# Why Would KBC want to keep me on a split mortgage



## engodel (8 Apr 2021)

Hi All,

A number of years ago myself and my wife ended up on a split mortgage with KBC. Over the last couple of years, our financial position had improved, and we want to go back to paying our full mortgage. 

We have had pushback over the last year from KBC who are trying their best to keep us on a split mortgage.  They have advised us we can overpay on the active part of the loan and leave the parked amount aside. Every single representative has told us the same and talk about the advantages of this, as it is a lower payment etc. 

This is fine, but we would like to begin repairing our credit rating and possibly move to a slightly bigger home in the next couple of years. I fear that if we continue on the split mortgage that we will not be able to move and we have been told conflicting stories by KBC representatives. Some tell us that we could still move and some tell us that we may not get mortgage approval.

We can afford our full payment and have been overpaying as advised for the last 9 months. ( this overpayment is double the amount of what we would be paying on our full mortgage)

 I would like to start paying what we owe but I can't think of a reason why KBC is keen to keep us on a split mortgage. Surely it suits them to have us paying back the full amount or am I missing something? 

Thanks


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## Brendan Burgess (8 Apr 2021)

Update: 

I spoke to KBC. In summary...

1) You have a contractual right to exit your split mortgage at any time.
2) They have to make sure that you fully understand the implications so they send you a letter recommending that you get independent financial advice and they ask you to sign a letter saying that you understand the implications.

I thought that banks would set any overpayments against the warehouse, but in fact, the banks generally seem to be allocating any overpayments against the active mortgage - which, of course, is much better for the customer.

In their experience, people want to get rid of the warehouse for the wrong reasons. People say "I don't want to reach 70 and find myself still with a mortgage hanging over me."

KBC explains that even still it makes sense to clear the interest-bearing part first. If you overpay that, it will be cleared well before the person reaches 70. And then they can start clearing down the warehoused part.

The last thing KBC wants, for themselves and for the borrower, is for a borrower to exit the split mortgage, only to be surprised by the increased repayments and then to fall into arrears again.

But if you choose to exit the split mortgage, KBC has no choice but to comply with your choice.

Brendan


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## engodel (8 Apr 2021)

Thank you -  

The next step, of course, is to put it in writing but wanted to do some homework first. I feel like there is a reason they want to keep us on a split.

No, we are not on a tracker unfortunately so we do see a little bit of a saving


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## TheGoodTheBad (25 Aug 2021)

I'm late to join this one and so prob not relevant anymore. 
But I heard that KBC looked at the warehoused tranche (portion of split mortgage not being addressed) as being written off, and did this for accounting purposes to help meet targets from European central bank or something like that. 
But in doing so then they could not actually charge any interest again on the warehouse tranche and so came the issue when the mortgage holder tried to address the warehoused part. 

That was something I heard a number of years ago.


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## Brendan Burgess (25 Aug 2021)

TheGoodTheBad said:


> But in doing so then they could not actually charge any interest again on the warehouse tranche



That is not correct. 

Their contract with the borrower is completely separate from their reporting and provisioning.  Lenders make full provisions against bad loans are delighted to write back those provisions. 

The following are possible explanations, although neither is convincing.
1) If you have a mortgage of €200k active and €50k split, the €200k is performing and the €50k is fully provided for.  They are concerned that if you resume full repayment and subsequently default, the €250k would be deemed non-performing. 
2) They want to lock you in to KBC and you won't be able to move while you have a split mortgage. Would make no sense now that they are selling their mortgage book to Bank of Ireland.


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## TheGoodTheBad (25 Aug 2021)

OK, maybe so.. But definately there was some issue a time back. They may have gotten around it since. 
It was just something I had heard internally a couple of years ago. 
Something on the lines of as it was classed as Written off they cant then just re instate it and in affect not have it written off anymore and then charge interest on it then. 
I just remember back then there was definately some issue and concern about what would happen in the future when people started paying down tranche one faster.


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## Brendan Burgess (25 Aug 2021)

I do admit that it is odd that they discourage people making split mortgages whole again. 

Brendan


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## engodel (28 Aug 2021)

Hi All, 

We have not progressed much further since the last time I posted here.  I think a week or so later I read about KBC proposed sale to BOI so we adopted a wait and see what happens approach.

We have just be overpaying as much as we can on the active part over the last few months to where there is now nearly the same amount in the active and parked amount.

I have got a few messages from other members who seem to be in the same boat so at least I'm not the only one. But I do find it really strange.


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## Brendan Burgess (28 Aug 2021)

Hi engodel

Thanks for the update.

I think it's still important for you to get back on track.  

Write to KBC and formally ask for the warehouse to be incorporated into your mortgage with immediate effect. 

In fact, tell them to backdate this since you began your overpayments. 

There have been many cases of people who had fully recovered who could not trade up or borrow money because of their impaired credit record. 

If you don't get a prompt response, complain to the Ombudsman.

The takeover by BoI will be messy and you might not be able to resolve this for some time.

Brendan


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## engodel (28 Aug 2021)

Thanks Brendan,

You are right.  I will write to them to this and will update the thread when I get a response


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## Davancr (19 Sep 2021)

engodel said:


> Thanks Brendan,
> 
> You are right.  I will write to them to this and will update the thread when I get a response



Hello, just wondering if you had any progress? I'm in the same situation in that our position has changed and requested that our warehouse portion be incorporated back with the active - we were told its not possible and that no provision was made when this structure was put in place. We've been overpaying for about three years now.

We hope to trade up but concerned due to the warehouse portion and with the imminent exit of KBC from Ireland - remains to be seen how a mortgage like this will be handled and whether it might go to Bank of Ireland or a vulture fund.

We were part of the tracker issue and when I contacted KBC again recently, I was told they'd have to get the tracker department to call me back, this was a week ago and I've heard nothing since. 

I see the advice from Brendan to write to them which I must now also do.


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## engodel (21 Sep 2021)

They rang me back today after we wrote to them and they said their team is backlogged but they will send out the forms to get the restructuring complete and we will go back onto the old terms.

To speed things up we sent in a completed SFS when sending our letter


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## lostsoul (2 Nov 2021)

KBC are still giving us the run around and seem to be refusing to take us off the spilt mortgage without actually saying no.    So far we have sent in a written letter and SFS, spoke to them almost on a weekly basis and have raised a complaint where they have basically ignored everything.

This seems quite strange but looks like i will have to go the ombudsman route


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## Brendan Burgess (2 Nov 2021)

Could this have anything to do with the BoI takeover of KBC? 

BoI is hardly paying 103.5% for split mortgages?  But they would get 103.5% for a performing mortgage. 

I assume it's just administrative incompetence. 

Of course, you can't switch to another lender when have a split mortgage, so that might be it.

Brendan


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## Louie56 (15 Feb 2022)

Hi is there any update on this as I am in the same boat I have 47k performing loan fixed at 2.45% and 55k warehoused can someone please advise what to do as contacted Kbc and told me we have to pay performing loan before paying off warehoused loan


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## Gwenbc (14 Apr 2022)

Hi I'm with kbc too and have had the same issues with split mortgage and them coming back over and over with the same answer that we can't put the mortgage as a full mortgage.Now we have finished paying the preforming loan and now we are paying on the non preforming loan of 82,000 but this is on 0% interest which to me doesn't make any sense on how the bank can do this I have rang and spoke to numerous of staff and all have said that my mortgage is on 0% and the payment is 250 a month but if we want to pay more that's fine which we are,I received a letter from them yesterday stating that the mortgage interest rate is at 0% I just would like to know is this correct and have you heard of this.


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## Brendan Burgess (14 Apr 2022)

Hi Gwen

Makes very little sense.  But unless you are planning to trade up, it won't matter too much.

I suggest that you make much higher payments than they are demanding so that you can show any potential lender that you did your best to pay more and for some reason, they blocked you.

Brendan


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## Gwenbc (14 Apr 2022)

Hi Brendan thanks for the reply that was always the intention to overpay as we have been paying triple this amount over the last five years but I was just wondering now would we be better off putting the money to better use as the repayments are 0% now.


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## Brendan Burgess (14 Apr 2022)

Hi Gwen

It's very hard to know without knowing the full picture - what does your pension fund look like?  Might you want to borrow again? It certainly seems like a good idea to stuff a pension when you can borrow at 0%

I suggest you do a Money Makeover

- start a new thread for it.






						Key Post - Basic information required for the "Money Makeover" forum
					

It can be difficult, but please try to use a meaningful title in your thread  For example "27 year old with mortgage arrears".  You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...



					www.askaboutmoney.com
				




Brendan


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## Brendan Burgess (15 Apr 2022)

When I read the first one, I thought it was a one-off.

Now that it has been reported three times, I have referred the thread directly to KBC and to the Central Bank.

Brendan


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## Gwenbc (15 Apr 2022)

That's brilliant thank you.


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## ChicagoGirl (16 Apr 2022)

I’m another KBC struggling to get off a split despite several years of trying and overpaying. Like other posts mentioned it started with “not possible”, then moved to “over pay and we will review” then ”pay off the active loan and we will review” and the latest is that it is “not possible as the restructure included an extended term and it is not possible to remove the split but leave the extended term in place” which is what I am looking for.  Interestingly I’ve never had a reply in writing, only a phonecall from them after writing to them.
I’ll be very interested to hear if you get a response from KBC or the Central Bank.


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## Gwenbc (17 Apr 2022)

ChicagoGirl said:


> I’m another KBC struggling to get off a split despite several years of trying and overpaying. Like other posts mentioned it started with “not possible”, then moved to “over pay and we will review” then ”pay off the active loan and we will review” and the latest is that it is “not possible as the restructure included an extended term and it is not possible to remove the split but leave the extended term in place” which is what I am looking for.  Interestingly I’ve never had a reply in writing, only a phonecall from them after writing to them.
> I’ll be very interested to hear if you get a response from KBC or the Central Bank.


Hey,ye I wonder if the central bank will get involved but I doubt it they really should the amount of people it's affecting,I hope you get sorted with them I understand your frustration it's a nightmare trying to get an answer from them as you speak to one person and then you get transferred to another person to get told someone will ring you back.


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## TheGoodTheBad (18 Apr 2022)

0% interest rate sounds great. The only drawback is referring to your credit rating, while it is still referred to as a tranche 2, it may then be noted as (M) moratorium, for the remaining duration of the mortgage. Which can impact ability to get further credit.


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## Brendan Burgess (19 Apr 2022)

OK

I spoke to KBC.  In summary...

1) You have a contractual right to exit your split mortgage at any time. 
2) They have to make sure that you fully understand the implications so they send you a letter recommending that you get independent financial advice and they ask you to sign a letter saying that you understand the implications.

I thought that banks would set any overpayments against the warehouse, but in fact, the banks generally seem to be allocating any overpayments against the active mortgage - which, of course, is much better for the customer. 

In their experience, people want to get rid of the warehouse for the wrong reasons.  People say "I don't want to reach  70 and find myself still with a mortgage hanging over me." 

KBC explains that even still it makes sense to clear the interest-bearing part first.  If you overpay that, it will be cleared well before the person reaches 70. And then they can start clearing down the warehoused part.

The last thing KBC wants, for themselves and for the borrower,  is for a borrower to exit the split mortgage, only to be surprised by the increased repayments and then to fall into arrears again. 

But if you choose to exit the split mortgage, KBC has no choice but to comply with your choice.

Brendan


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