Mortgage gone up due to TRS.

L

Lydia

Registered User
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25
Hi,
I just have a quick query on my mortgage amount. We took out a mortgage in October 2006 for 331,000 over 35 years on a first year new business rate of 3.95%. Last October we fixed again for another year at 5.3%. We had been receiving the maximum tax relief (two people) but received a letter the other day stating that due to changes in the tax relief in the budget our mortgage is going up from 1427 a month to 1459 a month.
I am not sure how this can be as interest relief went up. I didn't expect to pay any less but didn't expect an increase either.
I know we pay less interest in the second year of the mortgage but when I put the figures into jeacle it looks like we are only paying about 500 less interest than last year. Would this lead to a 32 euro a month increase?
Before I ring the bank to query am I missing anything glaringly obvious??

Thank you so much!!!!
 
how would a change in the budget make your mortgage go up if it was fixed rate? i would call the bank and get them to explain it to you clearly. call the revenue and check your trs is correct also.
 
That rate is with PTSB and is actually 5.35%.
We fixed for the year as we are getting married in August and needed to be sure of what we were paying out. I am going to look into switching in September just before the fixed rate is up. Its only a 92% mortgage though (probably more now because the value of our house has gone down) so I don't have much negotiation with LTV rates etc.

Thansk for the replies and the link to the othher thread. Am going to ring the bank later.
 
Hi,

I checked my bank statement yesterday and realised my mortgage payment went up also albeit by a few Euro. I'm on ECB tracker with UB. I called them to enquire why it had gone up. The guy I was talking to was clueless. He said "it's to do TRS and it's not the bank's problem and to contact the revenue" This was not the response I wanted to hear. If you are providing a service to your customers at least employ somebody who knows what they are talking about. Surely if TRS was increased I would see a reduction, certainly not an increase.
 
darkdays said:
I could be way off here, but the something similar happened me this month and I discovered that 2000 (i Think) counted as 2 tax years and my period as a first time buyer is now expired and the ceiling on my relief has been dropped. Would it be this?
Click to expand...
You should have 7 full years or 7 x 12 = 84 months of FTB TRS as far as I know.
 
I could be way off here, but the something similar happened me this month and I discovered that 2000 (i Think) counted as 2 tax years and my period as a first time buyer is now expired and the ceiling on my relief has been dropped. Would it be this?
Click to expand...

I think that TRS is calculated over 7 tax years (same as calender years) rather than 7x12 month periods. There for e.g. someone who took out a mortgage on 1st October 2007 would only be allowed claim for 2007, 08, 09, 10, 11, 12, 2013. They lose the relief on 31st December 2013 rather than 1st October 2014 (84 months).

Also remember that there was a 9 month long tax year in recent years when Revenue switched over from April 1st to March 31st tax year to Jan 1st to Dec 31st tax year. And two tax years ended in the same calander year during this change over - one ending on March 31st 200X and the other ending on December 31st 200X (having started on 1st April 200X).
 
csirl said:
I think that TRS is calculated over 7 tax years (same as calender years) rather than 7x12 month periods.
Click to expand...
See here.

If it was calculated on tax years only then anybody who happened to span the short tax year during the transition to an aligned tax and calendar year would be penalised compared to those who did not. I doubt that this is the case.
 
If it was calculated on tax years only then anybody who happened to span the short tax year during the transition to an aligned tax and calendar year would be penalised compared to those who did not. I doubt that this is the case.
Click to expand...

Its possible that there was a special clause put in the legislation during the changeover to prevent these people from losing out - would need to check the Finance Act for that particular year.
 
OK - maybe I'm wrong so...

[broken link removed]
The higher limits for first-time buyers, apply for the tax year in which the mortgage is taken out plus six subsequent tax years.
Click to expand...
 
Ok, I am gonna give my two pence if I may.

Am gonna work on an example,

Someone who drewdown down their mortgage in Aug 07 and claimed tax relief would receive a full year's tax relief in those five months.

Entering into a new year 2008, their tax relief is calculated over the twelve months which would reduce their TRS and increase their mortgage repayments.

That's my understanding of it, hope it makes sense.

Where are those people in the Revenue who can answer these questions...?... :)
 
Ok, I am gonna give my two pence if I may.

Am gonna work on an example,

Someone who drewdown down their mortgage in Aug 07 and claimed tax relief would receive a full year's tax relief in those five months.

Entering into a new year 2008, their tax relief is calculated over the twelve months which would reduce their TRS and increase their mortgage repayments.

That's my understanding of it, hope it makes sense.

Where are those people in the Revenue who can answer these questions...?... :)
Click to expand...

This sounds correct. In 2007 they got 1/5th of the annual relief each month, in 2008 they only get 1/12th of the annual relief each month.
 
My Two Cents;


As the TRS is calculated against the interest paid in that year.

You mightn't get near the maximum tax relief in that first short year, thus you would have got relief on all of the interest paid.

while in the 2nd year if your total interest over the year is above the maximum allowable for relief (€20000 for a married couple both FTB) You will get interest relief on that amount (~333€ a month) but no relief on any interest over this.

Thus, your mortgage will go up to pay off this interest with no tax relief on it.
 
My Two Cents;


As the TRS is calculated against the interest paid in that year.

You mightn't get near the maximum tax relief in that first short year, thus you would have got relief on all of the interest paid.

while in the 2nd year if your total interest over the year is above the maximum allowable for relief (€20000 for a married couple both FTB) You will get interest relief on that amount (~333€ a month) but no relief on any interest over this.

Thus, your mortgage will go up to pay off this interest with no tax relief on it.
 
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