# Implications for mortgage holders of rumoured Ulster Bank pull out



## Brendan Burgess (17 Sep 2020)

Summary 

Tracker  customers - The existing tracker is safe.  Whoever buys it would have to respect the existing terms and conditions. 

Fixed rate customers - it's unlikely that your mortgage will be sold before UB is closed down.  So no real implications for you.

Thinking of taking out a mortgage or switching to Ulster  - No real implications. The fixed rate deals are still very good value.  Whoever buys your mortgage will want to retain the business.  If they push up the rates, you will have to switch. 

In mortgage arrears - Most of these have already been sold to vulture funds.


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## Nicetoknow (17 Sep 2020)

If thix goes ahead, what impact would this have on existing mortgage holders? If you come of a fixed rate in next few years would a new fixed rate then not be available (if they are winding up) - would you have to move lenders?


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## peemac (17 Sep 2020)

Nicetoknow said:


> If thix goes ahead, what impact would this have on existing mortgage holders? If you come of a fixed rate in next few years would a new fixed rate then not be available (if they are winding up) - would you have to move lenders?


The article says that the mortgage book would be sold. Same as Danske.


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## misemoi (17 Sep 2020)

Eek.  Fixed with them until Nov.


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## misemoi (17 Sep 2020)

I assume they will need to honour their existing contracts?  Better get myself teed up for another move!


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## kitty81 (17 Sep 2020)

Would UB mortgage holders be advised to start switching now if they can? I'm not sure what 'mortgage book being sold' could mean for existing customers?

Can anyone enlightened me!?


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## Richardb (17 Sep 2020)

We've a tracker with them. What happens there?


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## skrooge (17 Sep 2020)

Hard to know what any of this might mean. The important question is who might buy their loan book and what business model might they have.

Selling a performing loan book will attract a different type of purchaser than the distressed sales we've seen in the past. Every chance one of the existing banks would be interested. Or a new entrant looking for a foothold, Avantmoney for example. 

Regardless of who purchases the loan book existing customers are still entitled to the protections as laid out by the central banks code of conduct.  Not too mention they world be obliged to honour the terms and conditions of any contract.

Regardless of the outcome of the RBS review it's never a bad idea to assess if moving is a good idea. Below are general points that apply in almost every case.

If you've a good tracker you'd be mad to move for this reason alone.

If you've fixed are there are better rates available it may be beneficial but and it depends on what the break cost would be.

After that I wouldn't be rushing to move just because your mortgage is sold. All that might change could be the headed paper.


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## tracer900 (18 Sep 2020)

Could this news cause any problems drawing down a current mortgage at loan offer stage?


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## Sybil35 (18 Sep 2020)

This is really disappointing to hear. Had a great experience switching to them. We are only 6 months into a 2yr fix at 2.3% but planning a sizeable top up in 6 months. Are we best to move again now? We needed to be with ulster 6 months before they consider top ups so guess the other banks have similar policies. Have already been with aib, boi, ebs so may aswell go try out kbc, but would rather stick with ulster.


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## skrooge (18 Sep 2020)

tracer900 said:


> Could this news cause any problems drawing down a current mortgage at loan offer stage?



Really depends on how far along the process they are relative your drawdown date. As the article says it's a tightly guarded review. There's likely nothing official circulating in Ulster Bank so it's business as usual, for now. 

In the short term you should be fine but if your purchase drags on you're more likely to be impacted by any closure, if that is the outcome of the review. 

Given the speculation and increasingly having a second loan approval from another bank can't hurt.


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## peemac (18 Sep 2020)

Richardb said:


> We've a tracker with them. What happens there?


nothing whatsoever. You might make the payments to a different account if the closure goes ahead. But your tracker is 100% safe.

Everyone else that has a mortgage or loan will see little difference too.

The main cohort affected (if and when this goes ahead) is current account holders and deposit account holders who will need to move to another bank


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## misemoi (18 Sep 2020)

I am most interested in the overpayment of a fixed rate, so I will look at KBC again.  Wonder if they will give me the 3k for switching again


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## MrEarl (18 Sep 2020)

Anyone wondering about what "might" happen, if UB were to close and sell on their loan book, should read over the discussion threads on Danske homeloans etc.

The key things to remember are :

-there's a legally binding contract, so even if your loan were to be sold, the new counterparty remains bound by the terms of the contract

- CCMA Regulations continue to apply.


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## Virgo80 (18 Sep 2020)

recently completed a mortgage switch to UB and also opened a current account as they are offering €500 for anyone opening a current account who switched their mortgage to UB as well.

so i am waiting for a €1500 as legal expenses cash back offered for the mortgage switch and €500 from the newly opened current. not sure i am ever going to get either of it.


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## peemac (18 Sep 2020)

Virgo80 said:


> recently completed a mortgage switch to UB and also opened a current account as they are offering €500 for anyone opening a current account who switched their mortgage to UB as well.
> 
> so i am waiting for a €1500 as legal expenses cash back offered for the mortgage switch and €500 from the newly opened current. not sure i am ever going to get either of it.


Nothing to worry about. Even if they do close the Irish operations there will be months of notice and everything paid in full. 

Remember they are part of Natwest - highly profitable 2nd largest bank in the UK


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## Sconeandjam (21 Oct 2020)

What happens to those with mortgages that are in place? Have a tracker and do not want to loose it.

Also I would say there are many people out there that may not be able to get a remortgage elsewhere due to change in circumstances. Hopefully they will not force people to find new mortgages elsewhere.


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## demoivre (21 Oct 2020)

Sconeandjam said:


> What happens to those with mortgages that are in place? Have a tracker and do not want to loose it.
> 
> Also I would say there are many people out there that may not be able to get a remortgage elsewhere due to change in circumstances. Hopefully they will not force people to find new mortgages elsewhere.



A mortgage is a legally binding contract that won't change no matter what happens to Ulster Bank.


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## DaveLong20 (21 Oct 2020)

We currently have a mortgage loan offer from Ulster and intend to draw down.  
Anyone else in a similar position and should we be concerned?


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## Freelance (27 Oct 2020)

Sconeandjam said:


> What happens to those with mortgages that are in place? Have a tracker and do not want to loose it.
> 
> Also I would say there are many people out there that may not be able to get a remortgage elsewhere due to change in circumstances. Hopefully they will not force people to find new mortgages elsewhere.





DaveLong20 said:


> We currently have a mortgage loan offer from Ulster and intend to draw down.
> Anyone else in a similar position and should we be concerned?



Dominic Coyle has a piece in today’s IrishTimes that adresses these questions and that should offer you some peace of mind.

Am I crazy to consider switching to an Ulster Bank mortgage?


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## Coldwarrior (27 Oct 2020)

demoivre said:


> A mortgage is a legally binding contract that won't change no matter what happens to Ulster Bank.



This is true but it's not the panacea it's made out to be, there's still an added risk for UB customers.

For example, people who currently have a mortgage with UB on a decent fixed rate, who are able to fully meet the repayments etc but for whatever reason can't switch lenders at the end of the fixed term (eg needed an exemption which the other banks may not be willing to give, or a change in circumstances like now having more kids). If their mortgage is sold to a non bank entity or vulture fund that doesn't offer mortgages themselves to new customers, they have no incentive to keep up with the market and offer competitive interest rates.

So if interest rates offered by the other banks generally dropped say 1%, the vulture fund is very unlikely to compete and match these, leaving the original UB customers paying way over the odds rates. I also don't believe there'd be anything to stop the vulture fund from increasing the variable rate that UB customers on fixed rates roll off to and thereby price gouging these UB customers who are stuck with them.


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## MrEarl (28 Oct 2020)

Don't you think that people will be paying down their loans over the coming years, while on their fixed rates, so will be more likely to be able to refinance in future years, if they did get an exemption ? 

Anyone on an SVR, who is unable to move lender, due to their personal circumstances, is exposed to the same risk of rates going up.

Any Bank can sell a loan portfolio, be it performing or otherwise. We've seen every Bank in the county sell loan portfolios, at this stage. Once their loan documentation allows for it, it's a risk, no matter who your lender is - with loan portfolios sold off for more than one reason. 

If anything, being on a good medium to long term fixed rate, might give additional comfort, for those afraid of their rates going up, in the future.


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## skrooge (28 Oct 2020)

I wonder what impact, if any, would a loan book sale have on a break fees calculations? 

I presume a sale only changes one factor, namely the current "bank" funding cost? Or am I missing something. 

Given the potential buyer might not be a bank might current funding costs be significantly different from what Ulster Bank faced at origination.

Be interested to hear how this worked in the case of other loan sale.


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## MrEarl (28 Oct 2020)

While no one can predict the future, people with various "what if" questions about their loans, would benefit from reading other threads on AAM, about what happened when Danske, Bank of Scotland and Rabobank sold loan portfolios.


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## demoivre (29 Oct 2020)

Coldwarrior said:


> This is true but it's not the panacea it's made out to be, there's still an added risk for UB customers.
> 
> For example, people who currently have a mortgage with UB on a decent fixed rate, who are able to fully meet the repayments etc but for whatever reason can't switch lenders at the end of the fixed term (eg needed an exemption which the other banks may not be willing to give, or a change in circumstances like now having more kids). If their mortgage is sold to a non bank entity or vulture fund that doesn't offer mortgages themselves to new customers, they have no incentive to keep up with the market and offer competitive interest rates.
> 
> So if interest rates offered by the other banks generally dropped say 1%, the vulture fund is very unlikely to compete and match these, leaving the original UB customers paying way over the odds rates. I also don't believe there'd be anything to stop the vulture fund from increasing the variable rate that UB customers on fixed rates roll off to and thereby price gouging these UB customers who are stuck with them.



A non tracker variable rate puts you at the mercy of the entity you are dealing with, irrespective of who they are. 

Plenty of borrowers out there being  fleeced by Banks with svrs of  >4% , and those borrowers unable to switch for the reasons you've alluded to above.


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## Coldwarrior (30 Oct 2020)

demoivre said:


> A non tracker variable rate puts you at the mercy of the entity you are dealing with, irrespective of who they are.
> 
> Plenty of borrowers out there being  fleeced by Banks with svrs of  >4% , and those borrowers unable to switch for the reasons you've alluded to above.



Agreed but they  have the option to fix for a better rate with their current bank, and competitive pressures mean those rates have to stay at least somewhat in line the other banks. Would a non bank entity even offer fixed rates to customers rolling off their current fixed periods?


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## Coldwarrior (30 Oct 2020)

MrEarl said:


> Don't you think that people will be paying down their loans over the coming years, while on their fixed rates, so will be more likely to be able to refinance in future years, if they did get an exemption ?


More likely yes, I didn't say this would affect all UB customers, but there's a subset that that it could.



MrEarl said:


> Anyone on an SVR, who is unable to move lender, due to their personal circumstances, is exposed to the same risk of rates going up.


As mentioned in previous post, they can at least usually get a decent fixed rate with their current bank if they can't switch, whereas a vulture fund wouldn't be competing for new business with the banks so wouldn't need to offer competitive rates.


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## SeanWal (3 Nov 2020)

We are currently one year into a two year fixed rate with Ulster Bank. Would it be better to switch from Ulster Bank now rather potentially being unable to switch in a year (due to a change in personal circumstances) and being at the mercy of unknown follow on rates of a new lender?


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## finlma (9 Feb 2021)

Lone Star are being linked with the takeover of UB. Any ideas of the implications for mortgage holders if this came to pass?

The end of UB in Ireland seems an inevitability now.


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## MrEarl (9 Feb 2021)

Until there's an announcement of any sort, this is all just speculation (granted, it does look like there's an announcement of some sort, on the way).

Interesting to note that UB are still opening new accounts, granting new loans, have been updating their app etc.

We've seen serval parties linked with Ulster Bank, with the news stories offering limited detail. Even if all of the stories are accurate, implications are that discussions are at a very early stage, with all of the parties named.

Assuming your homeloan is up to date, then nothing would change, even if UB did sell it to another party. If its not up to date, you continue to benefit from Irish regulatory and legal protections.


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## Coldwarrior (9 Feb 2021)

If your UB mortgage was sold to a "vulture" fund, would another negative implication be that they may not provide top up mortgages for people looking to renovate or expand their home? Not sure if these funds would allow something like this, I guess most of the current loans that have been bought by vultures have been in default so the mortgage holders wouldn't be looking to increase their mortgage.


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## Eureka101 (9 Feb 2021)

It would be great to know what percentage of each Vulture fund’s loan book are performing versus the percentage that are non-performing.
Take it from me, if your mortgage is sold to a fund it simply becomes an overpriced loan with no mortgage facilities or services you would expect from a bank.
If you can switch then great, if you can’t then you’re mortgage journey becomes mired.


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## Gordon Gekko (9 Feb 2021)

It will be a bit of a nuisance for sure if it comes to pass. I’m with UB as I like the rates and the flexibility in terms of overpaying.


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## finlma (10 Feb 2021)

Coldwarrior said:


> If your UB mortgage was sold to a "vulture" fund, would another negative implication be that they may not provide top up mortgages for people looking to renovate or expand their home? Not sure if these funds would allow something like this, I guess most of the current loans that have been bought by vultures have been in default so the mortgage holders wouldn't be looking to increase their mortgage.



I have a tracker with them but looking to move within next 5 years. Hoping to port the remaining amount at an increased rate for 10 years, as per UB current offer. All depends on who takes over the loan book I suppose.


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## RedOnion (11 Feb 2021)

jumpaddict said:


> If UB move my loan to another Fund/Bank/Vulture etc, I wont be guaranteed the ability to overpay?


Th overpayment option is contractual, and is part of your fixed rate agreement.  The loan moving to another lender won't change the contract.
The first time a change could be introduced would be as part of a new fixed rate agreement.


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## Gordon Gekko (11 Feb 2021)

The big potential problem arises for people who reach the end of their fixed term or who are on a variable rate AND who can’t switch for whatever reason in circumstances where the purchaser’s offering is worse than Ulster Bank’s.

If you’re in the middle of a fixed term, as I am, you’re fine for the moment. Your rate will continue to apply and you can continue to make your 10% overpayments.

The issue is, where does the book end-up and what terms might that purchaser be offering thereafter. If the terms change and they’re rubbish, most people can simply switch. But for people who can’t switch, for whatever reason, they’re a captured audience and subject to the vagaries of whatever’s on offer from the purchaser. 

I suppose it’s possible that decent terms could be on offer. For example, if Avant Money took over the book or parts of it. When you stand back from it, why would a purchaser look to wreck the business that it has purchased. If they mess people around, the performing customers will hit the road leaving them with a rump of distressed or somewhat distressed borrowers. Why would they do that?


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## Ariel7 (11 Feb 2021)

I'm shortly due to finish a fixed term with UB and was contemplating re fixing at their 2.2 high value 5 year rate. Now I'm not sure whether to do this or not. The rate is competitive and would save having to move, also I love the reassurance of a fixed rate for 5 years while kids are small etc. Just a bit nervous now due to potential pull out. There's 27 years left on mortgage. Can't see our personal circumstances changing in next 5 years as we are both public sector workers, happy in jobs etc so could hopefully move at end of term if we needed to. Just wondering what people think? The gist of what I have read here on this thread is that if your mortgage is performing and you can move at end of term then there is no issue really if mortgage is sold?


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## RedOnion (11 Feb 2021)

I fully agree with the points raised by @MrEarl and @Gordon Gekko 

What we have to remember is this is all purely speculation at the moment. 

That said, all the other banks would be salivating at the idea of getting their hands on UBs performing loan book at the moment. It would be a quick & cheap way to massively increase their balance sheets with low risk lending, at a time they've excess deposits. If the book goes for sale, it will be incredibly competitive. The absolute worst case scenario for the other banks is the loans get sold to a fund, and the banks are left having to take on another 20bn + in deposits that they don't want.


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## Gordon Gekko (11 Feb 2021)

Ariel7 said:


> I'm shortly due to finish a fixed term with UB and was contemplating re fixing at their 2.2 high value 5 year rate. Now I'm not sure whether to do this or not. The rate is competitive and would save having to move, also I love the reassurance of a fixed rate for 5 years while kids are small etc. Just a bit nervous now due to potential pull out. There's 27 years left on mortgage. Can't see our personal circumstances changing in next 5 years as we are both public sector workers, happy in jobs etc so could hopefully move at end of term if we needed to. Just wondering what people think? The gist of what I have read here on this thread is that if your mortgage is performing and you can move at end of term then there is no issue really if mortgage is sold?



Hi,

What’s your Loan to Value (LTV)?

If it’s less than 60% and you don’t plan to make lump sum overpayments, you should consider switching to Avant Money now for their 1.95% fixed rate.

Otherwise, if it was me, I’d take the UB rate that’s on offer.

Gordon


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## Ariel7 (11 Feb 2021)

Gordon Gekko said:


> Hi,
> 
> What’s your Loan to Value (LTV)?
> 
> ...


Thank you Gordon. Our LTV is 70% so Avant would only be matching the 2.2% rate I can get by re fixing with UB. Thanks for your response. Yes, Ulster are probably the best choice for us right now.


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## Nicetoknow (11 Feb 2021)

If UB announce they are pulling out, any ideas how long the sale deal would take? Would we know within a couple of months do you think?

The reason I ask is that if our loan gets sold to a Vulture fund we'll be throwing everything at it (money that would have been going into pension) to get our balance down. If we can't switch I want less debt at a high SVR. If one of the high street banks buys the loan...I'll be happier to stick with my current plan of small overpayment on mortgage plus pension.


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## skrooge (11 Feb 2021)

Might there be some small silver lining for mortgage holders - could they forgo break fees in the hopes of expediting the wind down?




Nicetoknow said:


> If UB announce they are pulling out, any ideas how long the sale deal would take? Would we know within a couple of months do you think?
> 
> The reason I ask is that if our loan gets sold to a Vulture fund we'll be throwing everything at it (money that would have been going into pension) to get our balance down. If we can't switch I want less debt at a high SVR. If one of the high street banks buys the loan...I'll be happier to stick with my current plan of small overpayment on mortgage plus pension.



It's all rumour and conjecture at this stage but a performing loan book like UB's would be  highly sought after. Especially from existing banks.

Any reason why you wouldn't be able to switch as is?

Are you currently fixed?


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## Gordon Gekko (11 Feb 2021)

Nicetoknow said:


> If UB announce they are pulling out, any ideas how long the sale deal would take? Would we know within a couple of months do you think?
> 
> The reason I ask is that if our loan gets sold to a Vulture fund we'll be throwing everything at it (money that would have been going into pension) to get our balance down. If we can't switch I want less debt at a high SVR. If one of the high street banks buys the loan...I'll be happier to stick with my current plan of small overpayment on mortgage plus pension.



Is your loan non-performing as things stand?

i.e. why wouldn’t you be able to switch it?


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## MrEarl (12 Feb 2021)

Why anyone is considering not taking a good fixed rate, for a medium to long term period, is beyond me.

Contractual terms are legally binding and must be honoured, even if a mortgage is sold to a fund.

My own homeloan was performing, but was sold as part of Danske Bank leaving Ireland, years ago. Its now held by a non - bank lender, but the terms and conditions remain the exact same, as when I was with Danske. The only issue, is that I can't get a top up loan, if ever I might want one. If ever I do want a further loan, I'll just refinance to another lender, at that time.

Ulster Bank are said to be fairly conservative lenders these days, while a lot of their historic higher risk loans, or tracker rate homeloans, will have reduced with time. As such, they'll be in high demand, if offered for sale, and will most likely be sold to another licenced bank - a bank looking for new, long term customers, who might also top up their loans, or buy other products.

Again, this is all based on a hypothetical situation, as things stand.

Even * if * NatWest announce a wind down of UB, on 19th February, its going to take 5-7 years, to wind Ulster Bank down. There's no need for anyone to be panicing, there'll be plenty of time for people to explore their options, move banks etc.

The one thing that I would say, is that anyone who is currently in financial difficulty, and struggling with their debt, (or anyone who thinks they may be about to fall into difficulty), should go and speak to the Bank immediately. The sooner the engagement begins, the better.


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## NoRegretsCoyote (12 Feb 2021)

Nicetoknow said:


> If UB announce they are pulling out, any ideas how long the sale deal would take? Would we know within a couple of months do you think?



When Danske announced a pull-out in October 2013 it said it would be complete by the middle of 2014.

I had a colleague at the time who had to close her Danske current account and open another one. It was straightforward (but pretty time consuming) for her to prove identity with new bank, then switch payroll and direct debits.


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## Nicetoknow (20 Feb 2021)

Gordon Gekko said:


> Is your loan non-performing as things stand?
> 
> i.e. why wouldn’t you be able to switch it?




Not in arrears and hope never to be. Due to Covid, childcare needs I have taken a leave of absence from work so we wouldnt be able to switch. God only know what our situation will be in 2 years when our current term ends.   I'm considering if breaking out of 5 year fixed ( 2.5% with 2 years remaining ) and refixing for 10yrs (@2.8% ) with UB is a daft or good idea.


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## kitty81 (21 Feb 2021)

Nicetoknow, I am thinking the same, although we would not have any break fee as our current mortgage term is set to expire end of March.

The only risk I can think of, is if rates drop during the ten years.

I'm finding it hard to submit the choice we've made though. I will give it another week and see where things are then.


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## Gordon Gekko (22 Feb 2021)

My understanding is that banks like Ulster Bank created certain products to help manage their LTV/LTI exemptions.

For example, their >€500k <80% LTV 2.5% Fixed product.

Those individual silos of mortgages may be of interest to providers in order to do the same or to achieve something specific.

e.g. “I’ll take all of that silo please”


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## Nicetoknow (22 Feb 2021)

Do you think UB would allow a customer to fix now for 10years?


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## skrooge (22 Feb 2021)

Nicetoknow said:


> Do you think UB would allow a customer to fix now for 10years?


Yes, they're selling the book why wouldn't they.


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## MrEarl (23 Feb 2021)

Nicetoknow said:


> Do you think UB would allow a customer to fix now for 10years?



Yes, it's business as usual!


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## lotus17 (23 Feb 2021)

I have my mortgage with Ulster Bank. 2 yr fixed at 2.3% with fixed period due to end December 2021. Current balance is €230K. House value circa €700K with 17 years remaining on the mortgage. Age 40.

I had originally planned on fixing the mortgage this coming December for 5 years at 2.35% with Ulster. *Is it likely this will be an option for me or is it likely my mortgage will be sold on to another bank at that stage? Would there be any value in breaking out of my fixed rate now and re-fixing for the 5 year term?* I was hoping that at the end of the 5 years fixed I will be able to clear the mortgage balance through the sale of an investment property.

Curve Ball…..I have heard mention of a house coming up for sale in my area in the next few months. This house is very attractive to me and would be a trade up. *How can I best position myself to maintain a low mortgage rate while also keeping myself open and ready to trade up if the right property becomes available in the next few months/years?*

Advice appreciated.


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## Brendan Burgess (23 Feb 2021)

1) Ask Ulster Bank what the break fee is.  It might not be very much. 

2) You might be better off fixing for a shorter period in case that house becomes available.   

3) If you really want that house, why don't you sell your investment property now?


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## skrooge (23 Feb 2021)

Personal speculation but for Ulster to sell your mortgage by December would be very quick. So I fully expect by the time you roll off your fixed rate your mortgage will still be part of the NatWest group.

As Brendan says why not look for a break free estimate now.

An alternative option would be to switch to the likes of KBC (or other bank offering cashback). If you're going to clear the mortgage in 5 years I imagine the cashback would out way any higher interest charge you might face.

Switching would also deal with any  uncertainty surrounding Ulster's actual closure.


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## Gordon Gekko (23 Feb 2021)

I’m fixed with UB at 2.5% until Q4 2022. The LTV is low and the LTI is fine. Any suggestions for what I should do? There is a material break-fee. Avant have the best rate but as I understand it they don’t allow overpayments. In an ideal world, I’d like a decent rate, the ability to overpay monthly, and the ability to make lump sum repayments. My own thoughts are to wait and see what happens and take action then if it’s something I don’t like. Many thanks.


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## RedOnion (23 Feb 2021)

Gordon Gekko said:


> My own thoughts are to wait and see what happens and take action then if it’s something I don’t like.


This would be my thoughts on it at the moment.  It will be months until there is any clarity on what might happen to your mortgage.  But I'm a bystander, I don't have a mortgage with UB.

In terms of overpaying, a number of lenders will allow you to shorten the term without incurring a break fee.  But it's a contractual change to the term.


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## Gordon Gekko (23 Feb 2021)

RedOnion said:


> This would be my thoughts on it at the moment.  It will be months until there is any clarity on what might happen to your mortgage.  But I'm a bystander, I don't have a mortgage with UB.
> 
> In terms of overpaying, a number of lenders will allow you to shorten the term without incurring a break fee.  But it's a contractual change to the term.



Yes, the problem with that is you’re committing to it.


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