Anybody else with a First Active tracker been able to let it & keep the tracker?

jigsaw

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92
Hey guys,

I see quite a few of these "Will I lose tracker if I rent my property?" posts appearing lately and it appears that is down to the individual lenders contract whether or not the borrower can be forced off the tracker for renting the property.

I have a very cheap tracker rate which i took out with First Active in early 2007. The mortgage was then switched to Ulster Bank.

When i took out my mortgage I received 2 sets of paperwork, one was the loan offer letter and the other was a general terms and conditions document.

In my loan offer letter there is no mention of losing the tracker if the property is rented out.

Recently I wrote to UB and requested a copy of the terms and conditions of my loan offer and they sent me a copy of my loan offer letter which was only 3 pages long and made no reference to losing the tracker if I rent my home or that it must remain my PPR.

Does this sound like it means that I can keep my tracker if i rent my property?

Or are the conditions normally set out on the other document I have, the general terms and conditions? (contains a lot of jargon)

would love some opinions/thoughts on this

Has anybody else with a first active tracker been able to rent it out and keep the tracker?

Thanks

Jigsaw
 

44brendan

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2,539
"The devil is in the detail". The L/O is composed of the specifics of the borrowers mortgage (generally a short enough doc. as per your comment) and the general T&C's attachment. There are 2 issues of concern to you;
(1) Is there a clause in the General T&C's which can lead to a rate increase if the property is rented out?
Ask UB for a copy of this doc. You are entitled to it. Remember that it is the First Active LO that applies in your case.
(2) If there is a restrictive clause, does this mean that the Bank will be watchning for such an occasion and will impose it?
Difficult to be definitive on this. From my own experience, most of the Banks (if not all) are fully focussed on the non compliant element of their book i.e. those that are not meeting their loan repayments. I have not seen or heard of any concentrated effort by Banks to look for those who are renting out property and imposing a rate increase.

In my own view, the risk of losing the tracker is not high. There is little fear of any retrospective penalty being applied in relation to this. However, if the clause is in your loan agreement, there is the possibility of the Bank imposing a rate increase, if they become aware that the property is no longer your PDH.
 
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wbbs

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I seriously doubt you will find anything in it to indicate you will lose your tracker. When those loans were issued the situation was not relevant as loans for buy to lets were being issued with the same tracker rates and terms and conditions. There was no difference so extremely unlikely anything is written into the loan offer to cover this eventuality.
 

44brendan

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I agree. There are a lot of posts on this issue and it would be interesting to find out (first hand) if anyone has seen this clause in their loan agreement or had it imposed by their bank!
 

jigsaw

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92
Thank you both for your replies guys

there's 100% definitely nothing in the loan offer about being moved onto a higher rate of interest.

There are 2 points in the general T&C's which concern me

In the "Interest" section it doesn't seem to mention losing the tracker or being put onto a higher interest rate but there is a section that says:

"the total debt shall become payable to the lender if the borrower assigns, lets, or parts possession of the mortgaged property without the written consent of the lender"

I understand what this means but this just wouldn't be possible as I don't have €xxx,xxx lying around

there's also another section that says:

"the borrower covenants so long as the mortgage is subsisting not to excerise the powers of leasing or agreeing to lease and of accepting surrenders of leases conferred on a mortgagor in possession by the conveyancing acts 1881 to 1911 and not to create any lease or tenancy or part with or share the occupation or possession of the mortgaged property"

I understand this also but I may have no choice other than to rent my property out soon

When i requested the full terms and condition in writing from the bank, they sent me the loan offer letter and there was a "special conditions" section on the back with no mention of losing interest rate if rented or that the house must remain PPR or anything

What do you think guys?
 

wbbs

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1,453
I would think they would like you to get their consent but does not seem to have any effect on the rate.
 

twofor1

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I agree. There are a lot of posts on this issue and it would be interesting to find out (first hand) if anyone has seen this clause in their loan agreement or had it imposed by their bank!
It’s very clear with my tracker.

From conditions for NIB LTV tracker mortgages 2006;

To maintain your LTV Rate;

(b) The property upon which your loan is secured must remain your Principal Private Residence (PPR) for the life of your loan. If such property ceases to be your PPR we reserve the right to convert your LTV Rate to our then applicable Investment Home Loan Rate (fixed or variable as the case may be).
 

oldnick

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1,412
First Active is pretty clear -
You can't let the property without asking them.

So, If you ask them they have the right to to say "NO-you can't let it" or "YES -but pay xyz interest rate."

If a lender has any legal way of getting out of a tracker then he'll take it.
 
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