UB & KBC mortgage buyers must honour rates. What about Ts&Cs?

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Dave Vanian

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My understanding is that the buyers of the mortgage books of Ulster Bank and KBC must honour whatever interest rate you're on while it lasts. So if you have a tracker, you must keep your tracker at the same margin. If you have a fixed rate you get to keep the same rate until the end of the fixed period and then it's up to the new bank what rate you roll onto.

What about mortgage features? KBC had a useful "redraw" facility allowing you to withdraw overpayments on demand. Am I correct in assuming that there's no obligation on the new lender to continue such features?
 
Such was said to me by a UB mortgage advisor last month. We are currently in the process of getting a top-up loan at a fixed mortgage rate. She said the rate would transfer but that the ability to pay 10% per year off a fixed rate may not, as it was a feature of the mortgage rather than a T&C.
 
I haven't checked my T&Cs but their website makes it very clear (from July last year) that the overpayment is a feature of the mortgage.
I think the facility to overpay 10% per annum will remain post UB exiting the market.
 

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  • Ulster Bank Fixed Rate Mortgages Explained screenshot 26 July 2021.pdf
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I'm nearly certain that KBC withdrew that option a few years ago.

You could lodge 10k against your mortgage and then withdraw it if you needed it at a later date. Effectively "earning" the mortgage rate as your interest rate and avoiding dirt.

In terms of transfer, it will be the terms and conditions written in the contract that a new holder will adhere to.

An advertised feature that is not written in your terms and conditions would not have to be adhered to.
 
Dave Vanian said:
KBC had a useful "redraw" facility allowing you to withdraw overpayments on demand. Am I correct in assuming that there's no obligation on the new lender to continue such features?
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KBC customers only have this redraw facility if they first took out their mortgage with KBC in about 2013 or earlier. In this thread (and here), user @gnf_ireland describes their long argument with KBC around being allowed to withdraw their overpayments. But your question about whether Bank of Ireland have to continue this feature for such KBC customers stands.

Another question is whether BOI will have to continue to allow penalty-free overpayments on the same terms as KBC do (10% of the outstanding balance over the fixed-rate period).

HollowKnight said:
I think the facility to overpay 10% per annum will remain post UB exiting the market.
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It didn't seem to be written in to my UB mortgage contract – it was just stated in the associated literature – so I wouldn't bet on PTSB honoring it.
 
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Further info:

Ulster Bank's FAQ says:
Will I be able to avail of the 10% overpayment feature on my fixed rate when my mortgage is transferred to Permanent TSB Group?

While we can reassure you that the 10% overpayment feature remains available and unchanged, we are unable to confirm until final arrangements are made with the new provider of your loan, whether this feature will continue unchanged when your mortgage is transferred. If you wish to make an overpayment, please log on to Manage My Mortgage.
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This topic (around Ulster Bank's 10% overpayment facility) came up before in another thread a year ago. @Brendan Burgess took the view that Permanent TSB would get in trouble (with the Ombudsman) if they revoked the 10% overpayment facility while you are still on your UB fixed rate.

But what about after your fixed-rate period expires? Who knows.
 
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KBC told me that the ability to redraw overpayments is a 'benefit' and not part of the terms and conditions of the mortgage. I was told that it is not something that Bank of Ireland (BOI) will honour.
 
There is another question around Ulster Bank mortgage contracts and Ts&Cs.

Ulster Bank cap the break fee you have to pay if breaking out of a fixed-rate mortgage so that it is never more than six months' interest.

Does anybody know if this is part of UB's mortgage contracts (in which case PTSB will have to honour it)? Or is it "only" part of UB's Ts&Cs?

Because wholesale interest rates have increased a lot recently, many people are getting break fee quotes of zero at the moment. But it is easy to imagine that somebody who re-fixed for 10 years with UB recently could face a very large break fee in a few years' time (if PTSB don't honour the cap).
 
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@Paul F raises a great question, I’d love to get a definitive answer. I‘ve re-fixed with UB to 2.2% and very happy to have that for 5 years. My insurance against the 10% being removed was the 6 months interest cost, which is really 1.1% so not a huge obstacle if that’s how it had to be done. If neither are possible, that’s disappointing.
 
@Wiresandmore Below is an excerpt from a loan offer from Ulster Bank from 2018. It seems pretty conclusive to me that the break fee being capped at six months' interest is part of the mortgage contract itself (and not merely part of Ulster Bank's terms of business). Therefore, Permanent TSB cannot ignore this cap when calculating break fees.

I also note that there is no reference anywhere in the loan offer to the 10% overpayment feature. So if somebody has a UB mortgage that gets sold to PTSB and they want to argue with PTSB that they are entitled to overpay by 10% of the balance per year without penalty, they will probably have to go to the Ombudsman.


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Hi Paul

I absolutely agree with you on the 6 months' cap. If it's in the terms and conditions, then ptsb must honour it.

If it's currently Ulster Bank's practice to allow 10% overpayment without penalty, then you must ask the question, could Ulster Bank itself change the practice? If you took out the mortgage based on marketing material which said that, then you would have a good case to insist on it. Also, if you have already overpaid by 10% without penalty, then you could argue that this custom and practice forms part of the contract.

Brendan
 
@Wiresandmore @Brendan Burgess Just gathering further evidence that the Ulster Bank break fee being capped at six months' interest is part of the mortgage contract itself (and not merely part of Ulster Bank's terms of business).

This is the back of a break fee quote letter issued by Ulster Bank to my friend recently.

Letter from Ulster Bank showing their break fee calculation


It makes clear that the break fee is capped at six months' interest, and that this cap was and remains part of the mortgage loan offer terms and conditions.

Therefore, Permanent TSB cannot ignore this cap when calculating break fees for customers whose mortgages were bought from Ulster Bank.
 
Does anyone have any idea what happens to the ‘no penalty’ condition of my mortgage being repaid early once it’s been transferred to PTSB?
I’ve a you first account at the moment. One of the benefits is being able to make additional lump sum payments with no penalties. Basically, I only ever owe whatever the current mortgage balance is. With UB transferring the balance to PTSB, and obv’s.the ufisrt account being withdrawn, is that advantage/condition still binding.
I also have a small car loan subject to the same conditions.
 
mikemove said:
One of the benefits is being able to make additional lump sum payments with no penalties.
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Are you on a fixed rate or variable rate?

There are no penalties on variable rates.
I was not aware that different accounts with Ulster allowed early repayments without penalties.

Brendan
 
mikemove said:
Does anyone have any idea what happens to the ‘no penalty’ condition of my mortgage being repaid early once it’s been transferred to PTSB?
I’ve a you first account at the moment. One of the benefits is being able to make additional lump sum payments with no penalties. Basically, I only ever owe whatever the current mortgage balance is. With UB transferring the balance to PTSB, and obv’s.the ufisrt account being withdrawn, is that advantage/condition still binding.
I also have a small car loan subject to the same conditions.
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@mikemove Are you sure you are not misunderstanding the source of and/or the Ts&Cs of the "no penalty" clause around overpayments?

Ulster Bank allows all its fixed-rate mortgage customers to overpay their mortgage by 10% of the outstanding balance per calendar without penalty, regardless of what type of current or savings account they hold. Ulster Bank have allowed this for the last four or five years. (There is no guarantee that PTSB will maintain this feature – although there is an argument that they will be obliged to.)

Are you sure that your ufirst account gives you an extra "no penalty" overpayment feature beyond this?
 
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I Have read that as part of the Deal with KBC and BOI , BOI have to offer the rates that KBC would have offered when fixed terms end so In 3/5/10 years you would not be at a disadvantage
 
steely1 said:
I Have read that as part of the Deal with KBC and BOI , BOI have to offer the rates that KBC would have offered when fixed terms end so In 3/5/10 years you would not be at a disadvantage
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Where did you read that?
 
steely1 said:
I Have read that as part of the Deal with KBC and BOI , BOI have to offer the rates that KBC would have offered when fixed terms end so In 3/5/10 years you would not be at a disadvantage
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Given that that would be a variable rate, and we have no idea what rates will be like next week let alone in 10 years, how would that even be possible?
 
"If you're on a fixed rate, when you come to the end of your fixed rate, Bank of Ireland has agreed to offer former KBC customers the same interest-rate options as KBC would have offered, for the first time you re-fix. This is good news as KBC's rates for its existing customers are much lower than Bank of Ireland's. The CCPC might request the same type of agreement for Ulster Bank customers. "
 
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