An old first active current account mortgage

kerryjack

This got changed over to ulster bank and I only lately started using it as a current account anyone know if its free banking because your man in bank told me there is a 4 euro charge a month and my old T/C reads that banking will always be free wondering anyone else has this type of account ulster bank don't seem to know much about it

BuffyBot

I'd check the T&C thoroughly because I'd bet there's a break clause in there that doesn't commit them to free banking "forever".

Ulster do charge on their standard accounts, and the changes were well publicized and notices given.

phormium

Is there a charge being debited to it? I have one of these and there has never been a charge applied and I really really use it, tons of transactions. I find very few UB staff understand the current account mortgage and it's features and benefits. I think I would ignore him for now and just start using it and see if any charge is applied.

kerryjack

phormium wrote: »

Is there a charge being debited to it? I have one of these and there has never been a charge applied and I really really use it, tons of transactions. I find very few UB staff understand the current account mortgage and it's features and benefits. I think I would ignore him for now and just start using it and see if any charge is applied.

Ya I have been using it for a while now and it seems to be free banking which is great started to look in to this mortgage that I have now and it seems we got a really good deal back than 1.15 above ECB rate and free banking for life well life of the mortgage anyway

phormium

It's a fantastic mortgage, I haven't paid a penny in interest for years Mind you mortgage is small now so easy to arrange it that way, you have to forgo investment interest but hey that's buttons anyway these days.

You have to find old First Active staff in a branch to get anyone who understands it, UB never had that product so haven't a clue. There are a few in HO who know how it works.

One of the main features of that mortgage is you can move it from property to property without paying it off and having to take a new one, therefore holding on to your tracker rate in the process. Now you can't increase the amount of it at the tracker rate, any extra borrowing will be at normal rates but you can move the existing amount to a new house.

kerryjack

phormium wrote: »

It's a fantastic mortgage, I haven't paid a penny in interest for years Mind you mortgage is small now so easy to arrange it that way, you have to forgo investment interest but hey that's buttons anyway these days.

You have to find old First Active staff in a branch to get anyone who understands it, UB never had that product so haven't a clue. There are a few in HO who know how it works.

One of the main features of that mortgage is you can move it from property to property without paying it off and having to take a new one, therefore holding on to your tracker rate in the process. Now you can't increase the amount of it at the tracker rate, any extra borrowing will be at normal rates but you can move the existing amount to a new house.

Hi phorminum you seem to be well able to understand this product more than me and some UB staff can you tell me that the so called facility is money that you have over paid on your mortgage but its not exsesable by you because there is no overdraft facility on this account all very confusing

phormium

Had a huge reply typed and somehow deleted it Will do it again later when I get a chance.

phormium

Right, 2nd go.

The facility part of the account is not exactly overpayments, it may contain overpayments but is not entirely made up of them. If you never made an overpayment you would still have a facility as it is loosely speaking the difference between what you were approved for day one and what you now owe (but the facility goes down every year and does not remain equal to the difference - explained later)

The facility amount is what is available to you to re-draw down on your mortgage subject to certain conditions mainly that life cover is in place to cover the new higher outstanding amount if you draw down the facility.

It can't be used to dip in and out of like an overdraft, you have to formally request in writing any draw down of it so you wouldn't be doing it for the odd few hundred or so.

Now for an example of how to use a facility-
Let's say your original mortgage was 150k over 20yrs with 100k now left outstanding, so you are some number of years into the mortgage. The facility showing will not be the full difference of 50k between what you owe and what you originally borrowed but will probably be around 35kish (just guesstimate). So you decide you want to build an extension and need the 35k in your available facility so you apply to draw it down, it is transferred into the current account and you withdraw it, the balance outstanding on your mortgage then goes from 100k to 135k and your facility resets to zero. Now obviously as you now must pay back 135k within the same timeframe as the original mortgage your monthly payments go up. What's the benefit of getting the money you need this way rather than other borrowings? Well mainly the interest rate which will still be the current account mortgage tracker rate of 1.15% over ECB. No other borrowing will be that cheap plus there is no real application process. Over time the facility will appear again but will be lower, it goes down each year as if it were to remain the same as the difference between what you were approved for day one and what you owe then you could have the situation where in year 19 of a 20yr mortgage you could top back up to the original amount, this would make no sense as obviously repayments on that big an amount would be too much over one year. So the facility amount available increases initially as you repay the mortgage but then decreases as the term shortens.

Another example of how the facility could be used would be for say to buy a car. Let's say you want to buy a car for 10k and you want to borrow the 10k. You can draw down 10k from the facility and buy your car. Now most people would say that is madness increasing your mortgage to buy a car and it would be if you intended repaying it over the remaining term of the loan by which time the car is probably a distant memory. So say you borrow the money from the bank/credit union on a 5yr car loan at a rate of ???? I don't know what rate you will get but it will be a lot higher than the current account mortgage rate of 1.15 over ECB. What you should do is draw down the 10k from the facility and then overpay the mortgage each month by what the repayments would be on 10k at mortgage rate over 5yrs. This will bring you back to the same position in the mortgage as you would have been had you not drawn down the extra but you will have had the benefit of paying for your car loan at the low mortgage rate.

The other big benefit to this mortgage is the offsetting arrangements, any balance in any account that you have linked to the offset mortgage will be taken into account every day when interest is calculated on the mortgage.

For example lets say your salary of 2k is paid into the account on the 5th of Feb, then that night interest on the mortgage is calculated on the balance amount less 2k, as you spend the 2k over the next month the balance left in the account every day saves you interest on the mortgage that day. So for every euro you have in an offset account you are saving interest on a euro of your mortgage. It's not unknown for people who are really working this mortgage to pay for everything every month with credit card and clear that at end of month to maximise the resting balance in their offset account to save interest charged

kerryjack

Well explained looks like I missed out in 10 years imtrest I am sure someone sat down with me 10 year's ago and explained all that but I wasn't interested at the time O what a difference a few years make thanks for replying back

phormium

Even if you never used it to it's full benefit it's still a good tracker rate, good to have

littleredspot

Sorry for dragging up an old thread but it contains the most information I've been able to find. We have this mortgage. We never signed over so got offered the new deal of a very low tracker rate and a good return on savings. However for some reason we're still on interest only. Have a vague recollection of the deal at the time. Is the interest only aspect for the duration of the loan?

phormium

Are you really sure it is the current account/offset mortgage you have? There was never an interest only option on this particular product to the best of my knowledge.

littleredspot

phormium wrote: »

Are you really sure it is the current account/offset mortgage you have? There was never an interest only option on this particular product to the best of my knowledge.

Thanks for the reply. Yes it was a CAM. The money in the current account was taken from the total owed on the loan each month for the purpose of calculating the interest due. It's been interest only from day 1 but I think it was only due to last for 5 years. I believe the unlimited extension was part of the deal when the account moved to Ulster Bank. I just can't find the documentation confirming it.

kerryjack

Good luck finding anyone in ulster bank ti explain anything to you they haven't a clue about it

littleredspot

Have been avoiding contacting them, just in case...

phormium

Right, maybe there was some deal done during the merger as definitely while originally a First Active product there was no interest only option. The CAM was the original then it changed to Offset but basically same product. There are a few people in UB Head Office who understand the product, hard to find them though!

One used to post here or was it on askaboutmoney, I can't remember which but they definitely knew the product.

phormium

When you say you never signed over what do you mean?

What tracker margin over ECB are you on?

Squirrell19

Ulster bank have been trying to contact everyone that had a FA CAM but they didn’t say why, anyone ?

phormium

No idea, haven't heard anything from them.

kerryjack

Squirrell19 wrote: »

Ulster bank have been trying to contact everyone that had a FA CAM but they didn’t say why, anyone ?

Shouldn't be hard to find us might be over charging us could do with a few euro

soap1978

whats fa cam stand for?

kerryjack

soap1978 wrote: »

whats fa cam stand for?

First Active current account mortgage

phormium

Definitely not overcharging me, I don't pay a penny in interest on it

I have old FA staff contacts now working in UB, would surely have heard something about this if it was anything important.

kerryjack

Any word what ulster bank are going to do with these current account mortgage i haven't started looking at moving yet,

rameire

They dont know what to do with them I believe at the moment.

They are in their own magical hole. It may be that they never move.

phormium

I'm interested as to what will happen them too! If they keep them somewhere in a magical place they will have to allow some other sort of savings account linked to them for the offsetting purposes, be awkward I'd imagine if it had to be a current account but very handy for those of us that have them! I'm sure they can change the t&cs to just allowing an offsetting account as opposed to it having to be a current account.

kerryjack

Is there any panic in looking for a new bank for our current account is it up to them to sort it out as our current account is linked to our mortgage. My reckoning is they will just sell these in some kind of a discounted package to one of the main banks as a going concern.

rameire

It is up to you to move your current account.

They will give you 6 months notice before they will close your account.

The belief is they currently have no deal for the Offset mortgages.

phormium

I know it's up to me to move my current account as things stand but the point is there has to be an account linked to the CAM to avail of the offsetting be it a current or savings account, whichever doesn't matter to me but some account has to be there or the whole premise the mortgage was sold on disappears. Surely the terms and conditions protect the very idea and main benefit of the product.

I suppose one option for them is to do a deal with somewhere to transfer the CAMs with the same offsetting situation with an account in the new place.

Or alternatively compensate us to the value of the offsetting for remaining time, there must be relatively short term left on most CAMs at this stage when none were issued after FA went.

rameire

Ah yes. Agree with you.

For that reason I believe its why they are in a magical pot all by themselves.

As for getting another lender to give the same product.

I don't believe there is anybody in the Irish market that has that product on their books. So it's a red herring.

Also think they only stopped selling them when they stopped selling trackers. So they were being sold when First Active was part of Ulster.

So around 2009/10

phormium

They were being sold when FA was owned by RBS but were no longer being sold when it was amalgamated with Ulster as in when the FA branches were closed. FA stopped accepting new tracker applications I feel in August-ish 2008 with ones in the pipeline continuing to be processed and drawn down after that date.

I'm fairly sure that is the time they finished as I was out sick after a small op for 6 weeks and when I came back all had changed, changed utterly and trackers were gone for new applicants!

There isn't an existing similar product out there but sure some bank might be willing to take on the existing CAMs plus an offsetting account if they were sold them at the right price :) Be better to just offer the customer the discount maybe.

Seurat

I’m going to hop onto this thread. I switched in ~2007.

I have not been contacted at all by UB regarding a new current account but my understanding is that whoever takes over the mortgage must supply some sort of current/savings account as @phormium states.

I have not checked into other banks re current accounts, is this something ye have been doing? And if so wondering what CA would best serve this mortgage..

phormium

https://www.boards.ie/discussion/comment/118591416#Comment_118591416

I am going to open a c/a with CU I think to switch my direct debits to but I will leave the one attached to the offset and a savings account still open and wait and see what UBs solution is when time runs out! There will be sufficient between those 2 accounts to offset any interest charges on the mortgage so I expect some solution will have to be found by UB rather than just switching the mortgage and charging me interest!

TheAngryTechie

Hi all,

Ulster bank are leaving the Irish market. Has anyone had any joy in getting the Facility account terms and conditions from them? Do they have them?

I assume they do because if they don't know the rules around these mortgages, how can they apply them? Surely this would have been a requirement from the Central Bank when they took over these mortgages from First Active.

I have asked them to send me the terms because I want to have these to hand before they sell off my mortgage off to AIB or other.

I think its a reasonable request that they provide me with info about my mortgage. anyone else have problems getting info from them?

phormium

https://www.boards.ie/discussion/comment/119121505#Comment_119121505

I have the Facility account terms & conditions booklet, pretty standard stuff really, as far as I know they have not sold off any of the ordinary tracker mortgages yet and the offsets will be a particular problem for them so waiting to hear how they intend to address it. Maybe some other bank would be willing to allow an offsetting account attached to the mortgage or if not then they'll have to come up with some solution!

notthereyet

We Got a letter from SW today stating to change bank account, Child Benefit is paid in to this joint Bank account for years and mortgage is paid out of that that's all we use it for, I am reluctant to just close it down as It has been a great product as I have used the facility account cheap money a few times, surely we should be compensated for this loss

phormium

https://www.boards.ie/discussion/comment/119232179#Comment_119232179

I have a new current account set up elsewhere and all debits/credits other than mortgage payment changed. I will not be closing either my facility account linked to the mortgage or the savings account that is also linked until UB let us know how they are intending facilitating the move of these mortgages/offset accounts to another lender.

The issue of the 'available facility' drawdown amount is another question that needs to be answered by them as it's a feature of the product. I suspect it may come to them having to manage these some other way rather than sell them off to any other lender.

notthereyet

Ya used the facility to buy my last 2 cars, cheap car loan and just paid more in to it the loan account each month

phormium

https://www.boards.ie/discussion/comment/119233379#Comment_119233379

Excellent! That is exactly what it was meant to be for, things like that where you can pay home loan rate for items which normally attract a higher rate. Unfortunately so many people underused it and perhaps didn't really fully understand how to use it, it was an great product used correctly.

kerryjack

Just started moving banks here transfered wages first and started DD but Ulster bank are adamant to draw every last bit of blood out of us as I had 2 missed DD and they charged me 12.50 each not fair in the middle of a change over. Problem is I am reluctant to close it down as I feel we should be compensated a little for loosing this facility but I know well UB will keep charging us 4 euro a month for the pleasure.

phormium

https://www.boards.ie/discussion/comment/119549610#Comment_119549610

Actually that is a good point, they are still charging for the current/facility account even though many people myself included have moved payments/debits away from that account. I have not closed it and had no intention of until they sort out what's happening with the offset mortgages but that means I am paying 4 euro a month for something useless other than the offsetting. As I also have a savings account that offsets against the mortgage maybe I should close the facility and leave the savings account? Must ask UB that one!

We have to keep our offsetting arrangement or be compensated for the loss of it!

PS Actually just checked cos wondered about the 4 euro and anyway I pay 2 euro pm, in fairness for that I'll keep paying but might still query them on it!

Seurat

https://www.boards.ie/discussion/comment/119233416#Comment_119233416

@phormium @notthereyet I have a question for ye if ye don't mind

On my app it says I'm -80k on the mortgage and underneath says I have ~60k available

Does this mean I have basically been pre approved for a mortgage topup of upto 60k?

How do I go about getting some of that that? I presume no one in UB knows about this stuff?

Is it only allowed to be used for home renovations or can I use it for a cheap car loan?

I am looking into buying a new car and this would prove to be much much cheaper than a credit union loan - 2.65% (1.15%+ECB 1.5%) for the facility loan as opposed to 6-8% credit union loan

I presume essentially my mortgage repayment would just increase automatically from X to Y every month and I would have to do nothing else?

rameire

You have an available facility that you will be able to draw down.

You will need to make sure you have suitable life cover.

They may require some docs to process it but it's alot easier than looking for a fresh top up.

There are some Staff in Ulster that know about it. You just need to get past the fronline staff who may not know.

Yes your payments will go up. It will all be on your mortgage as 1 balance and not split.

Seurat

Thanks @rameire for that

So if I ring up the life insurance and make sure I am covered for mortgage amt due + what extra I draw down (upto 60k) there should be no issue?

Also is it ok to use for car loan or does it matter for what I use it?

rameire

You are OK I believe to use for car loan, New sofa, the next gas bill.

Check the life cover you currently have, if it covers the current and wanted get that in a document.

If it doesn't get quotes to cover the rest but don't get it in place until you speak to the Bank.

phormium

You can use it for whatever you like but if for example you used it for a car then you should ideally increase the payments to cover clearing the extra amount in the same term you would have if it was a car loan so say 5 yrs for example. Otherwise you are financing a short term asset onto a long term debt and not saving yourself as much as you should. The big saving is that you will have the 'car loan' at home loan rates.

If you're using it for home improvements then this doesn't matter obviously.

Seurat

Thanks @rameire and @phormium for that advice.

I rang up the bank and they said I just need to send in a letter stating how much I want, what bank account it is to be paid into and the life insurance details to show K am covered for the new full amount.

Interesting he said I need also to state the reason for the drawdown

phormium

https://www.boards.ie/discussion/comment/119680269#Comment_119680269

A box ticking exercise I would imagine to show prudent lending should the need ever arise. Imagining UB being in front of a judge in a repossession case, yes your honour we gave Seurat €xxxx to put on the gee gees! Wouldn't go down well for them! 😀 Just give them a logical reason for the drawdown that they can put on file.

Seurat

Yeah that's what I was thinking

I'll leave putting it on the horses to others!!!