Taking a break from full payments or pay interest only

If you feel you need to take a break from repayments for a while, to cover maternity leave or home property improvements for example, we’ll look at that for you.  You can apply for a complete break on your mortgage repayments for six months (it’s what we call a moratorium), or to pay interest only.

We may be able to give you a complete break from your mortgage for up to six months, or the option to pay interest only for 12 months. It all depends on you living in the home, having all your payments up to date with us, as well as some other information we need from you when you apply.

If we agree to it, we will then spread those rearranged repayments over the rest of your mortgage term.

If you are considering a repayment break because you are finding it hard to pay your mortgage, please visit to https://aib.ie/worried-about-payments.

Six month complete break in repayments:

If we agree to it, we will spread the six months’ worth of repayments you are taking a break from, over the rest of your mortgage term. This means that when you start paying again, your repayments will be a little higher to make sure that your mortgage will be repaid (together with interest) within its original term.

Interest-only repayments

Or, if you like, you may be able to make your repayments interest-only for up to 12 months, in other words, not paying the capital part of your repayment. At the early stages of your mortgage, the interest portion of your repayment is usually higher than the capital portion.

Then after 12 months, your repayments will be a little higher to make sure that your mortgage will be repaid (together with interest) within its original term.

To apply for either of these options, fill in the Payment Break Form and return it to your Mortgage Advisor or drop it in to any of our branches.

You can reduce your monthly repayments by extending the term of your mortgage. You can apply using the Reduced Repayment Application Form and send it to: homemortgages@aib.ie or send it to AIB Home Mortgage Operations, Accounts Section, Unit 33, Blackthorn Road, Sandyford Business Park, Sandyford, Dublin 18, D18 E9T3.

Reduce your mortgage repayments or own your home sooner by paying more off your mortgage. You can pay more than your normal repayments off your mortgage with an extra monthly payment or a lump sum payment, or both. Try our Overpayment Calculator to see how much you could save.

Below are the options available when making an unscheduled overpayment.
 

• Pay a lump sum, maintain current scheduled repayments, and reduce your mortgage term. Your mortgage loan term will be reduced to keep the scheduled repayments at approximately the same level as they were prior to the lump sum payment. If you are a variable rate customer, the prevailing rate of interest remains unchanged, and your scheduled repayments will adjust in line with any future rate increases or decreases as normal. If you are on a fixed rate and ask to reduce the term, you will need to break out of your current fixed rate for which an early repayment charge may apply. A new interest rate will then need to be selected.

• Increase your monthly scheduled repayments and reduce your mortgage term. Your mortgage loan term will be reduced due to the increase in your monthly repayments to your mortgage. If you are a variable rate customer the prevailing rate of interest remains unchanged, and your scheduled repayments will adjust in line with any future rate increases or decreases as normal. If you are on a fixed rate and ask to reduce the term, you will need to break out of your current fixed rate for which an early repayment charge may apply. A new interest rate will then need to be selected.

• Pay a lump sum and reduce your scheduled repayment amount. Your scheduled mortgage repayments will reduce in line with the reduced balance of the account. The remaining term and prevailing rate of interest remain unchanged, and your scheduled repayments will adjust in line with any future rate increases or decreases, as normal.

From 14 October 2023, under all the fixed rates we offer, you can overpay up to €5,000 each calendar year for the term of your fixed rate and we will not charge an early repayment charge up to this amount being applied. Any additional overpayments above €5,000, or early full redemption of your mortgage loan, may result in an early repayment charge if you are on a fixed rate. If you are on a fixed rate and ask to reduce the term, you will need to break out of your current fixed rate for which an early repayment charge may apply. A new interest rate will then need to be selected.

An overpayment will reduce the cost of credit of your mortgage loan. There are no disadvantages of this AIB Fixed Rate Overpayment allowance.

How does it work?

• On any overpayments up to a total of €5,000 that you make between January and December of each year, and use to reduce your mortgage repayments, we will not apply an early repayment charge.
• Your scheduled monthly mortgage repayments will reduce in line with the lowered balance of your mortgage.
• The overpayment will reduce the cost of credit of your mortgage loan, while the remaining term and interest rate remains unchanged.
• A new €5,000 overpayment allowance will automatically be reset in January, for each of the years in the fixed rate that you have chosen. You can’t carry any unused allowance from one year to another.
• Any overpayment you make in December needs to be paid no later than 15 December to make sure that it’s processed within the current year’s overpayment allowance. While we will try to process all overpayments by the end of the current year, if you make an overpayment after this date, it may be taken from the following year’s allowance.
• The €5,000 Fixed Rate overpayment allowance doesn’t apply to a full mortgage loan redemption or if you are seeking to reduce the term of mortgage as a result of the overpayment.

Who is it available to?

All new and existing AIB mortgage customers on a fixed rate, including Private Dwelling Home and Buy To Let customers.

If you are a past Ulster Bank customer please click here for more information.

More Information:

• Any remaining allowance cannot be transferred from one fixed rate to another rate.  
• If you change to another fixed rate, a new €5,000 limit is applied to each year of the new fixed rate term.
• You can only reduce your mortgage term when on a fixed rate if you break out of your fixed rate agreement and choose a new interest rate. Breaking a fixed rate agreement may result in you having to pay an early repayment charge and choose a new rate.
• An overpayment results in a permanent reduction of the mortgage balance and is non-refundable.

Example:

The following example shows the effect of overpaying within the €5,000 limit where we do not apply an early repayment charge. At the time of the overpayment the mortgage balance is €200,000 on a fixed interest rate of 5.25% for a period of 5 years (60 months) and there is 25 years remaining in the term of the mortgage.

a)   No overpayment – total cost of credit is €158,952.80, repayments of €1,196.52 per month.
b)   €5,000 overpayment is made - total cost of credit is €154,978.09, repayments of €1,166.61 per month.

In the calculation above we are assuming the interest rate applied for the full mortgage term is 5.25%.

Ways to make an overpayment:

There are a few ways that you can make an overpayment for either a one off lump sum, or multiple overpayments.

• In a Branch
• AIB Phone and Internet Banking
• AIB Mobile App
• Setting up a Standing Order with your Bank
• Complete the Overpayment Form.

When you have filled in the Overpayment Form, please return it to us via email to homemortgages@aib.ie or send it to AIB Home Mortgage Operations, Accounts Section, Unit 33, Blackthorn Road, Sandyford Business Park, Sandyford, Dublin 18, D18 E9T3.