Key Post New Group:PTSB interest only review for Buy To Let investors

Discussion in 'Financial campaigns and consultations' started by frankor2, 22 Nov 2010.

  1. frankor2

    frankor2 Registered User

  2. frankor2

    frankor2 Registered User

    New Group:pTSB interest only review for Buy To Let investors on tracker mortgages

    Has anyone on a "Buy To Let" interest only tracker received a review letter from Permanent TSB?

    I'm curious to know what they are offering if you cannot revert to capital & interest and need to stay on interest only.

    This is a timebomb as investors bought properties on interest only. The loans were underwritten on using the rent to cover the interest.

    Anyone any views??

    Here is the wording from a typical contract:

    "Permanent tsb will accept monthly repayments, as set out in the letter of approval, representing repayment of interest only (as may be varied from time to time and including insurance premiums where applicable) for the first three years from the date of cheque issue or such other period as permanent tsb may decide.

    Permanent tsb reserves the right to review the deferral of the repayment of principal at any time during the term of the loan, including the first three years of the term and may require the applicant to cease the interest only repayment and require the repayment of principal and interest and the applicant will immediately arrange to pay the revised monthly repayment comprising the repayment of principal and interest calculated over the remaining term so that the principal and interest will be discharged within the existing term of the loan".
  3. snowdrop

    snowdrop Frequent Poster

    Hi frankor2
    I received the same letter from PTSB advising me that the mortgage on our interest only S23 holiday/tourist home was going to go up BY € 1200 per month (based on the tracker of ECB plus .9%)
    I checked my previous review letter and no date given on that for the next review. I've had six years of interest only and reverting to interest/principal is going to crucify me - I don't see how I can manage it. The property has brought in NO net rent for the last two years after running costs paid by mgmt co and this year has had to be subsidised.

    The property cannot be sold for another four years without clawback of the tax reliefs plus of course there's no buyer market.

    I have a substantial enough sum on term deposit with PTSB but that's my "rainy day" fund and I don't want to touch it. I'd be happy to offset it though - gross interest on it is 3.4%.

    Anyone got any positive suggestions?
  4. frankor2

    frankor2 Registered User

    Hi snowdrop

    Did the letter offer any interest only rate? I believe that if you ask, you can stay on interest only but only at a higher rate....

    These interest only loans were never meant to revert to capital and interest....
  5. snowdrop

    snowdrop Frequent Poster

    hi again frankor2 - no, there was no option given in the letter except conversion to repayment of principal and interest at the agreed tracker rate.

    I agree with you that these loans were never meant to revert to capital and interest; our plan was always to sell at the end of the 10 yr period or keep it on interest only as a holiday home if we could have afforded to do so. The latter is certainly not an option with how our business has been affected by the recession and the former seems optimistic at best.

    I guess I'll just have to contact the bank directly and see what can be done.

    If anyone else is in the same boat with ptsb on these types of mortgages, please post up how you get on dealing with them.
  6. Selbeep

    Selbeep Registered User

    Interest Only Review for Buy to Let Investors on Tracker

    We have one investment property which we bought for my husband's pension in 2006 with an interest only mortgage with PTSB. It was initially interest only for 3 years but this was extended last year. We were given the option at the time of capital & interest or interest only and we chose interest only. The letter we got did not state how long this interest only period would apply for. We are aware that most buy to let investors have received letters from PTSB telling them that they must now start to repay the capital and the interest. To date, however, we have not received any such letter. Could anybody tell me please if all investors with buy to let mortgages are being issued this these letters? Thanks a lot.
  7. kildon

    kildon Frequent Poster

    its standard practice on but to let or commercial term mortgages that the terms of the mortgage are up for review at various stages, from what I've seen borrowers can either pay principal and interest and keep the tracker rate or they can lose the tracker rate and move to a variable rate and stay on interest only
  8. Luternau

    Luternau Frequent Poster

    The rate that they go to stay on interest only is, I believe the standard variable with a 2yr discount. investors could soon be paying back more than twice the interest they currently pay - just to stand still. With this in mind would they be better off staying on the tracker and paying all interest and some capital-therefore going into arrears on the capital amount?

    If you take the view that a loan where all the interest is being paid is a performing loan, PTSB would have to decide what to do. Accept this scenario, or make an application to the court seeking repayment of the loans?

    PTSB are not without responsibility for advancing so much money to buy to let investors, especially those with multiple units. Essentially they were chasing after BOSI's lifetime tracker offer.
  9. alanokelly

    alanokelly Guest

    I got the letter too. As far as I know the interest only period was for five years and then to be reviewed. The five year period was up last year but they gave us the choice to continue on IO. I need to contact them as paying capital on top of the increased rates almost doubles the repayment.
    I'm on a variable rate of 5.99.
  10. in the mire

    in the mire Registered User

    PTSB offering 2y interest only if you switch from tracker-investment mortgage.

    PTSB are offering extended interest only mortgages if you go from a tracker to a type of variable rate, so for example if the tracker is 1% over ECB the new offering is 2% over ECB but it is not a tracker as such.

    My brothers situation is, PTSB are putting pressure on him to start paying principle on his tracker, up to now he has been paying interest only, they are offering 2 year extended interest only if he comes off the tracker and pays 2% over ECB.

    It looks like he has no other option, what should he do?
  11. 7seats

    7seats Registered User

    Firstly, check the terms of the original Mortgage, dont just assume PTSB have the right to make the change.

    Is this an investment mortgage or Your brothers home? If it is his home, and he can afford to start paying off the capital, then it may be no bad thing in the long run. (You didnt mention if he was able to pay at the new rate).

    Study the terms of the new offer carefully, while it says variable for 2 years, they have the right to change the rate at any time and at the end of the 2 years they will just demand that he starts repaying the capital anyway.
  12. frankor2

    frankor2 Registered User

  13. The_Banker

    The_Banker Frequent Poster


    A group of Permanent TSB buy-to-let tracker mortgage customers are to challenge a decision by the lender to terminate the interest-only period of their mortgages.
    New information campaign Protect our Trackers focuses on highlighting the issue to affected Permanent TSB customers and informing them of their options.
    The bank's buy-to-let customers have been told that they must change to capital and interest repayments or they will lose their tracker rate. PTSB says this is in line with its mortgage terms and conditions.
    The group is being advised by Dublin-based solicitors Walter Odlum & Company.
    It claims that buy-to-let customers face a three-fold increase in their monthly repayments.
    A customer who borrowed €300,000 in 2005 over 25 years currently pays about €525 a month, before the ECB rate increase.
    This repayment would rise to about €1,600 under Permanent TSB's proposal.
    Estimates of Permanent TSB's level of buy-to-let mortgages range from 14,000 to 18,000. The mortgages could be worth around €5bn.
  14. Brendan Burgess

    Brendan Burgess Founder

  15. Brendan Burgess

    Brendan Burgess Founder

    Why are they going to court?

    It would be far faster and far cheaper to go to the Financial Services Ombudsman. The Ombudsman is less likely to take a legalistic view of this issue and if he gets a few cases may refer it to the Financial Regulator for action.

    If the Ombudsman rejects a claim, it could then be appealed to the High Court by either side.
  16. Bronte

    Bronte Frequent Poster

    Do these people have contracts that say they are interest only for the term of the loan, if not I don't see how they can take a court case. If they have interest only for 3 or 5 years which is more likely then where do they get the idea that this forces the bank to offer 3 or 5 years interest only again and again.

    Take an example of a fixed interest rate for 5 years, you sign up for a certain amount of time but when that ends you will be offered what is available then, if the interest rates have gone up you will be offered that, if they no longer offer 5 year fixed you may be offered a 2 or 3 year but you are not guaranteed to get either a 5 year fixed or any fixed, only what is available then.

    The main argument seems to be that it would cost them a lot more in repayments. That's not a legal ground and if that is all they're going into court with it would seem a waste of money.

    It seems that they have say an interest only period of 3 or 5 years and after than they should be making capital and interest at tracker rates plain and simple. But if they can't afford that then the bank will be 'kind' and offer then interest only for another short period and then they lose their tracker. So it is up to the clients to fulfill the terms of the contract or take the new offer.
  17. Brendan Burgess

    Brendan Burgess Founder

    According to Conor Pope's article

    I would be very interested in knowing what the precise wording of the contract is.

    It would also be interesting to see the advertising and marketing at the time. If the advertising was for "interest only tracker mortgages for the length of the mortgage" , I don't think that something in the small print could prompt a review.
  18. On_A_BEACH

    On_A_BEACH Registered User

    Hi Brendan,

    I have one of this contracts with PTSB and will email the wording later when i get a chance as its a scan...

    Is it possible to upload JPEGS onto this board?

    Bronte is more or less right - that's why I'm considering moving back into the main mortgaged property (with four others cross secured on it) and declaring that as my PPR..

    My solicitor has advised that they would (PTSB) then be forced to use the Central Banks code of conduct as the mortgaged prop would then be my PPR.
  19. Brendan Burgess

    Brendan Burgess Founder

    We don't allow uploads, but I don't imagine that the key wording would be very long. Can you just type it?

    That is an interesting idea but I am not sure that it will solve your problem. If you have a contract which allows the lender to review the terms of your loan, then I don't think that the Mortage Arrears Code would contradict it.

    While the Code does actually say:

    it also requires the borrower to act in good faith. Moving into an investment property to make it your home might fall foul of that. Had you moved in a few years ago, then I think it would apply.

    But it's still an interesting idea.
  20. Butter

    Butter Frequent Poster

    I have experience recently of taking a case against a bank to the Financial Services Ombudsman's Office and I have to commend the work that they do. It would certainly be less expensive (no cost other than time & effort) than the court route but the Ombudsman will only rule on one individual case at a time and as far as I know will not make recommendations to the Financial Regulator. But if several people did win cases against PTSB through the FSO's office then a group of people could go to the FR and ask him to investigate. But it all takes time and PTSB are putting pressure on now. If I could afford it I would start paying capital to keep my tracker and buy time to see how this might play out with the FSO's office and the FR. If you lose your tracker because you refuse to pay the capital - then the tracker will be gone for good (unless the contract states differently).

    What is in the contract here is absolutely key - if PTSB have written in the contract that the tracker rates applies for x years of an interest-only period then they must stick to this. If it is in the contract that the IO tracker rate is subject to a review after x years & then the discretion of the bank applies after a certain length of time, I think PTSB will win their case.

    I changed a variable rate investment mortgage to a tracker within PTSB in 2008 when I was offered 0.8% above ECB rates. But it was a repayment mortgage and not an interest only one. PTSB is tied into this rate for the lifetime of my loan.

    From my understanding in 2002 and 2005 when I looked into different investment mortgages IO investments were not generally contracted for more than 3 or 5 years and the assumption was the bank would automatically extend it. Assumptions are not in contracts though.

    Banks will be trying every possible trick in the book to move people off trackers and to get IO mortgage holders to repay capital, such is the mess that they are in.