# Warning: Check your rate before drawing down



## olibau (21 Jul 2009)

I know there must others out there who got done like this as well. The banks cant get away with this. Check your rate...

Got a loan offer of 5.02% last year, fixed for 2 years from Ulster Bank. (It was a good deal at the time). Signed the offer and subsequently drew down the loan. Last week i got my first mortgage statment, 13 months after the loan offer was signed and 12 months after draw down and discovered to my horror they had fixed me in at 5.85%.

They say the rate changed prior to drawing down but i was never informed, verbally or in writing. They told me today they are covered as they advise on the offer that rates can change " [FONT=&quot]the payment rates on this housing loan may be adjusted by the lender from time to time"[/FONT] To me this is vague and flimsy and is aimed at those on a variable rate not a fixed. Basically they quoted me one price and charged me a different one. Then they had the nerve to tell me that they dont notify people of rate changes prior to drawing down and that I would have found out by reading the paper or listening to the news for ecb rate hikes!

What got me most was i was on a variable rate with another bank at 5.9% and there was no way i would have fixed in at 5.85 if i had been informed. The bank actually rang me about a week before i drew down to tell me the rate was due to go up so i should draw down before a certain date. So i did. They didn't tell me the rate had gone up a few times already since my loan offer and that i was actually fixing in at 5.85.


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## TheBigD (21 Jul 2009)

Standard practice tbh. The rate of your mortgage is always the rate on offer at the time of drawdown, not at the time of loan offer. 

If you examine your contract/loan offer doc I'm sure you'll find a clause that states that the rate at drawdown will be applied and this might be different from the rate in the loan offer. You'll only have a case against them if they didn't state this.


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## Spin (21 Jul 2009)

When the cheque was issued to your Solicitor surely it came with a notice stating the interest rate had increased. If you had been informed at this stage you could have had the option to return the cheque and not proceed. Also you should have got a letter from Ulster Bank after the cheque issuing confirming your rate, term and monthly repayment.

This happened a lot last year when rates increased, where the issue of the cheque was held up for very minor reasons, thereby allowing the increase.

This is definitely a case for the Ombudsman, however you need to make a written complaint first to Ulster Bank.
I am surprised if you got a loan offer with one rate quoted and your monthly instalment quoted and then your monthly repayments were higher that you didn't notice until you got your statement.  

Did you get your mortgage through a branch or through a broker as your broker would have been notified when the increased rate would apply and should have been working with your Solicitor to get the cheque issued before the rate increased and if through a branch the manager/mortgage advisor dealing with your mortgage should have advised you.
It all comes down at the end of the day to shoddy service be it from the bank/broker/Solicitor.


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## Kate10 (21 Jul 2009)

Solicitors do not get any notice re changes in rates on or before drawdown.  We get a "solicitor's pack" which generally has a copy of the loan offer, two mortgages, a cheque requisition form, a solicitor's undertaking and a cert of title, for completion by us.

The client also gets a pack which includes the loan offer, t's and c's if separate from the loan offer, a direct debit mandate, notice of interest on fire policy, assignment of life policy and possibly some other documents depending on your personal circumstances.

The t's and c's on a fixed rate loan offer ALWAYS say that the rate that applies is the applicable rate at the date of drawdown.  Therefore the bank is not obliged to give any further notice to the borrower, the broker or the solicitor.  

Seriously, is someone can't be bothered to read the 3/4 pages of general conditions that apply to their mortgage ...well what can you do?  You can hardly argue that solicitors should follow every rate change in the market and notify their clients accordingly!!


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## TheBigD (21 Jul 2009)

kate10 said:


> seriously, is someone can't be bothered to read the 3/4 pages of general conditions that apply to their mortgage ...well what can you do? You can hardly argue that solicitors should follow every rate change in the market and notify their clients accordingly!!


qft


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## Kate10 (21 Jul 2009)

qft = ??


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## TheBigD (21 Jul 2009)

*Q*uoted *f*or *t*ruth


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## olibau (21 Jul 2009)

hi all thanks for the replies. I went through the t&c's with a fine tooth comb and the only mention of a possible rate increase is the line "the payment rates may be adjusted by the lender from time to time" There is no mention of checking prior to drawdown. The bank said it was their standard practice to issue notice to the solicitor just prior to drawdown with notice of interest etc but this never happened. 

Its since transpired that the rate actually wnet up 3 times prior to drawdown and one of those was 4 days before i go the loan offer, so the offer itself was invalid from day one. I cant get over the fact that i was talking them probably twice a week while going through the motions and nothing ws mentioned. 

My fault i suppose, i dont speak 'bank' and like the rest of the world assumed i could trust them to give me what we had agreed on. Guess we all learned that lesson in the last year.


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## olibau (21 Jul 2009)

Got it from the bank and used their solicitor swithing service.


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## Locke (21 Jul 2009)

What bank was it if you don't mind me asking


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## Locke (21 Jul 2009)

I know with BOI it is VERY clear

'The fixed rate of interets set out in this offer letter is the fixed rate which would apply if the loan was drawn down today. There is no gaurantee that the fixed rate so stated will be available when the loan draws down. The actual fixed rate that shall apply shall be the lenders fixed rate available for the fixed period


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## Kate10 (21 Jul 2009)

Hi Olibau,

If that is the only reference in your T's and C's then it is not sufficiently clear to my mind.  I think you should call your solicitor and ask them to review your T's and C's.  The line you are referring to is in reference to variable rates and would not apply to a fixed rate.  The kind of wording you should be looking for is the BOI wording quoted by Locke.  If the bank got their T's and C's wrong then you would have a very strong argument and could look for a refund.

Before you do anything though, I suggest you ask your solicitor to check the T's and C's as well as your loan offer if T's and C's are in a separate document.

Good luck,

Kate.


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## Monsoon (21 Jul 2009)

Thanks for posting this - Im hoping to draw down a remortgage soon on a fixed rate and wouldnt have thought of this at all...
best of luck with it.


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## olibau (21 Jul 2009)

Locke said:


> I know with BOI it is VERY clear
> 
> 'The fixed rate of interets set out in this offer letter is the fixed rate which would apply if the loan was drawn down today. There is no gaurantee that the fixed rate so stated will be available when the loan draws down. The actual fixed rate that shall apply shall be the lenders fixed rate available for the fixed period



Hi thanks for that i can use that in my letter to the bank. As i said went through all the various documents and the only mention of rates is as i stated before. It seems very loose. At least the BOI one is crystal clear, our loan is with UB. Just drafting letter to bank now. Will post again once i get some reaction.


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## TheBigD (21 Jul 2009)

From my AIB loan offer:

"In the case of a fixed interest rate Mortgage loan, the interest rate is the appropriate rate which prevails at the date of drawdown, and will be fixed for the period of time stated in the Particulars, subject to these conditions"

So quite clear there I think. This is from the general conditions so would be standard in every AIB mortgage I would imagine. The special conditions lay out the particulars relavent to each individual loan.


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## olibau (22 Jul 2009)

If that wording had been on the Ulster bank offer i wouldn't be on this post right now.


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## raven (22 Jul 2009)

TheBigD said:


> Standard practice tbh. The rate of your mortgage is always the rate on offer at the time of drawdown, not at the time of loan offer.


True enough, and probably well known to people who are well acquanted to the business of buying and selling houses.

I think its fairly understandable on the part of the OP here that they were not aware that it is standard practice. Most of us after all, only buy/sell a house once or a few times in our lifetimes; so the majority of buyers would be totally unaware. 

I think Ulster Bank should have made this much clearer to the OP, and not just buried in unclear Ts and Cs.


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## TheBigD (22 Jul 2009)

I accept your point that people might not have experience of buying and selling, but I would have thought (and hoped) that as buying a property is the biggest expenditure a person will probably make that they'd approach it with due care and make sure they understand everything and seek professional advice if they are unsure.


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## busterh (29 Jul 2009)

Myself and my partner have just gone through this horrible situation ourselves. Last year we got a loan offer from first active for fixed rate for 5 years at 4.95%. As the interest rates were due to go up we were concerned about the rate going up, but the guy we were dealing with assured us they would hold it at the original rate once we got everything singned by a certain date - we did as he said. Once we started paying our monthly amount it was higher than we expected, we couldn't figure out what was wrong and got no answers from the bank. Last week we got our annual statement that had a rate of 5.9%! we were never informed of this change at the time or at any point during the year. Is there anything we can do as we were promised over the phone that the original rate would apply??


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## TheBigD (29 Jul 2009)

Again, check the wording of your contract. If it states the rate at drawdown applies then that is what is correct. A written signed contract would override a verbal agreement over the phone that has no record.


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## busterh (31 Jul 2009)

Yes we knew about that at the time and were concerned about it, but only went ahead beacause we were assured by the person at the branch that it would be held for us EVEN when the rate changed. His word obviously had no weight behind it but being trusting people we beleived him.


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## TheJackal (31 Jul 2009)

busterh said:


> Yes we knew about that at the time and were concerned about it, but only went ahead beacause we were assured by the person at the branch that it would be held for us EVEN when the rate changed. His word obviously had no weight behind it but being trusting people we beleived him.


 
Unfortunately, since it's not in writing I'm not sure you have recourse. Very bad form though.


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