Offset Tracker Mortgage

[ElaineMac13]

Anyone experiencing problems with repayment calculations for Offset Tracker Mortgage. We have one with UB and conflicting information received from them regarding repayment amount following interest rate hikes. There are indications from UB that these mortgages are a complex product for their staff and they are having difficulty getting a buyer to take them on when UB leave the market. Advised a small specialist team from UB may be retained to deal with these mortgages only. Anyone else experiencing any problems or have received any update as to whether mortgage will he sold in. We have also been advised that we cannot avail of a fixed rate as it is a clause in offset mortgage agreement to prevent us from availing of this? Any advice appreciated

 

[Monbretia]

Don't know what is happening with them and haven't noticed a problem with the calculations but then again I pay no interest due to offsetting.

You definitely though cannot avail of a fixed rate on an offset mortgage, there was never an option to do so and it was part of the original product from day one, no fixed rate option, it's not so much a clause in it as part of the design, the offsetting continuous calculations are geared towards a variable rate product. If you want to fix you would have to switch from the Offset mortgage to a standard mortgage type and then fix but no offsetting then obviously.

 

[cremeegg]

Is this the onset mortgage that was originally issued by First Active. UB have never understood them.

In my opinion changing to a fixed rate now would be unwise. Interest rates have increased significantly recently, locking in a fixed rate now when markets expect rates to peak soon could leave you fixed at a high rate just as rates fall.

 

[ElaineMac13]

Is this the onset mortgage that was originally issued by First Active. UB have never understood them.

In my opinion changing to a fixed rate now would be unwise. Interest rates have increased significantly recently, locking in a fixed rate now when markets expect rates to peak soon could leave you fixed at a high rate just as rates fall.

Thank you. Yes offset mortgage which was originally issued by First Active Bank. Inherited by UB. Definitely out of their depth with complexities of this type of mortgage. Just trying to gauge if anyone else experiencing the same from UB with this product

 

[ElaineMac13]

Don't know what is happening with them and haven't noticed a problem with the calculations but then again I pay no interest due to offsetting.

You definitely though cannot avail of a fixed rate on an offset mortgage, there was never an option to do so and it was part of the original product from day one, no fixed rate option, it's not so much a clause in it as part of the design, the offsetting continuous calculations are geared towards a variable rate product. If you want to fix you would have to switch from the Offset mortgage to a standard mortgage type and then fix but no offsetting then obviously.

Thanks for reply. That helps to clarify issue around fixed rate. Can I ask if you can explain the offsetting function of these mortgages. We were so young when we took the original mortgage out with First Active. Our balance is not reducing to what we feel it should be and our MABs advisor assumes there may be money in another account i.e the offsetting?? Thank you

 

[Monbretia]

Thanks for reply. That helps to clarify issue around fixed rate. Can I ask if you can explain the offsetting function of these mortgages. We were so young when we took the original mortgage out with First Active. Our balance is not reducing to what we feel it should be and our MABs advisor assumes there may be money in another account i.e the offsetting?? Thank you

The mortgages were set up with an attached current/facility account? Have you ever or do you use the current account for anything? The idea being that you would have salary paid into the current account and use it as a fully functioning C/A for direct debits, debit card etc etc. The benefit being that every night there was a balance in your current account then you would not pay interest on the equivalent amount of your mortgage.

So for example you owe 100,000 and you are paid 2,000 on the 1st of every month, therefore night one 1st of month the 2k goes into current account and that night you are only charged interest on 98,000, 2nd of month a bunch of direct debits go through and you only have 1,000 left in current account so second night you are charged interest ont on 99,000 and so on throughout the month and the interest owed is then charged to your mortgage once a month. Equally if you have more than just your salary in the current account you save interest on that too so say you win 5k on lotto and you stick that in there then while it's there you don't pay interest on 5k of your mortgage.

This does not affect your monthly repayments usually which stay the same other than for interest rate changes, what it will affect is the term of the mortgage as the less interest you pay the more is coming off the capital so the mortgage gets cleared earlier.

There can also be savings accounts attached to the mortgage where the amount in them is offset against the interest however it doesn't sound like you are operating any extra accounts other than perhaps the current account.

I don't think your MABS advisor understands it either (I was one of them for a while too) and it's unlikely there is money sitting in another account that you don't know you have, did you ever put money into a savings account with FA/UB them and forget about it? Either way it wouldn't affect the balance owing it would just affect the interest charged.

If you have never really used the offsetting benefit as in used the current account with credit balances or any attached savings accounts then the mortgage really just behaves like an ordinary mortgage and if you have paid all repayments on time the balance should on schedule to pay off as per original loan offer. Usually when statements come out it shows any interest savings due to offsetting and also the amount of time saved off the term.

Any other questions just ask!

 

[cremeegg]

Hi @Monbretia,

Do you know if it is possible to open a current account as part of this FA offset mortgage with UB at this stage. Over the last decade interest rates were low and I had no money, but now that rates are higher it would be worth my while using the offset facility and I have some spare cash I could put in an offset account. Thanks for any info.

 

[RichInSpirit]

I have an offset mortgage too from First Active days. I just have the mortgage account and a facility account. I've only found out during the last year (curtsey of askaboutmoney.com) that you could have savings accounts and current accounts too.
I guess the facility account is like an overdraft but I have never used it as an overdraft.
I think Ulster bank are very accommodating about the Internet rate hikes. They don't rise the rate for about 3 weeks to a month after the ECB announcement. And they send you loads of letters telling you exactly what day they are rising the interest rate.

 

[Monbretia]

I have an offset mortgage too from First Active days. I just have the mortgage account and a facility account. I've only found out during the last year (curtsey of askaboutmoney.com) that you could have savings accounts and current accounts too.
I guess the facility account is like an overdraft but I have never used it as an overdraft.
I think Ulster bank are very accommodating about the Internet rate hikes. They don't rise the rate for about 3 weeks to a month after the ECB announcement. And they send you loads of letters telling you exactly what day they are rising the interest rate.

The Facility account IS a current account, it's not an overdraft and in fact has no overdraft function at all. You use it as you would an ordinary current account, direct debits, standing orders, cards, etc etc, I never had another current account while using the facility account, they just called it that at the time!

 

[Monbretia]

Hi @Monbretia,

Do you know if it is possible to open a current account as part of this FA offset mortgage with UB at this stage. Over the last decade interest rates were low and I had no money, but now that rates are higher it would be worth my while using the offset facility and I have some spare cash I could put in an offset account. Thanks for any info.

Don't know the answer to that one, are you sure there is not a facility/current account sitting there already attached to it or did you close it at some stage? It would have had one originally. Don't know if you can reopen a new one now, unlikely I'd imagine but you never know, if they have to stick to originally T&Cs then maybe you can, a question for UB wherever they are now I'd say.

 

[rameire]

Anyone experiencing problems with repayment calculations for Offset Tracker Mortgage. We have one with UB and conflicting information received from them regarding repayment amount following interest rate hikes. There are indications from UB that these mortgages are a complex product for their staff and they are having difficulty getting a buyer to take them on when UB leave the market. Advised a small specialist team from UB may be retained to deal with these mortgages only. Anyone else experiencing any problems or have received any update as to whether mortgage will he sold in. We have also been advised that we cannot avail of a fixed rate as it is a clause in offset mortgage agreement to prevent us from availing of this? Any advice appreciated

As above you cant get a fixed rate.
they send a calculation of the repayment at a point in time, this I think is based on what is on your account at that time of the letter, when the rate is actually changed the balance at the time could be different so will get a different repayment,.
nobody knows not even Ulster Bank I believe for who will take the mortgages from them.
Offset mortgages are complex yes, but I believe they have staff from First Active that still work on this Mortgage.

 

[llgon]

Yes offset mortgage which was originally issued by First Active Bank. Inherited by UB. Definitely out of their depth with complexities of this type of mortgage.

Offset mortgages are complex yes, but I believe they have staff from First Active that still work on this Mortgage.

I disagree with the comments about offset mortgages being complex. The concept is very simple and has been well explained by Monbretia in a few paragraphs above.

If bank or MABS staff have difficulty understanding them it's a poor reflection on themselves rather than the product being complex.

 

[aoraki]

Anyone experiencing problems with repayment calculations for Offset Tracker Mortgage. We have one with UB and conflicting information received from them regarding repayment amount following interest rate hikes. There are indications from UB that these mortgages are a complex product for their staff and they are having difficulty getting a buyer to take them on when UB leave the market. Advised a small specialist team from UB may be retained to deal with these mortgages only. Anyone else experiencing any problems or have received any update as to whether mortgage will he sold in. We have also been advised that we cannot avail of a fixed rate as it is a clause in offset mortgage agreement to prevent us from availing of this? Any advice appreciated

Hi Elaine. Was curious when you said this bit;

There are indications from UB that these mortgages are a complex product for their staff and they are having difficulty getting a buyer to take them on when UB leave the market. Advised a small specialist team from UB may be retained to deal with these mortgages only.

Did you get this information from Ulster Bank staff directly? Or from reading rumours and speculation on online forums like this?