Key Post UB left many borrowers on interest-only; now want full repayments ; 4 options letter

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whyme

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Hi

We borrowed to build a holiday home in 2006. €230,000 on ECB + .85 with Ulster bank. Now worth about €130,000.
Received a letter on Friday stating that this loan should have reverted to capital and interest 18 months but due to an error within the bank it was over looked.
Problem is the arrears are now nearly €16,000. we have been given 4 options.

1. Repay the full arrears and revert to making full payments as before.
2. Pay full amount for now on over the original period.
3. Extend the original term, but they have not said by how much.
4. get an interest free loan for the €16,000 over a max ten year period and pay the original mortgage as it should be along side the interest free loan.

Problem is, we have been paying the interest up until now with no arrears but due to there only being one income in the house and having no savings it is a bit of a problem.

What do the contributors feel is the best course of action in dealing with the bank on this issue.

We also have our home mortgage with UB which is not in arrears.

Many thanks or any advice given
 
You have got a great deal from Ulster Bank, so far. They unwittingly extended your interest-only period by 18 months. Why did you not pick up this error yourself? Whatever about a home or an investment property, it is questionable whether you should be using an interest-only mortgage to buy a holdiay home.

UB has offered you a really great deal to fix this. The ten year interest free loan is great, but as the rate is ECB +.85% anyway, maybe one of the other options is best.

Extending the original term is the option which will reduce your repayments by the biggest amount.

However, as I have said, as this is a holiday home, you need to think whether it is appropriate to have borrowings on it at all.

due to there only being one income in the house and having no savings it is a bit of a problem.
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Maybe you can't afford a holiday home on only one income. You probably should sell it and reduce the mortgage. If you do so, ask UB for a discount to reflect the fact that you are paying a lump of cash off a cheap tracker, early.
 
Can you or can you not pay the full mortgage (capital and interest)?

In relation to your 4 options, that which costs the least is what you should go with.
 
Thank You Brendan and Bronte for your reply's

No, we cannot pay the C&I. We can just about make the interest.

There is no particular reason for not noticing that capital was due other than the ostrich type scenario.

Brendan in relation to your last sentence, are banks doing deals on BUY TO LETS. I have not heard anything to this effect. I called an acctioneer earlier and they said that it could sell in the region of 110K-120K and that they are carrying out valuations for the same reasons as myself. Banks seem to be requesting them.

Getting rid is my preferred option, should I contact the bank on the helpline provided or put my case in writing? what sort of information do they require.

Thanks
 
They are not doing deals, but I think you should ask for one anyway. You might be able to get something in return for their admin error.

Brendan
 
I dont follow this. Its also hard without seeing all the documentation.

If interest has been paid, then the capital has not. Wheres the €16,000 coming in and why is there borrowings being suggested? Are UB asking for you to 'borrow' €16k and is that to be credited to the mortgage bringing it to 214 (230-16) as thats what it would have been?

I think what I would be looking for is:

- As Bank made mistake cancel out arrears;
- a further interest only period
- extended term
- then begin repayments
 
WidardDr

The 16K is the capital that should have been paid over the 18 months to now
UB simply forgot about us until now.

In this situation is it possible to have the 16K written off???
 
Sorry WidardDr, I didn't fully comprehend your post.

Yes the 16K will come off the 230K leaving 214K if paid in a lump sum.
 
Problem is the arrears are now nearly €16,000.
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Hi whyme

These should not be appearing anywhere as arrears. I presume you are using the expression "arrears" loosely. You are not in arrears and you must make sure that UB don't classify you as being in arrears as it would affect your credit rating.

They will not, and should not, write off the €16k.
 
Brendan Burgess said:
They unwittingly extended your interest-only period by 18 months. Why did you not pick up this error yourself?
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Did Ulster Bank tell you that the interest only period would expire after 5 years?

I ask because we weren't told that until the 5 year period was up - when we took out the mortgage we were told the interest only was for as long as we wanted and could pay off lump sums when we could (self-employed with very variable income).

From talking to their marp call-centre (which would drive you to drink) we are not unusual in this.

I would agree that the solutions they are offering are decent, but if you were sold a life-time interest only mortgage to be repaid on sale of the property then I would suggest fighting it.
 
Brendan Burgess said:
Hi whyme

These should not be appearing anywhere as arrears. I presume you are using the expression "arrears" loosely. You are not in arrears and you must make sure that UB don't classify you as being in arrears as it would affect your credit rating.

They will not, and should not, write off the €16k.
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Hi Whyme,

Can you confirm if the bank are classifying the capital payments of 16K as arrears or is it a case as Brendan suggests above,

fear peile
 
Sorry I am using the phrase "arrears" incorrectly. I am not sure of what phrase to use in this instance maybe "uncollected".

No Mrs Vimes I was not sold a pup in that regard. My mortgages paperwork clearly states that after 60 months the repayments will revert to C&I.

Now with the latest Croke park 2 talks it looks like the household income will be down by a further 5.5%.
 
Right, I spoke to the bank today. turns our we are not the only people that this has happened too. It seem to be a bit of a problem at the moment within UB.

In fairness the guy on the phone could not have been more helpful and pleasant to deal with.

If we cannot avail of one of the 4 offers they are looking to put us on a further 12 months interest only but are looking for a SFS to be filled in first. I have read on other posts that it is being recommended that these are not filled in.
Does anyone have a reason for this?

The SFS is not a legal document i am told. or am i wrong.
 
whyme said:
Thank You Brendan and Bronte for your reply's

No, we cannot pay the C&I. We can just about make the interest.
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Regardless of whether or not you submit an SFS I can't see the bank running to repossess if you are making interest payments and have €100k of negative equity. Can this property be rented out for some months of the year - maybe short term lettings during the summer/autumn ?
 
It appears that Whyme is not alone and that Ulster bank have again made an enormous mess for people. 1300 people so far that we know about.


Whyme - you have stated that you cannot afford to pay any more than interest only and therefor the 4 options put to you by Ulster bank are pointless.

What do you think of selling the property and paying off the NE at the same rate of interest and term that you have now. Would that be a good option for you. You could discuss it with UB and see what they say.

In relation to the arrears - this should not cause you any extra interest. So I imagine based on the bad publicity they will be open to a bit of negotiation on this, maybe allowing you to pay it back interest free over a longer term.

I see no reason not to fill out an SFS. All you're doing is listing your income and expenditure. It's in your best interest that the bank know what you can and cannot pay and for this you need to help them get the information.
 
Thanks Bronte,

Yes, there seems to be a large number of people in a similar position. the papers have reported that the issue is with First Active morgtages which went over to UB. This was not the case for us, we were always with UB and have never been involved with FA.

We are looking at all options, sale of property but the short fall would be significant.

Renting out but due to location its only attractive in summer months but this has proved unsuccessful in the past.

Yes the 16K is to be paid back interest free over a max of 10 years.

From my chat yesterday with the bank which i stated in an earlier post was very informative they seem open to hearing another option which suits the individual.

Before UB sent the letters the regulator was informed and the options offered are as a result of this
 
whyme said:
From my chat yesterday with the bank which i stated in an earlier post was very informative they seem open to hearing another option which suits the individual.
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Well this is good news, the bank is being helpful and informative and appear open to negotiation. That may or may not mean they will be willing to write off some debt or come to some other mutually agreeable arrangement. Will probably be dependant on what your income is, but also your assets. The worse your situation the more likely they will be to 'ease' your repayments.
 
Thanks username - just remembered that my last UB statement included Interest and Capital details.
 
I got one of these letters also but my problem is slightly different.

Interest only with €240K owed, house currently rented for €750.00 per month.
I would like to stay on interest only as i have considerable other assets and cash to hand which wouldn't look pretty on the SFS form.

If you do not engage with them in relation to the SFS what would the outcome be?

I don't mind paying some capital but lets remember we investors did not buy in order to pay back the capital and the banks know that. The plan was to dispose within 5 years but unfortunately like all good ideas that got screwed up.
 
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