Ulster Bank's proposal to deal with offset mortgages

[Keninf]

"In order to determine the correct tax treatment applicable in any circumstance where a compensation payment is made to an individual, each settlement must be analysed on its own facts,” they told me, quite correctly. “Firstly, the nature of the compensation payment itself would need to be determined to establish if it is revenue or capital in nature. The general principles established by legislation, case law and Revenue guidance would then need to be applied to each case based on this analysis.”

That's is part of the reply back from Revenue, but also that they have got no detail of the scheme from Ulster Bank. And until they do they can not determine what tax, if any will apply.

Author then goes on to say that industry people he has spoke with do not believe any tax will apply, unless there is something out of the ordinary with an individuals status. Though that is not a definite.

 

[aoraki]

"In order to determine the correct tax treatment applicable in any circumstance where a compensation payment is made to an individual, each settlement must be analysed on its own facts,” they told me, quite correctly. “Firstly, the nature of the compensation payment itself would need to be determined to establish if it is revenue or capital in nature. The general principles established by legislation, case law and Revenue guidance would then need to be applied to each case based on this analysis.”

That's is part of the reply back from Revenue, but also that they have got no detail of the scheme from Ulster Bank. And until they do they can not determine what tax, if any will apply.

Author then goes on to say that industry people he has spoke with do not believe any tax will apply, unless there is something out of the ordinary with an individuals status. Though that is not a definite.

Thank you very much Keninf. Interesting to see that Revenue themselves don't know for sure and won't be able to advise until they get clarification of the scheme from Ulster Bank. Equally interesting that Revenue are viewing it as compensation and using that language. Which of course it is.

I guess we'll see what happens next. Probably won't get any further clarification until the new year, what with Christmas happening in between.

 

[Doni666]

Hey guys , a few questions if ye don't mind.

1. So technically our Offset Flexible mortgages are being changed to Flexible mortgages?

2. When officially lodging a complaint with Ulster bank in writing, does one have to quote all our issues .ie possible breach of contract, possible unfair clauses , and any other possible issues, or can one send a general complaint and expand it after recieving advice?

3. Didn't Danske Bank have a similar issue a few years ago but I can't seem to find any resolution?

4 And for so many people with this type of product I see very little mobilisation?

5. I read somewhere that these mortgages are under performing. Surely with the rate rises they would now be considered more attractive?

 

[Indebadbooks]

Thank you very much Keninf. Interesting to see that Revenue themselves don't know for sure and won't be able to advise until they get clarification of the scheme from Ulster Bank. Equally interesting that Revenue are viewing it as compensation and using that language. Which of course it is.

I guess we'll see what happens next. Probably won't get any further clarification until the new year, what with Christmas happening in between.

Guys I'm not a tax expert, but have an accounting background.
In view of the fact that ub will not pay anymore than the total possible interest by way of compensation, then this is not a capital write down and therefore should not attract any taxation.
We are only getting a reduction in future interest, no more so than if interest rates had ever gone negative and we were paying zero interest whatsoever.
If we had got a capital write down and that could be demonstrated by revenue then yes it may well attract tax.
That's not gospel but I'd be confident that we're ok

 

[Keninf]

In my scenario, if I don't use the payment against the mortgage then I will have an extra 10k+ in interest in the first year..... I still have 21 years to go.

The only way this payment works for me is to pay down the mortgage. Otherwise it is essentially another loan I didn't seek as I have actively used the offset.

 

[Monbretia]

4 And for so many people with this type of product I see very little mobilisation?

I would be inclined to think the bulk of people are quite happy with the offering, I know a few people with them and all are delighted but their mortgages are not that big at this stage. Bearing in mind that any mortgage out there is at least 15 yrs old so for most half way through term or so and those that knew what they had were probably making good use of the offset and may not owe as much as they should, those that didn't use the offset features at all are really losing nothing and gaining. Yes in theory they might come into money and use it but in reality unlikely as if you didn't know or use it for 15 yrs hardly likely to now!

Also the numbers who might wish to avail of the switching to new property feature are likely to be very small and not even sure if that feature is gone too so in general I would think there just aren't huge numbers of offset customers unhappy with the solution which might actually work to their benefit, easier for UB to up the offer for a few rather than many.

 

[aoraki]

I would be inclined to think the bulk of people are quite happy with the offering, I know a few people with them and all are delighted but their mortgages are not that big at this stage. Bearing in mind that any mortgage out there is at least 15 yrs old so for most half way through term or so and those that knew what they had were probably making good use of the offset and may not owe as much as they should, those that didn't use the offset features at all are really losing nothing and gaining. Yes in theory they might come into money and use it but in reality unlikely as if you didn't know or use it for 15 yrs hardly likely to now!

Also the numbers who might wish to avail of the switching to new property feature are likely to be very small and not even sure if that feature is gone too so in general I would think there just aren't huge numbers of offset customers unhappy with the solution which might actually work to their benefit, easier for UB to up the offer for a few rather than many.

I think this is correct. If you never used the Offset and didn't even understand what it was (which seems to be a big chunk of the mortgage holders) then getting a 5K payout is probably a nice little unexpected bonus. I think the people who were utilising the offsetting feature and had some time left on their mortgage are probably happy as well, they are getting big payments that represents a large percentage of their remaining outstanding balance.

The folks that are probably unhappy are people who know the power of the offsetting feature but weren't in a position to fully avail of it yet, and also have a long term remaining. I imagine it is that cohort of customers that are going to challenge this. And rightly so.

 

[Doni666]

I would be inclined to think the bulk of people are quite happy with the offering, I know a few people with them and all are delighted but their mortgages are not that big at this stage. Bearing in mind that any mortgage out there is at least 15 yrs old so for most half way through term or so and those that knew what they had were probably making good use of the offset and may not owe as much as they should, those that didn't use the offset features at all are really losing nothing and gaining.

I think this is correct. If you never used the Offset and didn't even understand what it was (which seems to be a big chunk of the mortgage holders) then getting a 5K payout is probably a nice little unexpected bonus. I think the people who were utilising the offsetting feature and had some time left on their mortgage are probably happy as well, they are getting big payments that represents a large percentage of their remaining outstanding balance.

The folks that are probably unhappy are people who know the power of the offsetting feature but weren't in a position to fully avail of it yet, and also have a long term remaining. I imagine it is that cohort of customers that are going to challenge this. And rightly so.

I'm

I think this is correct. If you never used the Offset and didn't even understand what it was (which seems to be a big chunk of the mortgage holders) then getting a 5K payout is probably a nice little unexpected bonus. I think the people who were utilising the offsetting feature and had some time left on their mortgage are probably happy as well, they are getting big payments that represents a large percentage of their remaining outstanding balance.

The folks that are probably unhappy are people who know the power of the offsetting feature but weren't in a position to fully avail of it yet, and also have a long term remaining. I imagine it is that cohort of customers that are going to challenge this. And rightly so.

Yes in theory they might come into money and use it but in reality unlikely as if you didn't know or use it for 15 yrs hardly likely to now!

Also the numbers who might wish to avail of the switching to new property feature are likely to be very small and not even sure if that feature is gone too so in general I would think there just aren't huge numbers of offset customers unhappy with the solution which might actually work to their benefit, easier for UB to up the offer for a few rather than many.

I would be inclined to think the bulk of people are quite happy with the offering, I know a few people with them and all are delighted but their mortgages are not that big at this stage. Bearing in mind that any mortgage out there is at least 15 yrs old so for most half way through term or so and those that knew what they had were probably making good use of the offset and may not owe as much as they should, those that didn't use the offset features at all are really losing nothing and gaining. Yes in theory they might come into money and use it but in reality unlikely as if you didn't know or use it for 15 yrs hardly likely to now!

Also the numbers who might wish to avail of the switching to new property feature are likely to be very small and not even sure if that feature is gone too so in general I would think there just aren't huge numbers of offset customers unhappy with the solution which might actually work to their benefit, easier for UB to up the offer for a few rather than many.

Very true and good point. My parent's availed iof this and benefited very well from offsetting. I did do a little in the beginning when interest rates were high but not so much when the rates hit the floor. Still having a twenty year term left is now an ideal time to offset for me. But obviously not for much longer! So can I ask all ye knowledgeable people , its an offset flexible mortgage so is the offsetting a term and condition of the mortgage or a feature?

 

[Doni666]

I think this is correct. If you never used the Offset and didn't even understand what it was (which seems to be a big chunk of the mortgage holders) then getting a 5K payout is probably a nice little unexpected bonus. I think the people who were utilising the offsetting feature and had some time left on their mortgage are probably happy as well, they are getting big payments that represents a large percentage of their remaining outstanding balance.

The folks that are probably unhappy are people who know the power of the offsetting feature but weren't in a position to fully avail of it yet, and also have a long term remaining. I imagine it is that cohort of customers that are going to challenge this. And rightly so.

Also the numbers who might wish to avail of the switching to new property feature are likely to be very small and not even sure if that feature is gone too

Sorry I should have asked, but what's the new property feature?

Emm I kind of do also remember Ulster Bank made quite a few mistakes with interest charges , maybe I received four refunds of overcharged interest , would it be worth having a forensic accountant examine the mortgage in your opinion?

 

[aoraki]

Sorry I should have asked, but what's the new property feature?

Emm I kind of do also remember Ulster Bank made quite a few mistakes with interest charges , maybe I received four refunds of overcharged interest , would it be worth having a forensic accountant examine the mortgage in your opinion?

It is a feature of the Offset Tracker Mortgage. You can transfer your mortgage to a another property and keep the offset capability, tracker margin and facility that you had. It's a nice feature, but I'm not sure if it is being removed along with the offset capability. I didn't see it specifically mentioned in the press release, so that would be something that would need to be clarified with Ulster Bank themselves.

Regarding the interest charges mistakes you mentioned, if you are concerned about the correctness of the payment the article that Keninf linked above mentioned opening a GDPR request to Ulster Bank, to obtain the details of the calculation so that you can check it for accuracy

 

[Monbretia]

Emm I kind of do also remember Ulster Bank made quite a few mistakes with interest charges , maybe I received four refunds of overcharged interest , would it be worth having a forensic accountant examine the mortgage in your opinion?

Never heard of anyone on the offset having mistakes in the interest charges, not to say it didn't happen though! Did they explain how it happened?

 

[Indebadbooks]

are we the only two in the country who still don’t know what they’re being offered?!

My biggest concern with the delay is that it eats into the available time to seek financial advice.

Still no letter here, how about you?

 

[Aniascor]

Still no letter here, how about you?

No. And we have received other post each day. It’s extremely frustrating.

 

[Indebadbooks]

No. And we have received other post each day. It’s extremely frustrating.

Really strange. My best guess is we were in the last batch and it can take 7 working days if letters are issued from the uk( if that's where they are coming from). In that event we should receive them tmra, we or Thurs at the very latest.

 

[Target106]

are we the only two in the country who still don’t know what they’re being offered?!

My biggest concern with the delay is that it eats into the available time to seek financial advice.

Can anybody tell me what the time limit is on seeking financial advice? Is it January 10th or can we dispute the amount up until we lose the facility on May 23rd? I didn't see anything in the letter about formally accepting or rejecting the payment. Surely if the €250 thats being included with the payment is for the purpose of seeking independent advice, then we can wait until we receive that payment to go looking for advice?

 

[Keninf]

Can anybody tell me what the time limit is on seeking financial advice? Is it January 10th or can we dispute the amount up until we lose the facility on May 23rd? I didn't see anything in the letter about formally accepting or rejecting the payment. Surely if the €250 thats being included with the payment is for the purpose of seeking independent advice, then we can wait until we receive that payment to go looking for advice?

Taking payment on 10th of January does not affect your ability to lodge a complaint. Nor is it acceptance of Ulster Banks decision.

Check out their FAQ on their website. Most of your answers will be there and from the horses mouth.

 

[Keninf]

Mortgages Support

Ulster Bank is closing. For help and support with your Mortgage queries visit the Mortgages page on our dedicated Customer Support Hub. We're here to support you through this change.

www.ulsterbank.ie

 

[Target106]

Taking payment on 10th of January does not affect your ability to lodge a complaint. Nor is it acceptance of Ulster Banks decision.

Check out their FAQ on their website. Most of your answers will be there and from the horses mouth.

Thanks for your reply, much appreciated. I'll check out the FAQ

 

[RichInSpirit]

No. And we have received other post each day. It’s extremely frustrating.

Is there any chance that the letters could be going astray in the postal system?

Are you getting any other letters from Ulster Bank at the moment?

This letter looks like it came from Leopardstown, not the Uk.

Is there a sorting office in your district that you could check for undelivered mail?

 

[Aniascor]

Is there any chance that the letters could be going astray in the postal system?

Are you getting any other letters from Ulster Bank at the moment?

This letter looks like it came from Leopardstown, not the Uk.

Is there a sorting office in your district that you could check for undelivered mail?

We've been receiving all our other Ulster bank post as normal for the last few months - offset savings summaries, interest increase notifications, etc. And I had them confirm the postal address on record, so I don't think it's that.