# UB switching to capital and interest after 5 years



## dublindamo (7 Nov 2013)

Hi,

I received a letter from the Bank saying that my Interest only repayments would be reverting to a principal and Interest repayments from December ( I took it out in September 2008).
I have the mortgage policy forms from the time and it states it is Interest only and does not state that it would revert after any length of time to Prinicpal and Interest (Even at that 5 years and 3 months seem a strange time to revert).

Can the bank force me to pay Principal if my policy states somethign else?


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## 44brendan (7 Nov 2013)

By Policy I assume you are commenting on the Loan Agreement Letter. This letter is your contract with the Bank. You need to examine it carefully as it would appear unusual for any Bank to grant a long term loan on an interest only basis for the full duration. However if those were the terms of the loan agreement then the Bank are obliged to comply with them, unless there is some clause in the contract that permits a change to the conditions. You need to examine the contract carefully and if satisfied that it is watertight, send a copy to the Bank stating that you want the original repayment agreement to continue for the duration of the agreement.


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## dublindamo (7 Nov 2013)

Thaks Brendan I'll go through the agreement tonight to see if they can change it. I know it states that as it is interest only I should put in place a plan to repay in full at maturity.


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## 44brendan (7 Nov 2013)

One of the things to take into account is the maturity date and your ability to clear this loan by the due date. From the perspective of my own organisation, we have some clients on IO agreements where it is clear that they will not be in a position to fully repay the loan by the due date. We have contacted all of these clients to advise them to tell us immediately if they feel that they will be unable to pay loans in full by the due date. For those who co-operate with us, we are flexible in both applying new pricing and terms in line with their ability to pay. Those who refuse to co-operate will not get the same level of flexibility when their loan term is up, if they cannot pay the funds due.


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## PadKiss (7 Nov 2013)

Hi dublindamo
What bank are you with as BOSI did do interest only for full term but not aware of any cases where they have gone back to their customers to attempt to alter the terms. Other lenders may have done pension backed mortgages and these would also be interest only for the length of the term and again same would apply re terms etc. The interest only term would be highlighted somewhere in your loan offer for sure so for example on page one of your loan offer does it state 60 months at a cretain cost per month, if this increases for the remaining 180 months (on a 20 year mortgage)it would appear it is indeed an interest only term of 5 years. The terms and conditions will certainly have a deeper explanation of what was to occur but without knowing the lender these are my best guess to you
Hope it helps 
Padraic


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## dublindamo (12 Nov 2013)

Hi, 
Its with Ulster Bank. 
The Loan offer states Interest only but then I can see the repayments amount change on the amortisation table afer 5 years. 
To be honest I always thought it was a 5 year Interest and then switched to Principal and Interest but I was expecting the change in September (Which is in line with the table) which never happened. No idea why they are starting this in December. Unless it was an oversight by Ulster and they are just picking up on this now


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## 44brendan (12 Nov 2013)

This would have been a standard product offering. i.e. IO for 5 years with full reversion to P&I repayments over the remaining term following expiry of the IO period. The couple of months gap in sending the letter may be due to a glitch in their system, or alternatively your 1st payment may have only commenced in Dec. Either way you are now facing a choice of either meeting the required P&I repayments or appealing the payments under MARP on the basis of an inability to pay.


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## PadKiss (12 Nov 2013)

Hi dublindamo, there has been a number of these accounts that were to move to Cap and Int after a certain period but Ulster Bank missed this occurring on their systems and are now putting the terms and conditions of the loan offer into play. If this is a home loan you may be able to come to some arrangement but otherwise the capital amount is due to be paid now. If its your home an extension to the term may also be considered as an alternative to enable the cost to remain affordable at present. If i can be of further help just let me know Padraic


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