tracker mortgage going up??

transam

we have our mortgage for the last 4 years , the first 2 it was fix at 5.20% and last year it became a tracker mortgage at 2.1% , today we got the letter from the bank (permanent tsb) saying that due to a change in the ammount of tax relief deducted at source its going up by 150euro a month , i rang them up and they told me to contact the revenue so i did and the revenue told me that there is no change in the tax relif !!! how come the bank is saying in the letter that the tax relif has changed and the revenue is saying that its the same , i rang the bank again and they told me that maybe my next payment will be lower , thay dont know yet . its crazy,maybe thay want to get more money of me , should i go to the bank and talk to the manager?

jarmstrong001

Citizens Information have some information on this, including sections on changes in the last budget
http://www.citizensinformation.ie/en/housing/owning_a_home/buying_a_home/mortgage_interest_relief.html

transam

"Mortgages taken out between 1 January 2004 and 31 December 2011 will continue to qualify for mortgage interest relief at current levels up to the end of 2017 "
The guy from revenue rang the bank to but said that didnt get much info from them , and told me to wait until next monts payment and if its the same then ring him again and he will start investigation on it

seamus

My guess is that you didn't apply for TRS in the first year of your loan (or something like that) and now your rate of TRS has dropped from 25% to 22.5%.

Or you got it late in year one, and although you say you've been paying for 4 years, for TRS purposes this may be the start of year 5, so your TRS rate is dropping to 20%.

For example, let's say you got your mortgage in late October 2006 and applied for TRS. This means that 2006 was year 1 of your TRS and 2010 was year 5. This means that 2011 is year 6 and you've dropped to 20%.

On the other hand if you got your mortgage in late 2008 but didn't get TRS applied till January 2009, then you're in year 3 for TRS purposes and down to 22.5%.

€150/month is 1800/year, which assuming that your TRS has only dropped by 2.5% means that you were claiming roughly €18k in TRS last year. Which would mean you have an astronomical mortgage. Query it with the bank again. An increase of €150/month would indicate the removal of TRS completely.

transam

the first payment for the mortgage was in january 2008 , the TRS kicked in from march 2008 (there is still 400e in credits on the account for january and febuary of 2008) , the revenue said i should be getting 22.5% the motrgage was for 220000 euro , i cant understand why bank says in the letter that revenue changed the ammount while the revenue says it the same , who is wright??

phormium

First payment made Jan 2008 but when did you drawdown the mortgage. Was it in Dec 2007 cos then 2007 would be 1st yr of TRS.

transam

it was dec 07 , still , revenue claims i should be getting 22.5% , 150e increse a mont is a bit much in my opinion , will see next month what happens , if payments will stay the same i will be on my way to the bank , the revenue and the bank have diffrent opinions , madness

jarmstrong001

Just about the tax relief at source decrease.
I think in your particular situation the reduction in relief may be due to the change in interest rates.
For the first year this was probably based on the stated interest rate of 5.2%.
For the second and third year this was based on the interest you were paying in the previous year.
Now in the fourth year the interest you were paying in the previous year is a lot less because in year 3 you moved to a 2.1% interest rate.
This is only a guess but would be a better explanation of why your TRS allowance dropped so steeply this year.