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

I have a Booklet dated January 2010, "A guide to Ulster Bank Accounts and Services for First Active customers'

Page 11 'Mortgages'

Important Information

New Sort code and account number

Terms and Conditions

Your terms and conditions remain the same

No interest paid on the excess amount in the Facility ( need to move it elsewhere) and no I wasn't expecting additional compensation for the excess

Same here. In fact I took it any time they offered it as I needed it for an extension which i am only now building. Delaying the extension was the best decision I ever made. UB will pay for the extension now

I was considering using this Pay and Redraw feature going forward. But with the existing Offset arrangement I was able to offset the full amount of the mortgage, and I was fastidious about just having enough in the Offset balance to cover the mortgage, with a standing order reducing the balance of the offsetting savings account in line with the balance of the mortgage account. To do something similar does not look possible with Pay and Redraw, it's just too messy and inconvenient for me and I'd say trying to fully offset the mortgage using this mechanism would trigger a redemption. Considering that 68% of people currently are hardly using the offset capability, I'd say very few people will use this Pay and Redraw feature going forward.

Thankfully my decision was made for me when I got the offer letter, I was surprised at the sum I got (in a very good way), and will most likely just put that towards the mortgage and pay off the rest with savings and be done with it.

I'd say Ulster Bank had your scenario factored in when coming up with this formula.... Again I wonder how much of this loan book will remain when it comes time to sell.

Hi all, are there any people here with an offset flexible mortgage in arrears? I received my letter today but will definitely be challenging it.

Also, somebody made the point that we have been hanging around for over a year wondering what's going to be done about these mortgages and now all of a sudden, at the busiest time of the year we are being asked to make up our minds by Jan 10th 2024. A little suspicious I think and typical of UB and their cunning antics.

Has anybody set up a group to challenge them as I for one would like to be involved. I know of a few others also challenging this....

TIA

I got advice myself at the time regarding these mortgages, I had never banked with First Active before that. But I was always fairly disciplined when it came to saving, so the concept appealed to me. Offset mortgages were not something that First Active invented, I think they were and might still be popular in Australia and the UK. But yeah, packaged up the way FA did was a costly mistake. But as the saying goes, the past is a very different country and back in 2005/2006 everybody had their heads up their arses thinking that the boom would go on for ever. Hindsight is 20/20 and all that.

I was trying to work out how much Ulster Bank have lost in relation to my own mortgage. It's a lot. Between the financial crash resulting in interest rates going to practically zero plus the offsetting feature, there were probably only 2 years in the entire term where they got the expected amount of interest from my mortgage. It's very rare that you beat the house, but it's nice when it does happen. Anyway, we all got shafted back in 2006/2007 when it came to house prices so at the end of the day it's swings and roundabouts.

That encapsulates exactly the situation I'm in myself. Apart from discussing this anonymously on this forum, we haven't mentioned it to anybody in the "real world". And probably won't even after we get the payment. I feel I can't mention it to friends or family because most of them still have big mortgages that they'll be paying off for years and years - I'd feel bad about telling them about this huge stroke of fortune we got. As of the end of January we'll be mortgage free with a very small impact to our savings (that we'll make up in a couple of years now that we won't be repaying a mortgage). My friends and family would be delighted for us but I still feel bad about it.

Is there any chance of Ulster taking back the offer or is it definitely going ahead with the payment in your account in January?

I asked revenue and the CAT unit said they have been told internally it isn't liable for CAT but may be liable for income tax... so i've put in an enquiry there too and yet to hear back

I find that insane that if there is any liability that it would be income Tax... CAT would be bad enough but income tax would be over 50% for some.

That is putting all beneficiaries in a worse position and totally cancels out the "doubling " up assumption that UB applied.

Therfore,their doubling up assumption to cover future losses because we are losing the product that could have saved us thousands is defunct!!

I cannot understand how there is even an argument to Tax recipients , it is a payment to cover the loss of future gains therefore no gain.

They also tell you to get Tax advice and no tax specialist has a clue. I couldn't get an actual answer from Tax specialist.

Anyone else had any joy with getting a clear answer,?

Sorry it was never a gain as long as you were paying the loan back how can it be a gain? Interest is the banks gain and they were losing out on a proportion or all if the full amount was offset at no stage during the mortgage was the customer getting a gain. If your definition was to be applied with all mortgages anyone paying off a mortgage early would be subject to tax and that is not the case

Hi There

Has anyone been in contact with a financial advisor on this matter?

Not sure who would be best to contact.

thanks