New Repayment Amount due to the changes in Tax Relief

Discussion in 'The Fair Mortgage Rates Campaign' started by Paul Reilly, Jan 9, 2018.

  1. Donnie

    Donnie Registered User

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    No I rang them and they confirmed rate has not changed. I have UB current account and salary is mandated to account.

    They are still investigating at their end so hoping I get an answer soon.
     
  2. gnf_ireland

    gnf_ireland Frequent Poster

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    @Paul Reilly I think we all understand at this point that you are frustrated with the banks and the high variable interest rates. I don't think anyone on a variable rate is 'happy' with the rates we are paying. However, this is totally unrelated to TRS relief and negative equity.

    As other posters have said, negative equity will disappear at some stage based on paying down the mortgage. The Capital Loss may never be recovered. Some, like my wife, ended up selling and realising this capital loss on a house she had down the country before we got married. Its a decision we made, as we no longer wanted to be landlords in this country.

    TRS is effectively the taxpayer subsidising your mortgage - no different to the Help to Buy scheme or any other brainwaves the government bring in at a point in time. However, the TRS credit has been in place for a long term (much longer than it should have been). I understand your frustration of having to pay a higher mortgage amount as a result, but the flip side is someone else was paying the cost of that.

    In effect, it is no difference to an insurance levy to cover losses of Quinn Insurance - someone always ends up paying
     
  3. Paul Reilly

    Paul Reilly Frequent Poster

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    thankls gnf for your response.

    Ive given up now on this as you say the Tax Relief was there too long.

    I dont think the Govt will ever get the banks to lower Variable Rates and TSB have a lower fixed rate for us of 4.2% instead of 4.3% Variable.

    It will reduce our repayments by 8 euro after them going up by about 40 i think since reduction in TRS.

    The banks can basically do as they like so it proves. They are more powerful than any Government will ever be.

    By the way gnf isnt a fine gael representative im speaking to by any chance.

    Its just that a lot of people seem to get offended here when I mention the hard work Michael McGrath is trying to achieve for Mortgage Holders. Im affiliated to no party but I see no other Politician who is lobbying for mortgage holders as much as he is. A thankless and ultimately winless task in this country.
     
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  4. tonymac

    tonymac Frequent Poster

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    Couldnt agree more with you Paul, the SVR issue appears lost as the banks are too powerful for the govt , central bank and consumer protection. And sorry to be the bearer of bad news but after not having benefitted from.lower ECB rates you, me and all the other SVR holders can prepare to be screwed again as im in no doubt we'll be made pay higher rates when the ECB starts putting them up again next year apparently. One small consolation for us might be that a few people on this site have said they shouldnt go up by more than 1% in the forthcoming years. Regarding TRS it has been a very valuable help to the likes of us considering we did more for getting the banks back on their feet than most others through our SVRs, ok it might be state help for private loans but considering the afformentioned state duty its the least they could have done for us. I by the way went on television before christmas to argue for its retention in some shape or form but unfortunately long term its gone. Regarding Michael McGrath i have no political affiliations either but if i was in Cork sth central hed be guaranteed my no 1 every time as hes the only politician who has consistently fought our cause over the years and i heard him doing the same today on behalf of wronged tracker customers of ulster bank as he got stuck into that banks rep today. Good luck with the mortgage going forward.
     
    Paul Reilly likes this.
  5. gnf_ireland

    gnf_ireland Frequent Poster

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    Absolutely not. I am not a member of any political party, nor have I ever any intention of being one.

    If you look at my comments here, I have applauded and supported Michael McGrath's work in this area - even if it appears to be stuck in a rut at the moment. I also supported other initiatives such as Fergal Quinn's bill in the Seanad and wrote to each and every Senator requesting them to support the bill at that stage.
    I have defended the need for Michael McGrath's bill here, clearly calling out the challenge that people who cannot switch for whatever reason have and their need for protection against high interest rates.


    However, this is a very different conversation to TRS and the fact that the taxpayer is effectively subsidising the mortgage interest for a few, but not all. The qualifying loans were from 1st January 2004 to 31st December 2012. The relief was available at 100% up to 31st December 2017, and on a reduced basis for the next 3 years.
    I think that is a pretty good deal for the mortgage holder over the lifetime of the mortgage - and if you calculate the amount of rebate you have received on your mortgage over the duration of it, it is not insignificant. Others have not been as lucky, and have been caught with equally high interest rates for whatever reason.
    The one thing that this discussion has shown is that any relief offered should be once off and immediate and not drag on for years. Maybe this is the one good thing about the Help to Buy scheme !

    I have full empathy for someone stuck in negative equity and cannot switch their mortgage. And I fully accept 4.2%/4.3% is a high mortgage rate in the current economic climate. But over a 25-30 year mortgage, the expectation should be that you would need to pay those rates (and higher) at some stage. This is the reason banks tend to stress test for +2% on the prevailing mortgage rate.
    I assume you also accept (at some level) that you are a higher risk profile given your negative equity than someone with a <50% LTV who is paying 3%. A 1.2% margin on this level of risk is not that bad realistically in real terms.

    I know you feel hard done by with the decision to buy your house in Sligo (I think you said you are from) during the end of the boom time. I am from county Galway myself originally, so I do understand the challenges of rural Ireland. I also feel empathy for a family starting off in Dublin paying ~3.5% on today's property prices. Looks like no one can be a winner here !
     
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  6. gnf_ireland

    gnf_ireland Frequent Poster

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    No I don't believe that is the reason. The banks (and everyone else including the media) are too focused on the tracker scandal in particular and until they determine a final cost to this, they will not be willing to make any further cuts to the "cash cow" variable rates.

    Add into this the homelessness issue and the political toxic suggestion of evicting people in long term arrears and you have a situation, unlikely everywhere else in Europe, where we have effectively an unsecured loan against a property with no way of enforcing the debt.
    If anyone is in any doubt here, it is the variable rate customers who are paying the price for long term arrears, the crazy cost/time of the few repossessions that are made and any debt forgiveness solutions that have been offered - via insolvency or any other means.

    So if Ireland really wants the European average mortgage interest rates, are we willing to accept that there is no exception to the 20% deposit rule, 20-25 year mortgages as standard and property repossessed after 180 days being in arrears (without exception).
    How many politicians would get elected on this position - very very few I imagine.... We want the low interest rates but not the conditions they come with !
     
    tonymac likes this.
  7. tonymac

    tonymac Frequent Poster

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    Very good post gnf and i do agree that all those factors play a part in the high SVRs. For me its the sheer unfairness of the fact that these people are carrying the can for this countrys repossessions regime which is something people who campaign on behalf of people in arrears forget about. This is the big reason why for me that i have written many a post here about retaining TRS as well as an appearance with David Murphy on the news last year. Fair enough it is a subsidisation of a private debt but i do think theres a case for retaining it for SVR holders only for the reasons weve both outlined.
     
  8. tonymac

    tonymac Frequent Poster

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    Forgot to say i never want to see peolle lose there homes through repossessions, what i would like is a stricter regime but one that offers an olive branch to people who genuinely fall into problems and who enter into an arrangement to get back on their feet but with no debt write offs.
     
  9. gnf_ireland

    gnf_ireland Frequent Poster

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    I think we would all prefer if everyone always paid their mortgages and no repossessions were necessary. Sadly this utopia is not reality and the world does not work like this. There will always be people who get into difficulty, and the question is how best to handle these cases.

    There is a fundamental different between someone who gets into difficulty but its temporary in nature versus a more permanent difficulty issue.
    Lets say John is a plasterer and he breaks his ankle playing soccer and cannot work for 8 weeks. There is a change he will get into difficulty if he has no money coming in for 2 months - depending on his insurance and savings situation. But its likely he will sort himself out in a few months and be back on track.
    Tony on the other hand is a teacher and is found guilty of misconduct by the teaching council and loses his job. Tony will find it very difficult to get back on his feet any time soon - we could be talking years? What should happen in his case?

    If I am being honest, I am actually in favour of limited debt write-offs where someone is in negative equity and they simply cannot afford the current mortgage payment (based on agreed rules). If they can afford the mortgage re-payment on the current value of the property, I think it would be reasonable for the bank to write down the debt to that amount (they will not get any more for it if they repossess it and sell it) but take part ownership on the property - so they now own a share of it. The property cannot be transferred (including inheritance) or sold without that share of the property being purchased back off the bank. If the person passes away and the share remains on it, then the house is sold and the bank get their share of the proceeds.
    So the person is able to move on with their lives, and the bank have a share in an asset they will realise some value for in the future.
    What I am not in favour of is unconditional debt write-offs!

    But no politician is going to support any move that has a chance of seeing peoples homes being repossessed. But without repossessions, someone has to pay - and that will be the variable rate mortgage holder for the foreseeable future.
    I raised this with two politicians who came to my door past year and both started to give me some waffle. I told them I was very knowledge in the area and if they wanted to discuss it I was more than happy to invite them in for a coffee to do so - but not to insult my intelligence on this matter. They declined the coffee and said they would get back to me but never did .... and I will add that one of them was from Fianna Fail, and I did mention Michael McGrath's work in the area and they looked at me like I had 3 heads !!
     
  10. gnf_ireland

    gnf_ireland Frequent Poster

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    Sadly TRS is not the answer here either. Many on TRS have tracker mortgages and any mortgage after 2012 have no TRS and are paying the inflated mortgage rates. I don't have the answer - I really wish I did.

    We should also not underestimate the cost of regulation on all of this. For a market the size of Ireland, the cost of regulation has to be borne across a much smaller customer base. I know from my own industry (not banking!!) the impact of regulation is actually quite high and I was very surprised when I witnessed it first hand.
     
  11. Donnie

    Donnie Registered User

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    Hi all. After querying this for a few weeks with Ulster Bank they advised that the updated repayments are correct - see below.

    Does anyone know if this is correct as I was only expecting the TRS amounts to reduce. This has taken place but at the same time the monthly repayments have increased.

    Dec 17
    €1,323.58 monthly repayment deducted from mortgage balance
    €168.84 TRS deducted from mortgage balance

    Jan 18 & Feb 18
    €1,4274.11 monthly repayment deducted from mortgage balance
    €56.25 TRS deducted from mortgage balance

    Discounted lifetime variable rate with Ulster Bank
    Variable rate of 3%
    Loan amount remaining of €387,500
    Years remaining 28
     
  12. peemac

    peemac Frequent Poster

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    effectively monthly payment before TRS change was 1492.42 (net payment + trs)
    and now its 1483.66 (net payment + reduced TRS)

    seems lower than it should be - possibly the balance figure is wrong

    Put your figures into this and it will give the payments breakdown between capital and interest
    http://www.amortization-calc.com/
     
  13. peemac

    peemac Frequent Poster

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    I have a totally different view

    The taxpayer via the government has been subsidising your mortgage substantially for the last few years - for some people it has been as high as €500 per month and was for some years a 30% reduction on their interest rate.

    It was meant to have ended last eyar, but the government that you seem to dislike have done you a favour by extending it further, albeit at a reducing rate.

    So in effect the taxpayer has been subsidising your mortgage for years and will continue to do so until 2020.

    Considering the amount of headlines the trs got over the years and considering the generosity of it, maybe read up on all the information so that you are not surprised when the free money finally ends. https://www.revenue.ie/en/property/mortgage-interest-relief/thresholds-and-rates.aspx

    Btw - those on low trackers would not get full benefit due to the interest rate they pay being so low as its relief on the interest paid.
     
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  14. Paul Reilly

    Paul Reilly Frequent Poster

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    But the Variable Mortgage holders are effectively subsidising the low tracker rates because without us the bank would have found a way to increase those.
     
    tonymac likes this.
  15. renter45

    renter45 Registered User

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    I moved from a 4.65% variable mortgage to 3.2% variable mortgage, who subsidised that?
     
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  16. tonymac

    tonymac Frequent Poster

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    Delighted for you, i really am at least youre getting nearer the european average rate and youre not subsidising the trackers to the same extent that you were. Thatll pay for a nice holiday for you if you so wish instead of propping up the banks like you have been doing.