# Two Mortgages one with a tracker



## L... (28 Feb 2012)

Hi guys would appreciate any advice you can give me. My mam has just retired and is hoping to pay off her mortgage but UB is being very difficult and seem to be going back on their word. Her situation is 1st mortgage taken out in 2002 for approx. at a variable rate of 4.75% at the minute approx.

2nd mortgage taken out in 2007, this was a tracker mortgage with an interest rate of 2%. Was advised to take this out over a variable rate

Wants to pay off first mortgage and continue to repay 2nd. Both mortgages were taken out with First Active and when they were taken over all the accounts moved to Ulster Bank.

Mam was told that at any time she could pay off either one of the mortgages, Ulster Bank are now going back on that and say that she must pay off tracker mortgage first. These are two different account numbers but UB claim that the 2nd tracker mortgage was a top up when she states it clearly wasnt.

She has currently requested copies of terms and conditions and is awaiting them. But are the bank right can they demand that she pays of the 2nd first? Sorry if this is long winded but any advice would help.


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## Jazz01 (28 Feb 2012)

Hi,

Seems like that they are chancing their arm... I am in same situation & am overpaying on my main mortgage and not the top up I got 6 years after the initial mortgage... treated as two seperate "loans" so to speak.

Check the T&C v carefully & cross reference against the ones your mom should have from First Active... 

Keep playing hard ball with them... here we have a situation where people are willing to clear mortgages & they aren't making it easy ... it's utter madness & frustrating no doubt...


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## wbbs (28 Feb 2012)

If she has two mortgages on the same property then the one taken out second is most definitely a top up and UB are correct, she cannot pay off the original mortgage first and leave the top up continuing.  The reason is that top ups were done in a different way and did not normally go through a solicitor so the original mortgage is the one registered. They may have separate account numbers, it doesn't matter if they are both on the same property.

What she should do to get around this is pay off a very large lump sum off the original loan, whatever amount is required to leave her monthly payments at say €10 or even less, leaving the term the same which is probably the same as the term on the top up.  This way she will benefit from getting rid of the bulk of the higher rate loan and can continue to pay the top up.    

The bank are not playing games on this and whoever informed her originally that she could clear it and leave the top up was just incorrect, it is an uncommon enough scenario so might be hard enough to find correct info for them especially on a First Active loan.


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## 44brendan (28 Feb 2012)

I would not agree with the last post. Mortgages are not individullay registerd against a property. Banks usually take an "all moneys charge" with the 1st mortgage. This enables them to issue further funds on the same mortgage without any further registration. 
There should be no impediment to her choosing to reduce or clear the 2nd motrtgage, should she wish to do so. The Bank are not in a position to demand that she pays off the Tracker loan first unless this was specifically included as a covenant in her mortgage agreement (unlikely).

She should write to the Bank and advise them that she wishes to fully repay the 2nd loan. In the event that they refuse, she should insist on them providing the basis for that refusal & if necessary consult her solicitor.


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## wbbs (28 Feb 2012)

Yes these mortgages were 'all sums due' mortgages but the top ups definitely were set up in a different way and the policy was that if the original mortgage was paid off the top up had to be too, however the top up can be cleared without the original being paid off.     

As I understood it she does not want to pay off the 2nd loan, it is the first loan granted she wanted to pay off which is what is causing the issue, if I understand it correctly.


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## L... (28 Feb 2012)

Hi thanks so much for the replies so far. 

The two mortgages were on seperate properties. What she wants to do is pay of the first mortgage and then continue to pay off the second mortgage. She understands there may be a penalty with paying of the first one ahead of time and accepts that. When she orginially enquired with UB two years ago they did say this was fine to do as she was orginially thinking of retiring then.


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## wbbs (28 Feb 2012)

Well that makes it very different!   It may now be an issue of the loans being cross secured on the properties.  It gets more complicated now really, did she borrow 100% of the purchase price on the second property using the first as security too?  If so maybe there is some issue with the loan to value on the second property if she clears the first mortgage and basically gets back the deeds of it?   If both are stand alone mortgages on 2 separate properties then I can see no reason why either one cannot be paid off independently of the other.

There should be no penalty for paying off early if it is a variable rate.


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## L... (28 Feb 2012)

At neither time was any of the mortgages secured by the property of the other mortgage but I will double check this out. The first mortgage was 100%, the 2nd ie the tracker mortgage was only €25000 I belive but she is admenant (sp - sorry) it was not a top up. She is waiting to get the T&C back on both of these.


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## wbbs (28 Feb 2012)

There was a minimum mortgage amount of 50k for quite a while so if it was only 25k it is more likely to be a top up.   If you have any of the old documentation the FA top up loans were in account format xxxxxxxxxxx/9201, main mortgages would be /9401

It would also have been unlikely to put someone to the legal expense of taking out a full new mortgage for a figure of 25k and a top up assuming there was sufficient equity in first property would quite possibly have been suggested even if the money was to be used for a separate property, it would have been the more cost effective option.


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## Bronte (1 Mar 2012)

wbbs said:


> If she has two mortgages on the same property then the one taken out second is most definitely a top up and UB are correct, she cannot pay off the original mortgage first and leave the top up continuing. .


 
Not sure this is correct as I had the very same situation, had a mortgage and took out a top up a few years later, then the original morgage ended one year before the top up.

Anyway OP can overpay the original mortgage and they cannot stop her doing this.


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