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

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

paneur

No it's not...

But this is "ex gratia "...

Not compensation...

shanoh

Here is my take:

1. UB are offering you a payment in return for losing out on future offset. Only you can determine the true value of what you are losing (with a financial adviser, I'd suggest).
2. If you believe the ex gratia payment doesn't cover this, then I would act now
3. UB say that the Pay and Redraw facility will remain in the new mortgage. I don't believe this. The new T&Cs to me seem to say that feature can be removed (therefore I think it will be, likely when sold to a new bank in the next year or so)
4. Therefore the Pay and Redraw facility should not factor into your calculations. Only the true value of what you are losing without the Offset facility.
5. Get a financial adviser to model your future earnings and savings over the course of your remaining mortgage term. Using the examples in the UB press release on their website, get the FA to estimate your lost savings. Double it, and that is what you should be getting from UB.
6. In a short few months you will have no leverage to get a higher number if you are unhappy now.
7. UB have struck a balance between avoiding reputational damage from leaving the market with 4000 unhappy people, and the cost of winding down. There should be some negotiation room here.
8. They have taken a slightly unfair way of calculating because it doesn't take future increases in your balance into account. The doubling of the calculated figure is their way of finding a blunt solution to that problem. However it's a guess. Everyone has different financial circumstances. If you are expecting an increase in salary, or some other increase in your balance (or reduction in outgoings) then prove it to them.
9. A group is likely to be stronger here, and you'd have to make some noise on social media or radio/papers

I'm happy with my offer but I'm going into this with my eyes open - I know I'm likely losing the ability to Pay and Withdraw in the future, which is a bummer. The payment seems reasonable for that, in my opinion. If however you really value that, make the case that the new T&Cs are worthless because anything can change in future. And ask for added compensation to offset that...

I have no expertise here, just saying it like I see it (this could all be wrong!)

paneur

Yep .. fully agree with you comments.

paneur

Does anyone have , or know where to find ulsterbanks t&c for this mortgage ?....The original first active is freely available but can't find UB....

IC2023

https://www.boards.ie/discussion/comment/121443550#Comment_121443550

Agree with everything. The offset was a sweet deal. I’ll be losing over 300 euros a month but they are compensating me double that so i have to be happy

kenif

https://www.boards.ie/discussion/comment/121445184#Comment_121445184

https://www.ulsterbank.ie/help-and-support/brochures-and-forms.html

find it in there

paneur

Thanks kenif....

Maybe im missing it , but the offset T&C on their site is dated 2023....

Then the new flexible T&C for 2024...

But wheres the original from when they took first active loan book..?

kerryjack

So what have we to do now, send them on the form of ID and a proof of address can we use our new bank account, eg AIB to get this ex gratia payment payed in to or will they put it in to the ulster bank account, I haven't closed down our Ulster bank account but haven't used it with over a year.

phormium

https://www.boards.ie/discussion/comment/121447143#Comment_121447143

Did they issue new T&C when they merged? Don't think any were ever sent out anyway, would it not still be the original FA T&Cs that are relevant and what they are now changing. Is the 2023 ones now available not just a reprint as such of the FA ones with UB branding as obviously they can't reissue them exactly as they were.

That said I haven't compared all aspects of the new ones online to the existing FA one!

phormium

https://www.boards.ie/discussion/comment/121447145#Comment_121447145

It says in the correspondence that the payment will go into whatever existing UB ac you have linked to the mortgage.

kenif

https://www.boards.ie/discussion/comment/121447297#Comment_121447297

If that account is no longer open they will issue the payment by cheque... I'd just leave it open for now.

Seurat

I got my letter yesterday

16 years left on the mortgage, they offered me 41% of my mortgage balance.

I had been offsetting heavily the last say 7 or 8 years. I guess my big payout is due mainly to high offsetting the past 2 years as stated in the letter

Overall I am very happy with the outcome, much more than I would have expected, though I do realise what I am losing. Then again having my balance sliced in almost two (I will just use the payment to go to this "new" pay and withdraw account) is a great boost mentally

I still wish UB wasn't leaving. Their staff were always very helpful. Anytime I drew down money from my facility it was in the account within a week, and the app is by far the best on any of the Irish banks. I am happy sad about the whole affair

I feel for the people who got lowballed but also I think as others state above they have had years to use this amazing and UB had to draw the line somewhere

Abel Magwitch

I don’t think Revenue will tax these payments as they are to substitute a projected loss of relief on a mortgage so to speak.

Ofc that may change if it is a rental property

brenlixnaw

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

thanks for this IC2023 i have used your method and get quite bigger figure than UB have offered me

if I take the average balance in my offset account over the last 24 months which my letter states they use if higher than the last 6 year average

then the length of time left on my mortgage is 6.5 years and my offset mortgage at present stands at 55,000 and i have 59,000 in my facility account so these are my calculations

56000 (average) *4% *6.5 (years)=14,560

14,560*2=29,120

ive been offered 8,763 ,my only thoughts would be that there's a clause which states "subject to your goodwill payment not exceeding the full amount of future mortgage interest you are expected to pay"

sorry if i seem dumb but what mortgage interest would 55,000 over 6.5 years come to im guessing around 8,700

thanks for any advice ,it makes sense to try to get some advice on here rather than pay a solicitor to tell me what should be obvious

kenif

https://www.boards.ie/discussion/comment/121448190#Comment_121448190

€7,500.

A couple of variations. It's probably been worked out from your facility which was higher at 31 August. N maybe a couple of months difference in the term. Also no one knows for sure what rate they are applying for each year. Just seems to average about 4.

It seems about right but I would ask them to confirm each figure they inputted for your calculation

Saffy the Cat

There seems to be a mixture of some people who are happy with their offer, but many others who are quite angry and are feeling the offer they have been given is unfair or a lot less than it should be. Couple of questions

1. I wonder would there be any point in getting a legal opinion as to whether UB can force this through without engaging with customers, as far as I am concerned I signed a contract with First Active and UB committed to honour the terms of that contract.
2. Does anyone know any good solicitors, specialising in this kind of dispute, who could provide an opinion on this.

I would imagine this is a done deal and has already been given the ok from the central bank and rubber stamped by the government (looking out for citizens as usual) but I don't want to just agree to UB's offer without exploring options

paneur

To Kenif..

The t & C on their website is issued this year 2023...

Also t & c for future "flexible " ( renamed) which is for 2024...

Cannot see any issued for when they took over from first active...

Solicitor I spoke with wants to compare first actives to ulsterbanks , but did they issue any ..?

If not , are they entitled to use first actives ..?

kenif

https://www.boards.ie/discussion/comment/121448389#Comment_121448389

I do not know. I do not believe there was any change when Ulster Bank first took over the loan book. It was the same parent company. No terms or conditions changed at that time.

Only reason new T&C's got issued in 23 was due to the changes affected by branch closures and how that affected day to day banking or people's method of repayment.

DO NOT TAKE THIS AS GOSPEL!!

kenif

https://irelandmortgages.com/mortgage-calculators/mortgage-repayment-calculator/

a calculator showing people total interest

kenif

https://www.mortgages.ie/go/first_time_buyers/tax_relief_calculator

this one will break it down by year

IC2023

https://www.boards.ie/discussion/comment/121448190#Comment_121448190

See above rough calculations for your example. I think they applied 4% interest rate to the remaining term of your mortgage and calculated that you wouldn’t pay more than 8.7k in interest so that is what they offered you.

Those with the highest term remaining benefit the most. I took out a 40 year mortgage and have over 22 years remaining.

If I apply the same logic as above my remaining 4% interest payments over 22 years would be below the original calculation methodology I provided (offset balance * 4% * term remaining * 2) which is why I got the latter larger offer from UB

Im not 100% certain about this but it seems to work out for me

aoraki

@Saffy the Cat It’s hard to believe that the central bank and regulators weren’t involved and vetting this when UB were coming up with this plan. And maybe it’s because of them that UB are making these goodwill payments because if they are legally within their rights to unilaterally remove the offset feature then strictly speaking they are not obliged to make any payments. So I do think this is a done deal.

I for one am very happy with the offer because I was in the category of customers that was fully offsetting over the past few years, had a long mortgage term remaining and who didn’t use the facility limit (but benefited from it being included in the calculation). But it was pure blind luck that I started offsetting when I did, for the first decade of the mortgage I didn’t offset at all. I can certainly sympathise with folks that UB have deemed to be non-offsetters, but still have a long time left remaining on their mortgage. But maybe they can make their case for an improved offer.

phormium

I seriously doubt there was any new T&Cs issued after merger with FA, why would they, it was the same product and they had to honour the existing T&C so why go print a whole new booklet to issue to customers with just a name change on cover. Did anyone with a UB mortgage that switched to say AIB get a new booklet of T&Cs?

As mentioned probably the only reason there is an updated one online at all is because of the branch closures.

meridian9491

I got my letter Friday. The offer wasn't exactly what I thought it would be and certainly doesn't equate to remaining principle at 4% doubled.

By my (potentially flawed calculations) the offer is working out with an interest rate of around 2.23% (this is close to a 20yr average of the ECB rate, not including the 1.15 tracker element) and they are then doubling this figure.

In the last 24 months my mortgage has been 95%+ offset. I did ring them on friday and they said someone would ring me by monday to explain my specific calculations.

kenif

Yours will not be doubled. The max they will give is 4%ish of your loan or facility as of 31st.

IC2023

https://www.boards.ie/discussion/comment/121449148#Comment_121449148

As far as I can tell, they do 2 calculations

Firstly, remaining mortgage * 4% * term (with annual capital reduction factored in)

and

Secondly, average Offset facility balance for past 2 years * 4% * remaining term * 2

they will pay option 2 above provided it is less than total remaining interest in 1 above

this works for me and I get option 2 as greater than option 1

Renbrandt

We got our letter today and I've been reading the previous posts.

We currently owe €85K, remaining term is 7 years.

I calculated on the mortgages.ie calculator the total interest left to pay on this mortgage at 4% rates would be €12,744.

The average balance of our facility account over the last 2 years is €110K.

The current balance of our Facility Account is €89K.

89,000*4%*7*2= €49,840

We have been offered €16,117 which is nowhere near this figure.

Is the offer a bad deal or have I missed anything?

Any comments appreciated.

IC2023

https://www.boards.ie/discussion/comment/121453540#Comment_121453540

They won’t pay any more than your total remaining interest. You’re fortunate that you only have 7 years left on your mortgage. The removal of the offset feature will adversely impact you but they all paying all your remaining interest by way or ex gratia payment. You are in the same boat as many on this forum

do you currently pay any interest if your offset balance is greater than your loan balance?

phormium

Agree with above, also any money over and above the amount of the outstanding mortgage would not be taken into account anyway as that's not offsetting anything, that's just savings as such.

Doesn't matter to me as I am in the minimum payment category but I haven't paid interest for many many years as my account balances exceeds the outstanding mortgage, in that situation you pay no interest and in fact at one time you got interest on the surplus over the offsetting amount!

JJ O Malley

I got my letter. Offer was 5250 E. My mortgage is at 60k, minimal offsetting up to now. 10 years remaining. Due to come into some funds next year and would have offset the full amount. Not sure what difference that would make on the offer or if there is any point in challenging it.. Following this thread with interest..

Cheers, JJ

Renbrandt

https://www.boards.ie/discussion/comment/121439281#Comment_121439281

Let us know the answer to this- it seems preferable to paying off the mortgage.

It would be worth it to have the flexibility of future removal of the lump sum.

I drew down some relatively small amount of additional borrowing under the 'Facility' back in about 2008.

The process took a couple of months and we had to have the property re-valued for the bank.

Renbrandt

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

Renbrandt

https://www.boards.ie/discussion/comment/121449148#Comment_121449148

Yes my offer looks like it's similar to yours. It's at around 2.25% interest on the borrowed sum for the remainder of the term, doubled.

The calculations are far from clear.

Renbrandt

https://www.boards.ie/discussion/comment/121454058#Comment_121454058

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

Seurat

https://www.boards.ie/discussion/comment/121454216#Comment_121454216

I have drawn down from the facility a few times with Ulster Bank, never with FA. All it needed was a letter written to Leopardstown stating the amount wanted and why (eg home imporvements). The money was always in my account within a working week. I find it hard to believe that will be the same with AIB/PTSB/Fund when they get sold on, you may need home valuations again etc. Also I imagine the amount available in the new "facility" will reduce more regularly and rapidly than with UB

IC2023

https://www.boards.ie/discussion/comment/121454535#Comment_121454535

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

IC2023

I tried to draw down again in Sept and I wasn’t allowed for some reason I didn’t understand then but makes sense now

phormium

The procedure for drawing down some of the facility was easy with FA too, it only required a written request and proof of life cover in place for the new higher o/s balance. I drew down a couple of times myself. You'd only need a valuation if you were actually increasing the overall loan or if maybe the value of property had seriously dropped, possibly happened some people back around last prices crash!

Abel Magwitch

True the LA was also needed with Ulster for me anyway

aoraki

https://www.boards.ie/discussion/comment/121454821#Comment_121454821

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.