a person pays 26 fortnightly payments as opposed to 12 monthly ones, effectively equalling an extra month’s payment each year which comes off the capital and reduces the term of the mortgage.
While some savings can be made by simply splitting payments from once a month to twice a month, they are comparatively small as the mortgage holder is not paying off the capital any faster.
After the article appeared, some bank call centres were said to have been inundated with calls from mortgage holders with many callers being told the banks had no facility to cater for anything other than monthly repayments.
Some callers to Ulster Bank were told that the bank would only accept payments on a monthly basis but when contacted by this newspaper yesterday morning, a spokeswoman repeated what we had been told last week and stressed that the bank would facilitate more frequent payments.
She said this message was being communicated to all staff.
Several readers said they had called the AIB and were told it was not possible to pay once a fortnight but again, when contacted by this newspaper, the bank spokesman said it would facilitate more regular payments.
Callers to Permanent TSB meanwhile said they too had been told that it was not technically possible to switch to fortnightly payments, contrary to what a spokesman told The Irish Times last week.
When contacted again yesterday afternoon, a spokesman apologised for providing the paper with inaccurate information.
“Bar exceptional circumstances, Permanent TSB mortgage repayments must be by direct debit which operate once a month and which may vary if interest rates change,” he said.
He said the bank “cannot generally allow customers to replace the agreed monthly direct debit by one or two standing orders per month”.
The EBS, meanwhile, was telling customers they could make fortnightly payments by standing order but warned that as standing orders were not controlled by it, account holders would have to make any adjustments if interest rates went up or down.
For its part, Bank of Ireland said its customers could pay their mortgages on a fortnightly basis. “If a customer wishes to do this, they must send a request in writing to the bank, signed by all parties,” a spokeswoman said.