Defaulting to Standard Variable Rate after termination of 3 Year Fixed Term Rate

paultkeano

Registered User
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4
Hello,

I hold a mortgage with one of Irelands biggest banks. Roughly 5 years ago, I had to get an evaluation done on my property, to prove that my LTV was less than 50%. This needed to be done with an accredited agent for the benefit of my lender. This was in order to avail of a preferential rate for Low LTV.

After some time, and reviewing interest rate offers, I went on a 3 Year Fixed Rate. This 3 years expired in February 2014, after which I was put on Standard Variable Rate. The bank however does not advertise one SVR figure, there are 4 different rates, depending on LTV as follows:

LTV Variable >80% (4.49%)
LTV Variable > 50%< =80% (4.29%)
LTV Variable< =50% (4.09%)
Standard Variable (Discontinued) (4.40%)

I rang my bank today to check what my actual Interest Rate is and was told that it is 4.49%. In order to be put on the correct LTV rate, I was told that I need to send them a letter, asking for the rate of 4.09% (the correct one given my LTV).

I have been told that I was provided documentation which would have stated that I would revert to Standard Variable Rate, after expiration of my 3 Year Fixed period. My argument is that no figure was provided (it cannot be at outset, as figure would not be known). The bank has said that any correspondence sent to me (I do not have any), would have stated Standard Variable Rate, but not given any specifics related to LTV. Given this, not only has the Bank put me on the wrong rate, but I believe that they also communicated less than full information to me.

My question is, am I entitled to have the extra .4% interest that has been charged to me since February 2014 refunded?

Thanks for any help that you can offer,
Paul.
 
Hi Paul

You have to get the documentation you got when you signed the fixed rate.

I would imagine that it said you would go onto the Standard Variable Rate. If so, you have no cause for complaint.

If it said you would go onto the appropriate LTV rate for your LTV, then you would have been entitled to the <50% rate.

Search again for the documentation. If you don't have it, ask the lender for a copy.


I was told that I need to send them a letter, asking for the rate of 4.09% (the correct one given my LTV).

In the meantime, send that letter and get it fixed from now on.

Most lenders do not allow people move from the SVR to the LTV rate. Which lender are you with?
 
Hi Brendan, my mortgage is with AIB. The problem for me is that if you check the website of AIB, there is no standard SVR published. The only rates under Standard Variable Rates are those that I have provided in my post. I was on the lowest LTV rate before going on 3 year Fixed rate, having provided evaluation as requested by the bank. I am unable to find any single SVR rate on the AIB website. If the documentation comes back and says that I will revert to "the highest SVR available", I agree, I would have no argument. However, I believe that all SVR's available for owner occupiers are based on LTV calculation.

Thanks,
Paul.
 
Hi Paul

You are confusing SVR (Standard Variable Rate) with LTV (Loan to Value rate).

Each bank has only one SVR.

They may have different LTVs.

The SVR is the rate which fixed rates tend to default to at the end of the fixed period.

You are lucky. AIB is the only lender which seems to allow existing customers switch to the LTV rate based on their current LTV. All the others charge you the rate based on the LTV when you took out the loan.

Brendan
 
Hi Brendan,

I am unable to find SVR on AIB website. I do not believe that I am mixed up, the bank gives an interest rate based on LTV. This rate is not of a fixed term, it is variable. Can you point to the SVR on AIB website? Please send on this link as I cannot find it. The LTV rate given when I took out Mortgage with AIB was based on LTV of less than 50%. A relationship manager rang me today and told me to send letter to AIB mortgages, and told me to request what I have asked about above. He has said that he does not make the decisions, but is happy to backup my argument.

Thanks for taking the time to read my emails, and give advice, even if I do not agree with it. Again, if you can send me SVR link it will help.

Paul.
 
You are lucky. AIB is the only lender which seems to allow existing customers switch to the LTV rate based on their current LTV. All the others charge you the rate based on the LTV when you took out the loan.

Well this might not be lucky if banks had decided to revise LTV's after the crash - just saying. That could have been very costly for many people.
 
I am unable to find SVR on AIB website. .

.

I too cannot find their SVR. But I did find this:

Standard Variable Rate (SVR)
A standard variable rate generally rises and falls in line with changes in interest rates. When the ECB rate rises or falls, the mortgage lender can increase or decrease the variable rate passing on some or all of the rate movement.


Loan to Value (LTV)
LTV’s are shown as percentages and represent the relationship between the size of the mortgage and the value of the property. For example a mortgage of €90,000 on a property valued at €100,000 would be shown as 90% LTV.

About 5 years ago I remember Ulster bank started messing around with the names of the standard variable rates. In essense I concluded they had two, but I'm open to correction on this.

You can request all your documentation from the bank, alternatively your solicitor might be helping in giving you a copy if you went via them.

Here's a link to what Ulster says about variable, and it's clear they only have one standard variable rate, and that they then will apply lower rates if your LTV is good.

http://www.ulsterbank.com/roi/personal/borrowing/mortgages/first-time-buyers/products/variable.ashx
 
Bronte/Brendan, thanks for replies and info.

I am currently not on what is the discontinued SVR, I am on an LTV rate of 4.49%. As previously mentioned, the bank is fully aware through documented evidence that this LTV does not reflect my opwn situation.

I will post to thread after I have received a reply to my letter.

Thanks,
Paul.
 
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