EBS Split Mortgage Review - Terms open to change?

Futurelookin

Frequent Poster
I have a split mortgage with EBS obtained through the IMHO in 2014. Has been fantastic and the security is brilliant.
My understanding at the time was that the arrangement was not subject to review or at least that the terms were fixed - we keep paying as agreed, the agreement runs to end of mortgage.

An example here where @Brendan Burgess posted a summary of the split mortgage agreement
https://www.askaboutmoney.com/threads/new-aib-ebs-split-mortgage-may-write-off-some-debt-up-front.185214/#post-1372405
21. Where your financial situation has improved or remains the same, the repayment structure will continue as detailed within this agreement.

This thread seems to contradict this:
https://www.askaboutmoney.com/threads/analysing-an-ebs-split-mortgage-offer.180025/#post-1341479

I can't find my offer letter (obviously I'll request it from the EBS in the morning) but I have a very strong recollection of the agreement being final / permanent for the term of the mortgage subject to keeping up payments. I've emailed the case worker in IMHO to see if he got a copy of the offer letter.

Question is: does anyone have a clear understanding of a standard offer from that time and if I'm correct in my recollection, why do they need / want to review my circumstances?

Thanks,
FL
 

Futurelookin

Frequent Poster
Apologies for replying to my own post but here is another article dated 9th Feb 2014 which details the new terms i.e. that there's no obligation for a change in circumstances to require a movement of funds from warehouse to base / live mortgage and it applies to both EBS/Haven and AIB
https://www.mortgageholders.ie/can-a-split-mortgage-lessen-the-burden/
My offer was received through IMHO on March 31st 2014.

Appreciate any insight from others affected.
 
The best way to confirm this is to look at what they said to you and not anything else.

You should have that letter.

But if you no longer need the split mortgage, you should consider whether it's worth keeping your credit record damaged forever.

Brendan
 

Futurelookin

Frequent Poster
Here to answer my own question and ask several more :)
I requested and received the original offer letter and it confirms: Where your financial situation has improved or remains the same, the repayment structure will continue as detailed within this agreement.

Review has also completed and they have said that as our circumstances have improved, they feel that we can afford additional (effectively full) payments. They suggest that we pay this directly to the active part of the account to reduce the term and in the meantime, the warehoused amount will remain unchanged. This is a departure from the original agreement as any additional payments, over the standard monthly repayment used to have to go to the warehoused part (which is obviously not attracting any interest) before any payments are applied to the active part.

I want to know what the best way to approach this is purely from a financial point of view.
  • We're approaching year five (hence the review) and at that point if I do nothing, the warehoused part will reduce by 5%. This would happen again at the 10 year mark.
  • Any repayments which we make currently to the warehoused part are topped up by 30% (we haven't made any yet) i.e. we pay €7 they reduce balance by €10. Post the 5 year mark, which is in April, this changes to 20% top up.
  • An additional change mentioned on the call but not detailed in the review letter is that the minimum payment to warehoused part used to be €1000 but now is any amount and top ups still apply.

So from what I can see, there doesn't seem to be any case for doing as they suggest. What I'd save on interest over the remaining terms (currently on 3% fixed, 16 years remaining on mortgage) would be less than I would gain by aggressively paying against the warehoused part?

Additionally the original letter says that once active part is paid down, then warehoused part gets moved to active part.

Considering I have in writing that I don't have to change anything, any additional payments are voluntary, they've confirmed this in their review letter, what incentive would there be for changing?

Leaving aside credit ratings / ICB / CCR etc. from a € point of view, is there a case for what they're suggesting?

My plan was to get the 5% reduction at year 5 and then start aggressively paying down the warehoused amount to avail of the 20% payment top up.

Income has improved greatly, we're currently doing some work on the house but once that's complete, I could pay €800 off warehoused amount monthly as well as the standard montlhy payment.

Current balance on Active is approx €210k and WH (before 5% reduction) is €136k.

Appreciate feedback.

Thanks
 
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