Ulster Bank/First Active Offset mortgages, here's the answer to previous thread!

fliball123

https://www.boards.ie/discussion/comment/121437997#Comment_121437997

A good starting point there also needs to be a commitment that the mortgages will not be sold to a vulture fund

paneur

Well I for one , will not be making any further mortgage payments after receiving the "ex gratia " or go quietly payment !!

I will not be engaging with the new bank / vulture fund. ...

They can talk to my solicitor or mabs..

I will not be giving ulster bank my new bank details which they say you MUST do to close your account...

I'll withdraw funds before due date and leave them a euro ."ex gratia "...

Yes , they can come after me , but that's gonna take some years...

They can ruin my credit rating, but I'm beyond caring....

In that time I will put my mortgage payments aside ....

When it it comes to negotiation I'll have that fund to play with and make a "reasonable " offer...

Sick of being shafted by service providers, banks , insurance etc...

Rant over..

Feeling better now 🙂

fliball123

https://www.boards.ie/discussion/comment/121438201#Comment_121438201

I take it you got your offer did you engage with the process??

paneur

Yep an it wont cover interest i could be avoiding...

I don't believe this pay and withdraw is of any use either.

Don't see any point in tryin to negotiate with ulster they wont be for turning..

Have sent first active terms and conditions along with letter to solicitor just for her opinion...

TM

https://www.boards.ie/discussion/comment/121438167#Comment_121438167

Why does it matter? They're trackers so the margin will remain the same no matter who services the mortgage.

Silpac

https://www.boards.ie/discussion/comment/121438167#Comment_121438167

No

paul321123

Sorry for the delay in replying, I have approx 7. 5years left on my mortgage so 45% of what is left is a OK for me, again I'm not 100% sure how the calculation was made but I'm sure the length of time that you were offsetting had something to do with this.

Jim2007

https://www.boards.ie/discussion/comment/121437939#Comment_121437939

They have noting to loose because they are not going to be around. It's your money that is on the table and I hope for your sake it works out for you.

DB2023

I've still to receive my letter so someone with greater knowledge might be able to help me. If I have a 100k mortgage and it's 100% offset, can I just move this to the new mortgage facility, continue to pay no interest and continue to pay off the loan each month? Thanks

kenif

Won't be able move all of it or mortgage will be paid off. Question is can you reduce your loan to maybe 1K and spread payments over the remainder of the term.... How many years left?

Silpac

No you can't do that. If you 100k mortgage and offset with new mortgage by say 60k, you will pay net of 40k, but you do not have access to the 60k.

You can however redraw it back but that the new "facility". And it will reduce. So it's nothing like what it was bit it is better than paying off mortgage in that you have opportunity to reborrow it.

aoraki

I am wondering the same thing @DB2023. Using a single account I don’t know how you separate the outstanding mortgage account with the money that is offsetting it. I don’t know if you can fully offset the mortgage balance without triggering a redemption. It just sounds like an awkward arrangement and to get your money out I think you need to write to them.

I don’t want to pay Ulster Bank a red cent in interest, but this sounds like too much hassle on the face of it.

kenif

Can you then spread the payments over the full term. Say 1K for over 10years. Very minimal repayments just to keep the option open for this loan so long as the facility lasts.

It is a question I will have for UB but won't be ringing till next week some time.

Uatstau

I'm struggling with the logic on this. Can anyone help? In the letter they say "We acknowledge .... that interest rate changes are by their nature unpredictable. To take account of this, we have doubled the payment to you." This is fair enough. Factor 2 should take account of most reasonable scenarios. But then they say "subject to your goodwill payment not exceeding the full amount of future mortgage interest you are expected to pay". Huh? But this 'expected to pay' depends on the predictable nature of the interest rate, which in the previous clause they have admitted might have a margin of two fluctuation.

aoraki

https://www.boards.ie/discussion/comment/121441141#Comment_121441141

Yeah, it's contradictory, I struggled with that myself. They're saying "Yeah, we've picked a best-guess interest rate to calculate your potential future interest payments. We acknowledge that it's a best guess and could be wrong so to compensate for that we will double the payment, so long as it doesn't exceed that value we got using our best guess".

In a scenario where you are not fully offsetting your mortgage, you will get the doubling effect applied to your payment. However, in a scenario where you are 100% offsetting, there is no doubling or uplift applied to your goodwill payment to acknowledge that the rate used might be wrong. It's a case of "this is the goodwill payment using our best guess rate, like it or lump it"

kenif

And they had to pick some ceiling.

fliball123

Anyone further along with valid complaints about their offer?

IC2023

Are you struggling with the calculation methodology. I think it was based on the average amount you had in your in your offset account over a period of time and time left on your mortgage and their suggested 4% rate

example

50,000 in offset account

their suggested rate 4% (interest rates currently higher but expected to go down 2023, 2024 with decreasing inflation)

term left on your mortgage example 15 years

50,000 * 4% * 15 years = 30,000

they double this to factor that rates can go up and that you may have increased the amount in the offset account in future due to windfall events

30,000 * 2 = 60,000

ex gratia payment 60,000

i think this is pretty fair. It’s not money for nothing - we lose out on this benefit going forward but ex gratia payment makes up for it If you were a heavy user of the offset

this roughly works out for me

the problem is if you didn’t use it heavily, didn’t have a large balance in it and if you don’t have a long term remaining on your mortgage you’re not going to benefit as much as others who did

fliball123

https://www.boards.ie/discussion/comment/121441304#Comment_121441304

Are you sure about this calc?

IC2023

this is from RTE website Mon 27 Nov 6:11pm

customers losing the offset feature and therefore the opportunity to use it over the remaining terms of their loans, Ulster Bank will make ex-gratia payments to each of the 4,500 customers around January 10th of next year.

It will be based on their previous use of offsetting over the past six years and their average offsetting balance over the last two years, as well as what they might have saved in future interest if they were to retain the same offsetting balance until they have cleared their mortgage.

The end figure will then be doubled, in recognition of the possibility that the customer’s offsetting balance might increase unexpectedly in the future, like through the receipt of inheritance or a redundancy payment for example.

it more or less works out for me.

WhatsGoingOn2

From Charlie Weston on Twitter:

Here's what @RevenueIE says: "Revenue is aware of media reports regarding payments to offset mortgage holders and will consider the tax implications of same, if any, once the full details of such payments are known. If required, existing guidance will be updated in due course."

jd9

We received the letter from Ulster Bank about closing the offset facility. We have not used the facility much until last year when the ECB rate started to rise. UB are only providing us with the minimum compensation (€5,250) which we are not happy about given that interest rates have gone very high and we have started using the offset facility more.

 

I spoke to a few solicitors but found Niall Kiernan of Lawlor Kiernan the best. I felt like he knew what he was talking about and is already taking cases for UB customers.

fliball123

https://www.boards.ie/discussion/comment/121441304#Comment_121441304

I dont think this is right as over the lifetime of the mortgage the amount payable will reduce each year so for example in the last few years in your example the mortgage will be less than 50k so the amount saved will not be 4% of 50k but 4% of what is remaining on the mortgage.

IC2023

I think it’s based on the amount you had in the offset account, not the mortgage account. That’s the part of the product that’s being removed and that’s what it said in the various media reports

One ceiling they have is that they won’t pay more ex gratia payment than the total interest you would owe. If people are in last few years of mortgage then total interest they would owe would be low

kenif

https://www.boards.ie/discussion/comment/121441780#Comment_121441780

But people in the last few years have pretty much got the full benefit of the product... Only going to compensate for the years people are missing out on.

paneur

So those that used the facility to it's max , say 100% , have paid zero interest to UB for possibly years..

Those that didn't ,have paid interest to UB for possibly years...

So those that made UB no profits seem to get a better ex gratia...

What a bizarre idea..

Let me be clear here ... I do not , in anyway , begrudge those people receiving that payment. Good luck to them... Much better than it staying in UB pockets.

IC2023

You’re right. All of us had up to now to make full use of the offset facility to reduce interest payments but they are now changing the terms. It’s easy to demonstrate that you have used it in the past and you can reasonably argue that you plan to continue to do so over the remaining term of your 20 year mortgage then it’s only right they pay you a higher ex gratia payment. they have this information which is why they are making a reasonable offer

Unfortunately it seems a lot of people may not have used offset facility and are not getting payments they are happy with. Hopefully these people can argue that they planned to do it in the future but I think that’s why Ulster Bank doubled the ex gratia payment.

if your mortgage level and remaining term are very low then this will limit how much you could benefit in the future and have an impact on payments you receive

the above are only my thoughts. Trying to make sense of it like everyone else

IC2023

Panuer, you’re right although I’d say there’s very few that have been 100% offset for a long time. I’ve had about 30% offset over past 10 years. Gonna keep as much there as I can along with ex gratia payment up to May 2024

Jim2007

https://www.boards.ie/discussion/comment/121441845#Comment_121441845

That is not how compensation works. People who made maximum use of the facility will get the maximum compensation because they will loose the most, that is pretty standard when it comes to compensation claims.

IC2023

https://www.boards.ie/discussion/comment/121442367#Comment_121442367

remove the ‘not’ from first sentence