https://www.rte.ie/news/business/2023/1127/1418724-ulster-bank-mortgages-to-lose-offset-facility-next-year/
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
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.
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.
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."
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.
Are you sure about this calc?
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
Anyone further along with valid complaints about their offer?
And they had to pick some ceiling.
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"
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.
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.
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.
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.
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?
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
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.
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.
No
Why does it matter? They're trackers so the margin will remain the same no matter who services the mortgage.
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...
I take it you got your offer did you engage with the process??
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 🙂
A good starting point there also needs to be a commitment that the mortgages will not be sold to a vulture fund
It seems to me that they are a few issues (just my opinion - I am not in a legal or financial profession):
Anyhow, I am still to receive my letter. I'll post on here the figures once I get it.
They didn't manage to sell them already because of the problem with the offsetting, no bank could or wanted to facilitate that set up. However now they will be selling just one account, the mortgage, no attached current/savings accounts. Yes there will a few conditions on it that the new buyer will have to adhere to but it becomes just a basic tracker mortgage so much easier to offload I would imagine.
Well if they did take that action then the mortgage holder could tell them were to go for the remainder of the mortgage and in Ireland as a country we don't do repossession of the family home history has shown that some people are living with out paying a mortgage payment for 10 years + and if they are outside the ECB or CBI like you say who can they go crying too? IMO by not dealing with peoples concerns they have a lot more to lose.
Probably the most sensible approach. And yes the 58m almost certainly has been signed off on and included in the 315m provision listed in the financial statements released in Feb. I think it was. I have not got the motivation to dig through all the financial information they released on this. Perhaps someone else will.
Effectively they have for so many. So many on here that are fully offset n now getting a payment. They can clear n be left with that payment. Or anyone can use their payment and put it toward paying off their mortgage if they have other funds.
The loan value is 477million now... Be interesting to see what it is when it comes time to sell.
If even then they can sell. There could still be a lot to play out here. Thes loans could end up with a receiver.
According to the information letter in the section called ..
"What else do I need to know ? " 🙄.
It states.. your mortgage will remain with ulster bank , but is likely to be sold in the future..
Could it be that they still haven't managed to sell these loans as there is not enough profit in them ..
Thoughts???
If so why not offer a reduced redemption figure ..??
