My five year interest only period is ending on my Ulster bank buy to let mortgage!!

landlord

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I received a letter yesterday from Ulster bank saying my five year period of interest only is ending on my buy to let mortgage. The letter gave me exactly 7 days notice of a 1150 Euro increase in the mortgage from Interest only to capital and interest. I am furious how can anyone expect to find €1150 extra the week before Christmas. They did apologise and said they should have given me one months notice.
I got this mortgage through a broker and all the paperwork he originally gave me five years ago mentions nothing of a five year restriction on the interest only period. Specifically the loan offer mentions interest only but nothing about a five year interest only period. I do not have any other terms of conditions.
I was advised by someone in Ulster bank mortgages to write in and apply for an extension to the interest only petiod. I have done this but I do not expect this letter to be looked at until after the Christmas period. I was also advised that if I do nothing the full capital and interest repayment will come out in six days time, So he recommended I cancel my direct debit to Ulster bank and manually pay the interest only amount. ...... I hope that doesn't get me into trouble!!!

The mortgage is an ECB tracker at 0.75% above ECB. I do not want to lose this rate at any cost.
Has anybody else gone through this with Ulster bank and have you successfully negotiated an increase in the interest only period?
 
Pretty shabby giving you such notice,if not illegal.

I got this mortgage through a broker and all the paperwork he originally gave me five years ago mentions nothing of a five year restriction on the interest only period.

Its the paperwork you received from the Bank that you need to be scrutinizing,The European Standardised Information Sheet that you would have gotten when you initially drew down the loan,if there is any mention of cap & int payments it will be on this document.

I was also advised that if I do nothing the full capital and interest repayment will come out in six days time, So he recommended I cancel my direct debit to Ulster bank and manually pay the interest only amount. ...... I hope that doesn't get me into trouble!!!

This will impact on your credit rating I would imagine and possibly give them an excuse to remove you off that Tracker rate.

If you can,pay the full amt until you get clarification,in the event they refuse you IO payments and you have documentary proof supporting your case or indeed that there is no mention of it in your loan paperwork ask for a final written letter and proceed to the Ombudsman.
 
Is The European Standardised Information Sheet not a general information sheet of no legal consequence?

Check your loan offer/mortgage agreement. I would expect that you will find the 5 year clause in that. If it's not there, then you should remain on interest only.
 
It will be on your loan offer letter and maybe in the specific conditions page attached to it. As far as I know UB never did a full term interest only, buy to lets were 5yrs, home loans up to 10 yrs.
 
Is The European Standardised Information Sheet not a general information sheet of no legal consequence?

Correct Brendan,funnily enough though if I recall correctly I think I used this statement sheet as corroborative evidence in a case I took to the Ombudsman against ICS.

Specifically the loan offer mentions interest only but nothing about a five year interest only period. I do not have any other terms of conditions.

However it provides an easily understandable overview of the conditions etc,the OP no longer has the terms and conditions of the loan offer but may have this somewhere around,failing that get back onto the Broker,they can be very helpful in situations like this and may have the relevant paperwork to support your case or run interference with the relevant individual in the Bank on your behalf.
 
I managed to get a 2 year extension on my interest only period, but this process took over 6 weeks and I ended up having to pay 2 payments of capital and interest while my request was under review to prevent any potential arrears affecting my credit rating. I would advise anyone coming to the end of an interest only period to renegotiate an extension two months in advance.
 
5 year interest only clause on Ulster Bank Mortgage

I recently experienced precisely the same experience as Landlord with Ulster Bank giving me one months notification of an increase from £200pm to £1000pm after a five year interest only period on my 25 year interest only Buy to Let mortgage. They invoked a clause which I had not been made aware of, albeit I accept that I signed the T&Cs to agree to this at the time (don't we all). It is evident that as the bank are only receiving 0.7% above base rate they are trying to recoup their money to lend to others at a higher rate. I am currently undertaking legal advice on the matter with a later fallback to the FSO should this fail.

Has anyone dealt with the FSO? Are they a toothless tiger? My complaint, which was refused by the bank, is that I was mis-sold a product which was in effect a Capital/Repayment Mortgage cleverly disguised as an Interest Only. The illustration which they provided at the time demonstrated 25 years of interest only payments and constantly referred to Interest Only and the requirement to have a vehicle in place to repay the capital at end of term.
 
. The illustration which they provided at the time demonstrated 25 years of interest only payments and constantly referred to Interest Only and the requirement to have a vehicle in place to repay the capital at end of term.

Could you copy paste this document on here please (deleting your name etc).
 
Sorry Bronte, don't have ready access to a scanner however I have done the maths and am quite satisfied that the Mortgage Illustration provided is for Interest Only. It calculates the 25 years of interest to the penny and quite clearly highlights the need to repay the capital sum at the end of that period with no reference to any special clauses. It also refers to remembering to add on the capital sum if comparing this mortgage against a repayment mortgage! I appreciate the Illustration is precisely that however it provides a clear indication of my requirements at that time before someone slipped in a 'hidden' clause when it came to the actual Offer of Loan.
 
Update!!

Hi, I have found myself in the same situation with a hidden 5yr interest only clause that was not communicated to my solicitor. Just wondering what the outcome was?
 
Idon't understand what a "hidden" clause can be!! The loan agreement would specifically contain all relevant clauses relating to the loan repayments. If the repayments were stated as interest only for the duration of the loan with a bullet repayment at maturity then these are the terms. If not then the repayments clause should specifically state tha the IO repayments will expire 5 years from loan drawdown.
 
Hi, sorry I didn't explain correctly. When we sourced the mortgage, we requested an interest only mortgage. The standard mortgage offer from ulsterbank was based on an interest only mortgage for a term of 25 years. In several sections it points out that the we should make arrangements to repay the capital after 25 years e.g. A separate saving plan. I have done this through another investment property. All calculations in the standard mortgage offer document refer to the fact that the loan is interest only for 25 years. We went through the mortgage with a broker and our solicitor. The Offer Letter also makes no reference to a 5year interest only term. Ulster bank sent 2 copies of the standard mortgage offer to our solicitor. One for him and one to be signed. He talked us through it again and we signed our copy and returned it. It transpired however that there were some special conditions on the copy we signed (but not on his copy) which contained 1 sentence to say the loan was interest only for a 5year term after which it would transfer to interest and capital repayment. There is absolutely no way we would have agreed to this as we planned to pay the capital at the end of the 25year term. When I say hidden... I feel we have been midsole this product. One sentence in some special terms and conditions document changes the standard mortgage offer in its entirety plus it seems to me that this was added in a separate document At the point of the loan.
 
I'm not a solicitor but at face value this seems highly unusual and would be unlikely to stand up, provided that your solicitor can verify that the copy of the agreement held by him (still held??) is different than the one signed by you. Even if he doesn't have a copy he can surely verify his understanding of the agreement. Your first port of call should be to this solicitor. His verification must be an essential part of your claim.
 
I have done that and he has confirmed this is the case. He still has both copies. I also have a letter from the solicitor from the time of the purchase summarising the mortgage offer at a 25year interest only mortgage. He agrees that we have been midsole the mortgage or that there has been a failure somewhere along the line. I have contacted ulster bank and am still trying to get a response. I have been waiting for 6 weeks now so plan to visit an adviser in a branch if all else fails. I was really just wondering how AngryKid got on. The 5year clause was extremely well hidden so much so that our broker, our solicitor and ourselves missed it.
 
"The 5year clause was extremely well hidden so much so that our broker, our solicitor and ourselves missed it."

But it was in the loan offer? So, the Bank can look for full payments?

mf
 
There seems to be 2 documents. The standard loan offer which refers to the loan being interest only for 25 years throughout. And then some separate pages with separate page numbering (that don't have our mortgage reference in the header) with a bullet point saying the loan is interest only for 5 years. These additional pages are in the document we returned but not on the solicitors copy. I know it sounds bizarre but I feel we were duped. Why refer to 25 years interest only throughout the main document and the actual mortgage letter when the bank don't even have such a mortgage product. Even the monthly calculations on the offer were based on 25 years interest only and over and over it stresses that you need to have a separate saving plan in place for the end of the mortgage term. It's so misleading and I think it's a case of blatantly mis selling a product.
 
I'm doubtful that they will agree to interest only for the remainder of the term, but would be happy to settle for an additional 8-10 years so I can get my affairs in order. What do you think are the chances?!
 
Vindicated!!!

Hi Anni, you we looking for an update?

I'm pleased to say that after outlining a very robust case to the FSO they found Ulster Bank guilty of mis-selling my mortgage and ordered them to repay the £5k in mortgage repayments that I had made since they initially switched my mortgage. A victory for the little man!!!

It just demonstrates the need to stand up to these big companies. I also recently won a case to have a parking done rescinded. After two appeals and threatening to take me to court they finally backed down.

Don't accept their offer, they have no case. they are very lucky that I didn't pursue a criminal prosecution for fraud as they had actually fraudulently altered the date on one of my documents. Had I pursued this someone may have ended up in jail.

Good luck and keep up the fight.
 
There is hope!!

Hi Angry Kid, that's great news. This definitely gives me hope :) I'm so glad I came across this forum now. I'm going to arrange to see someone face to face as I'm getting nowhere trying to contact them in writing and online. I just find it so strange that their documents are written in this way when they haven't sold a product like that for years. Thanks again for coming back!
 
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