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

phormium

https://www.boards.ie/discussion/comment/121456458#Comment_121456458

Yes you are right, the pay and redraw would need a lot more managing for full offsetting as such whereas having extra in an offset account didn't matter at all, actually the original CAM mtg from FA did have a limit on the offset linked account and you had to keep it below the mtg balance or it would also trigger a redemption but that was subsequently fixed when it was revamped to Offset mtg.

Again I'd imagine not too many have the full thing offset but if you wanted to then definitely the pay and redraw would not be nearly as good, should be fine though for someone who just happens to have an extra lump sum less than mortgage temporarily.

kenif

https://www.boards.ie/discussion/comment/121456458#Comment_121456458

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.

kerryjack

I wonder what happened to the lad or woman or team of people that came up with this product, I got this by pure accident was supposed to have a meeting with someone from EBS I think and I walked in to first active by mistake and met someone in there that said sure we are open for your business and got mortgage off of them instead. 2005 and 6 was mad years for banks trying to give away money to who ever would take it.

virgo65

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

Jim2007

https://www.boards.ie/discussion/comment/121457628#Comment_121457628

The young guns in any bank comes up with 10 dumb ideas every week, it is up to the rest of us to but a stop to them. Most of the gate keepers from then are retired by now. And of the one ones I know a fair few are not doing so well.

aoraki

https://www.boards.ie/discussion/comment/121457628#Comment_121457628

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.

IC2023

https://www.boards.ie/discussion/comment/121458067#Comment_121458067

Absolutely. I’m almost embarrassed for Ulster bank to talk about this publicly. Haven’t told anyone else about the windfall- at least not until it’s in the account. Anyone else feel like this?

aoraki

https://www.boards.ie/discussion/comment/121458120#Comment_121458120

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.

phormium

https://www.boards.ie/discussion/comment/121457628#Comment_121457628

Weren't you lucky! 😁

As a mortgage type it wasn't really a FA invention, very common in Australia at the time especially, it was a hard sell as very few could understand the benefits bar the occasional person who had lived in Aus and already had one! Either way all those staff long gone in all the clear outs over the years and finally the merger with UB.

Aoraki- just saw your comment after I posted, yes it already existed prior to FA and FA actually bought an Aus financial system yeares back when computerising stuff, can't remember details but people had to go out there for discussions/training etc, probably came across it at that stage. Even though some used it very well I would say they were in the minority, no matter how much it was explained a lot of people didn't get it. I know someone who still gets car finance from garage despite having one of these mortgages and I explaining umpteen times how it would be far cheaper to draw down some of the facility!

soap1978

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

Mmar1234

First time posting. I have been following the thread.

Overall I am very happy with the offer I have received.

Does anyone know if revenue are going to tax the payment. Has anyone been in contact with them?

shanoh

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

Mmar1234

Great. Thank you

whoareya1

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.

Jim2007

https://www.boards.ie/discussion/comment/121460778#Comment_121460778

As you say: "it is a payment to cover the loss of future gains" so of course it is a gain otherwise there would be no need to compensate you in the first place and furthermore it is a realised gain that is a fact. Whether it is taxable or not remains to be seen. First we'll hear from the Revenue on how they propose to deal with it and then we'll see if someone appeals it and so on.

whoareya1

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,?

whoareya1

The offset product is a legitimised gain though. It's never been a case that whilst using this product to reduce interest (gain) that that was ever questioned for Tax.

So what sense does it make that if we can no longer do that on a product that didn't originally have a liability that the compensation gets taxed and we make a loss on what we would have had we kept it.

fliball123

The offset product is a legitimised gain though. It's never been a case that whilst using this product to reduce interest (gain) that that was ever questioned for Tax.

So what sense does it make that if we can no longer do that on a product that didn't originally have a liability that the compensation gets taxed and we make a loss on what we would have had we kept it.

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

DB2023

My tax consultant said its not taxable as it would be deemed as compensation by revenue despite the wording on the UB letter. If it was taxable virtually everyone would be at a loss.

Anybody have any feedback from UB about the loss of the ability to remortgage on the same terms as your current mortgage. This is potentially a massive loss if you were going to avail of it. I'm waiting on UB reply ....

obriendj

Hi There

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

Not sure who would be best to contact.

thanks

wellboy76

https://www.boards.ie/discussion/comment/121454686#Comment_121454686

I managed to draw down in September and was planning to do so again this year.

spoke to my accountant yesterday. I got an offer of €7100 and he just basically said, take it and enjoy it. Nice gift to get after the Christmas. Nothing I can do will increase the amount. If it’s got the CB’s approval then it is what it is.

wellboy76

https://www.boards.ie/discussion/comment/121460822#Comment_121460822

See what my accountant said just before this thread. Not one financial advisor has a clue on this.

soap1978

https://www.boards.ie/discussion/comment/121470942#Comment_121470942

I got the same answer from the uncle that is a accountant

Jim2007

MOD: The last thread on this topic was closed because it turned into speculation on the outcome without much substance. This time please stick to the facts of the matter as people are trying to assess how it well impact them and idle speculation and editorials are not helpful.

kenif

https://www.irishtimes.com/your-money/2023/12/10/mortgage-customers-left-in-the-dark-on-tax-implications-of-goodwill-payment/

Nothing new really but a bit of feed back from revenue

Seurat

It would be helpful if we had the tax advise from Revenue before the payment hits the account. That sounds unlikely now given Ulster Bank haven’t been in contact with them and we have the Christmas holidays coming up making only 17 working days for Revenue to receive the information, assign it to someone and get guidance out to us (assuming Revenue don’t work between Christmas and New Years)

kenif

"Firstly, the nature of the compensation payment itself would need to be determined to establish if it is revenue or capital in nature"

Don't want to read too much into it at this stage but Revenue are calling it compensation.

Jim2007

https://www.boards.ie/discussion/comment/121480706#Comment_121480706

There are lots of things that the Revenue don't comment or issue practice guidelines on. In this case we are talking about a very small number of tax payers so I would not expect them to do much about it for the moment.

woddyf26

I have a mortgage and the amount in the letter is €5250 but it will be finished in May and I have €4450 remaining on it so what happens in this situation

WhatsGoingOn2

The money is yours to do whatever you want with it. You don't have to pay off your mortgage with it.

McSween

Has anyone uploaded the documents. I tried the phone number, nobody available

Jim2007

https://www.boards.ie/discussion/comment/121530197#Comment_121530197

MOD: To not upload documents here.

paul321123

I have uploaded the document but when I was talking to them in the phone I was told only one person needs to upload their documents even though I my wife is on the mortgage as well, it was easy to do once you have the link sent to you,

fluffy stuff

Out of interest has anyone else here not got their letter yet? I contacted them just before Christmas as I assumed they were sending them in waves, to be told mine was sent out ages ago. They said ,send it again but I've no idea where the first one went!

phormium

https://www.boards.ie/discussion/comment/121544630#Comment_121544630

Over on Askaboutmoney there was a couple of posters whose letters were delayed, they were practically ringing daily but even they have got them at this stage I'm fairly sure. You should definitely have it by now, they weren't that staggered, only over the course of a few days, have they correct address on it, do you always get your other offset post normally?

fluffy stuff

Yes I always get my regular offset post so it's very odd. Hopefully in the next few days he new one will arrive. Otherwise I guess I'll find out on Jan 10th 🤣

paneur

Has anybody had any legal feed back..?

Have engaged with solicitor to get their opinion, but I'm sensing a reluctantance from them to give a definitive answer....

Or maybe I'm paranoid 🤔

Jim2007

https://www.boards.ie/discussion/comment/121561018#Comment_121561018

Why would you expect a definitive answer from any professional if they don't have one? And there will be nothing but (reluctant) opinions until it is adjudicated upon by the courts. And really anyone one gives you a definitive answer, then you should be very careful about using them.

Iamcurious

I contacted central bank and they told me that I can only lodge a complaint with Ulster bank, which I have done, then they have 40 days to reply and if they don't then I can take it to the Financial Ombudsman to bring it further.

I also rang UB and told them I wasn't excepting this money and I wanted my T n C with first active honored.

Villenelle

Hi

Late to the party. 50k left over 7 years at the moment. Annoyingly, we have savings but in the credit union, 16k there. We used the facility account in early stages of mortgage, but then hit recession etc. Only saving for last few years, and with talk of UB leaving we put the money in CU to save the hassle of moving it.

We have been offered the standard €5250 as we haven't used the facility account, gutted now although don't know how much we have lost as a result. With savings growing, and possible lump sum on the way, we have possibly made a huge mistake.

kenif

Move the 16K now and contact Ulster bank. I have heard they are accommodating people in such situations up to a certain date.... They may rework your compensation. Though no idea what it will be worth or how they will factor it in to any calculation.

supergroove

Hi All, I am late to the party here but am just wondering if there have been any new developments. I got my letter over a month ago. Ive been asked to upload the documents but haven’t yet. They told me that the documents have nothing to do with receiving the payment but more about identity I suppose and KYC.

supergroove

I read somewhere maybe in the letter that they told the central bank what they were doing which I guess is what you suspected.

Jim2007

https://www.boards.ie/discussion/comment/121575532#Comment_121575532

As all of this stuff will have been gone through several legal reviews before it was made public, it would probably be a very good idea to get legal advice before outright rejecting the offer, so you have some indication of what the alternative might look like.

For instance, if you read the T&C that you originally signed up to, I full expect that they contain provisions for the transfer of your mortgage and provisions for the varying of those T&C. So what would your complaint actually be and even more important is it something within the remit of the Ombudsman.

JJ O Malley

Did anyone get the payment? Put my letter in a safe place so may never find it again, but think it said payment is planned for the 10th January? Nothing landed yet..

Cheers

JJ

rameire

I rang Ulster and the agent advised the payments would be starting today and be completed over the next week.

so it sounds like they will be doing it in bits over the next few days and not in one go.

whoareya1

As a matter of interest..has anyone on here gotten an answer from Revenue as of late about the tax treatment of this?

darthinvader

Revenue have not received all information from Ulster Bank yet to determine if payment is exempt or taxable.

paul321123

Got another letter from ulster bank today which said that the money will be in my account within 10 working days from the date on the letter, anyone else get this, it aldo looks like if you were not using the facility account but would have used it in the future that you could be entitled to them recalculating your sum that you will receive, anyone get this new letter or has anyone received their payment yet

Abel Magwitch

https://www.boards.ie/discussion/comment/121607403#Comment_121607403

I got the letter also but no payment. Should be in by end of next week.

i’m not contesting what they calculated, I am very happy with the payout sum