Bank changed commercial mortgage from Euribor + to Cost of Funds +

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Mrwhite

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got a morgage from boi in 2006 for a business premises. The intest rate wS calculated it said in offer letter as 1.5% above euribor rate. I was paying In 2011 I got a letter to say that due to market conditions they were changing how they were calculating the morgage by switching it to bank cost of funds bcof. This was convient for them as the Eurobond dropped dramatically. I wasn't happy but manager said it was in the terms and conditions of the small print and that the increase of 0.7 % in my morgage was temporary and that as the rates for the banks dropped so would the rate. It didn't move for 3 and a half years. I am assuming the costs of funds for the banks did drop in this time.

With recent publicity about the banks behaviors and cases being taken against the banks by ombudsman and central bank I am thinking of challenging this. I have 2 main questions

1. Can the banks really change the terms of the morgage because it suits them

2. Even if they can change the way interest rate is calculated how come in 4 years since 2015 I have had one interest rate cut 5 months ago of 0.5 despite huge drops in the costs of the banks funds

This has cost me approx 25k in the last few years and I am struggling to pay a 2006 morgage that the bank should never have given me.
 
Hi MrWhite

It's possible, but unlikely, that the bank "changed mortgage conditions".

It's more likely that they put a wrong rate on your account. This happens quite a bit.

You will have to go back and look at what is actually written in your contract. No one on Askaboutmoney can guess what was in your contract.

You should ask your bank for a schedule of their cost of funds since that date. I have seen a statement recently which shows Bank of Ireland having a negative cost of funds.

Here are the euribor rates which are negative at the moment.

http://www.euribor-rates.eu/euribor-rate-3-months.asp

If you can't sort it out yourself, there are some specialists who will look at it for you e.g. bankhawk.com or bankcheck.co.uk

I wouldn't bother with a normal solicitor or accountant at this stage. The specialists have probably come across this problem before and will be able to advise you.

Brendan
 
They sent me and as far as I am aware a lot of other customers a letter in 2011 that said due to losses else were they were changing how the interest rate was calculated. When I questioned this they said it was in the small print they could do this. They changed it from euribor with a 1.5% margin to bank cost of funds. I could check the euribor rate I am not even sure how they calculate bcof. I checked my offer letter and it states that the interest charged on the loan is euibor plus 1.5. Which should mean me paying approx 1.5% however they have charged me 3.5% over the last 4 years
 
Mrwhite said:
I checked my offer letter and it states that the interest charged on the loan is euibor plus 1.5.
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If that's what you signed for then that is what you should be paying. What bank is it?

Did you sign anything in 2011? You need to make a complaint, tell them you're going to the ombudsman, and when you get your 'final response' letter you make a complaint to the ombudsman.


I have the costs of funds for Ulster bank for the last few years as they send it to me annually, it never went into negative like Burgess said BofI did.
 
Mrwhite said:
When I questioned this they said it was in the small print they could do this. They changed it from euribor with a 1.5% margin to bank cost of funds. I could check the euribor rate I am not even sure how they calculate bcof.
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Check your mortgage agreement, if you cannot find this clause in the small print, ask the bank to point it out to you, if they can’t then insist on euribor plus 1.5% as per your agreement, backdated to 2011, if they won’t give it, and after having followed the complaints procedure, then go to the Ombudsman.

If they were entitled to switch your mortgage to BCOF then I would be asking them to show how the rate charged for the past 4 years is in line with your mortgage agreement. Consider your next move, if any, when you get their reply, possibly they are within their rights.
 
The main point will be it says in the morgage offer the interest is 'primarily' calculated by a margin in the euribor. The bank will argue that this means it is open to change. The bank will fight me tooth and nail on this as if they lost and other cases were similar they would loose millions.
I am just wondering if it's a battle worth fighting. Have the bank got so many legal loop holes in terms and conditions to argue against me. They changed the terms of the interest when it suited them and this seems inherently wrong. The letter I got in 2011 even says due to the banks losing money they were changing how the rate was calculated. Since when was that my problem!!!! Surely there is some consumer protection to state that banks should be clear in how they set rates. I checked again today and the bank lifted my morgage rate after the letter a second time even though the ecb rate was going down.
 
I think you should consult with one of the specialists mentioned in the above post. There really is no point in you fighting this one on your own. There will be thousands of others affected by it. If you have a reasonable case, it's probably worth taking a test case to the High Court.
 
Mrwhite said:
The main point will be it says in the morgage offer the interest is 'primarily' calculated by a margin in the euribor. The bank will argue that this means it is open to change.
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That's different, you originally said it was simply euribor plus 1.5%, no mention of ''Primarily''.

Perhaps if you put up the exact wording in full regarding interest from your mortgage agreement, it would then be easier to establish what if any argument you might have.
 
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In addition to the wording from your loan offer, can you also scan us the letter about the rate changing - just cross out your name, address and account no etc.
 
Mr White,

a bank cannot arbitrarily change a core term in a loan agreement; that being, how it calculates the cost of funding of a commercial loan, ie euribor to bcof, prime to euribor etc. This is unlawful and if successfully challenged in court, a court can declare the loan void and unenforceable. It is essential that you examine your original loan agreement, if their is no mention of an option for BOI to change how it calculates the cost of funding of the loan ( I believe you will not find such a clause ) seek a meeting with the bank. There are previous High court cases that come to mind in both Ireland and England where the bank wrote off all the interest on the loan, and one case in particular, where a bank wrote off the commercial loan in it's entirety, in return for a confidentiality agreement. If the bank did use the word primarily, then I believe you still have a case, as the word "primarily" means chiefly, mostly, essentially etc. Therefore if there is any ambiguity about the word, the common law principal of contra proferentum applies; literally meaning against the drafter. Seeing that the bank drafted the contract in the first instance, a Judge must find in your favour in relation to any ambiguity in a clause within the contract or agreement that the bank drafted.
 
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Thanks for the reply I met the women from boi on Monday and am still waiting an official letter but seems they are nervous. She said it is stated in the terms and conditions on page 9 of a 20 page agreement that they can change the terms. I would like to test the validity of this.

I also stated to her even if they can change how come my morgage interest rate didn't come down in 3 years despite the banks costs of funds dropping if this is what the new rate was measured by. She was new to boi and said you must be mistaken she then checked online and didn't have an answer when she saw I was right. I have to wait for an official response and then I guess query with the central bank. This has cost me 25k in extra interest and with a 2006 morgage this is squeezing the life out of me
 
Rather than drip-feeding information to us why not post the actual terms and conditions on page 9?
 
Why has the OP consistently ignored the advice from BB to get advice from an external expert on this matter? I don't understand the persistence with obtaining explanations from the Bank who clearly have a vested interest in the issue. this makes no sense. If a loss of c25k has been suffered then there is clearly a monetary rationale for obtaining an expert independent opinion. I mean seriously, a "woman from BoI" who is a new entrant to the Bank trying to interpret a loan contract!!!!!
 
legal advice costs a lot of money in the Country, the Trioka even mentioned reforming same, however the Government has done nothing to address the situation.
 
44brendan said:
Why has the OP consistently ignored the advice from BB to get advice from an external expert on this matter? I don't understand the persistence with obtaining explanations from the Bank who clearly have a vested interest in the issue. this makes no sense. If a loss of c25k has been suffered then there is clearly a monetary rationale for obtaining an expert independent opinion. I mean seriously, a "woman from BoI" who is a new entrant to the Bank trying to interpret a loan contract!!!!!
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I have talked to the central bank who said I first have to raise a complaint with boi and get an official response before I can go further. Of course the bank will dispute I am just wondering if I have a case worth the hassle.
 
dereko1969 said:
Rather than drip-feeding information to us why not post the actual terms and conditions on page 9?
Click to expand...
I wasn't aware of conditions on page 9 and am looking at that today. I guess we're I see this going is if there is a condition hidden in a 20 page document is it legal they can hide this. My loan offer said the interest rate was calculated primarily which can be defined as mainly. This hasn't been the case. My second point is that even if they could change to bcof, then why hasn't it dropped when the costs of funds to the bank dropped.
 
These are 2 separate issues. (1) Raising a complaint directly to the bank (2) Obtaining advice from an expert. I.e. You go to the expert first to establish whether the bank were correct in their decision. Assuming the expert agrees with you then you raise a written complaint to the bank.
 
I got a commercial 3 year fixed rate mortgage in early 2010 costing 2.86%
In October 2011 I got a letter from BOI informing me of change in method of calculating interest rate from Euribor to BCOF
As I was on a fixed rate nothing happened until the 3 ended and my rate increased to 3.41%.
I contacted my BOI manager and it took 9 months to get my excess interest refunded.Never got exact calculation from bank but now on BCOF + .98%
 
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