Urgent Help needed - Speaking to Ombudsman on Wednesday

0028673

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I lodged an appeal to the Ombudsman this summer on behalf of a relative. My relative took out a Home mortgage at a tracker rate in 2008 for 150K. They needed an additional 30K to finish the property. Unfortunately this is where the problem arose. Instead of getting a 30K loan to finish the property the original mortgage and 30K top up were bundled together at a more expensive rate (Buy to let rate). This property has never been a Buy to let nor were any representations made by my relative to the Bank that this property would be used for renting. Unfortunately my relative did sign up to these changes but would not have any experience in dealing with Financial matters.

My relative has fallen on hard times and is in mortgage arrears as a result of the changes made to her account. An appeal was made to AIB to review the case but they have stated that the case has been reviewed and that the tracker mortgage would not be reinstated.
I am due to speak to the Ombudsman on Wednesday.
Any hints?
 
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NoRegretsCoyote

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Even if you don't win on the tracker point if the house was never let then it should not have been on a BTL rate which is often 100bp higher than the standard variable rate.

Your relative should assemble a chain of evidence to prove that it was always owner occupied, and that she made a genuine error in signing up to the BTL rate.
 

0028673

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Thanks for your response. To expand on my original post. My relative was on tracker mortgage of LTV less than 60% +ECB +.95% in March 2007 for mortgage of 150K. An additional 30K top up was needed and agreed I August 2008 and that is when they were changed to a much less favourable Buy to let rate of 5.7%.

My relative has modest means and has no other dwelling. This was built on land provided by her Mother and father. It has caused her enormous distress as she has fallen into arrears on the property.
 
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0028673

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They were building this as their PPR. It was built on family land and has never been rented nor was their ever an intention to rent the House.
 

RedOnion

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They were building this as their PPR. It was built on family land and has never been rented nor was their ever an intention to rent the House.
I'm trying to clarify something, so that you can get appropriate guidance.

Whether it was intended to be rented it not is unfortunately irrelevant. It was (and still is) very common for a bank to treat a house which was not going to be PPR as an investment, so used BTL rates.
 

0028673

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I will clarify this with her but as far as I am aware she was living with her Parents and this house was being built as her PPR. This was always going to be a PPR.
 

RedOnion

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Perfect, and sorry for being pedantic. I didn't want you focusing on the wrong thing.

Was the mortgage in her sole name?
Were parents guarantors?
Is she currently living in the house?
Is she still on BTL rate or has she moved rates?
 

0028673

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Mortgage is in her name and her Father (acted as a Guarantor)
She is living in the house.
She moved from the Buy to let rate in April 2010 to a variable rate for a PPR of 2.59%.

The Buy to let rate was eventually amended to a PPR loan to value rate of less than 50%.
My contention was that she was on a tracker mortgage and than because of the top up she was taken off it erroneously at time when tracker mortgages were still meant to be available to the public.
Any advice would be greatly appreciated.
 

0028673

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http://www.lendingrisk.com/lr_term.php?lookup=Churning#.XhNN9FOnw0M. Is churning the wording that is used in this case???. Im not financial expert but i believe this has happened in a number of cases where top up loans were requested onto existing mortgages. If you think about it the mortgage advisor was getting paid for another new loan. I question was this legal??? and was it in the clients best. interests.

It was in the best interests of the Bank that her tracker mortgage rate was removed! Ethically wrong but I don't know if this will be successful on appeal with the Ombudsman.
 

RedOnion

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Ok, so the facts as I understand them.
These are just my musings, but you've a serious amount of research to do before meeting on Wednesday!

The original mortgage was a BTL, because it's the only one that had the LTV / rate you mentioned.

Sometime prior to March 2008, took a BTL mortgage (<60% LTV, ECB +0.95%). Joint names with father, who owned another property (his PDH). Joint names might explain why it was BTL?

Needed additional funds. Applied for top-up on existing BTL c. March 2008.

AIB had by then withdrawn BTL trackers (but still offered tracker rates for PDH).

Bank offered additional & new funds at then available BTL rates.

Was the criteria for <60% LTV met?

Later, April 2010, changed mortgage to PDH, <50% LTV.

The big question is why was it on BTL rate originally?
 
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0028673

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Ok, so the facts as I understand them.
These are just my musings, but you've a serious amount of research to do before meeting on Wednesday!

The original mortgage was a BTL, because it's the only one that had the LTV / rate you mentioned.

Sometime prior to March 2008, took a BTL mortgage (<60% LTV, ECB +0.95%). Joint names with father, who owned another property (his PDH). Joint names might explain why it was BTL?

Needed additional funds. Applied for top-up on existing BTL c. March 2008.

AIB had by then withdrawn BTL trackers (but still offered tracker rates for PDH).

Bank offered additional & new funds at then available BTL rates.

Was the criteria for <60% LTV met?

Later, April 2010, changed mortgage to PDH, <50% LTV.

The big question is why was it on BTL rate originally?
Apologies for not being clearer.
The original mortgage in March 2008 was a Tracker mortgage of < 60% LTV as shown below.

4201



In March 2008 an additional 30K was needed to finish out the property. Rather than being a top up of the existing tracker mortgage my relative was taken off the tracker mortgage rate and put on a Buy to let rate for the original mortgage plus the top up. (150K &30K).

Has she a genuine case?
 

RedOnion

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Tracker mortgage of < 60% LTV as shown below
My understanding is that <60% band only existed for BTL.

PDH mortgages used different bands; <50%, 50-80%, >80%.

Alternatively, it might have been a 1 year discounted tracker?

Can you get your hands on the original offer letter?
 

RedOnion

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@0028673
Sorry, it's possible they had a <60% LTV for PDH. I was looking at 2008. They changed the bands during 2007 which is when the letter refers to.
 

0028673

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@0028673
Sorry, it's possible they had a <60% LTV for PDH. I was looking at 2008. They changed the bands during 2007 which is when the letter refers to.
She was granted a tracker mortgage on her private dwelling home at the ECB rate +.95% margin. When she sought to get a top up on the mortgage they bundled the initial mortgage plus the top up together in a Buy to let rate. Thus removing her tracker rate.
Unfortunately she signed this but did not understand the implications at the time.

Has she a case?
 

RedOnion

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Has she a case?
It's impossible to tell on the information provided.

Strictly speaking, I would say no. She didn't have to take the mortgage. She could have gone elsewhere. You keep fixating on it being her PDH - tracker rates were still available at AIB and elsewhere for PDH mortgages. There's something about the circumstances that you're not sharing, and it might be very very subtle.
 
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