Need for flexibility on mortgage payments

Q&A: I recently took out a mortgage with Ulster Bank with my partner to purchase a property. Neither of us bank with Ulster Bank (my current account is with Bank of Ireland and my partner's with AIB).

We set up a U-First account with Ulster Bank in order to pay the mortgage and other household bills. Both of us have our salary paid two working days from the end of the month into our individual banks (i.e. BoI and AIB) and each transfer a set amount of money into the Ulster Bank account to cover our mortgage payment and other household bills we pay through that account for the coming month.

The problem we have is that we transfer the money from our individual accounts at the end of the month (i.e. when we get paid two days from the end of the month) to the Ulster Bank account and the transfer of funds does not arrive at the Ulster Bank account for three working days. Ulster Bank insists that our mortgage payment is made on the 1st of every month. More often than not we will not have enough time to make the transfer from our individual accounts to the Ulster Bank account and will be left short when the mortgage payment is made.

I have been onto Ulster Bank and they are adamant that they wont change the payment date of our mortgage. Therefore we are somewhat in limbo as to how to have the money in our Ulster Bank account in time to meet our mortgage payment in the 1st of every month.

Do you see anyway around this or have you come across this problem before (other than having both our salaries being paid into the Ulster Bank account, as we would both like to keep our accounts separate and independent)? I'm sure we are not the only people with this problem!

Mr K.B., Dublin

I'm sure you aren't the only people in this situation but it appears you are unlikely to persuade Ulster Bank of the need for flexibility on this issue.

To be fair, they are not alone in setting one or two dates a month on which they draw down items like mortgage payments.

They're not even the only financial institution fixing the first of the month as that date - and, as they assure me, there is no reason to suppose they would not have outlined this to you when you opened the mortgage.

Having said all that, I tend to agree with you that it is a somewhat ridiculous situation. In the first place, in an era of electronic banking, it is ludicrous that the banks still require three working days' clearance for funds being transferred from another domestic institution. The only party among the three involved that does not have use of the cash in this period is you, the customer - and for no good reason.

Further, it beggars belief that when so many people receive payment of salary electronically to their banks towards the end of a month and when increasing competition means that people can have financial products, such as mortgages, with providers other than their main bank, banks should set a drawdown date on the first of the month for taking such payments.

Personally, while I see the logic of a single drawdown date, I can see no reason why that date should not be the 7th - allowing plenty of time for transfers, bank holidays etc.

So what can you do now? Well, the obvious answer is to move your accounts to Ulster Bank but that makes a nonsense of competition and, in any case, goes against your express wishes to retain independence.

You could just switch one of your accounts to Ulster and have the other account feeding into it. Obviously, the account that is moved to Ulster Bank would need to ensure that there are sufficient funds to meet the monthly drawdown but that could easily be arranged through the setting up of an overdraft facility even if, between you, you did not have sufficient financial latitude to arrange it otherwise.

Alternatively, you could switch the mortgage to either of your current banks, both of which appear to offer tracker rates that are at least as competitive as the one you are getting at Ulster Bank. In fact, I am somewhat mystified as to how you ended up with Ulster Bank given current market rates.

A separate option is that you could take a one-month payment holiday, which I understand is allowed under the U-First product, but continue to make your usual monthly payments into the account.

This would have the effect of pre-funding your mortgage obligations almost a month in advance.

I agree it is all a lot of hassle and no way for a bank to prove itself customer friendly but the reality is that, given your respective clout, you are going to have to accommodate the bank and not the other way around.

Paying tax on gifts

How much can a parent give as a gift to his son before he has to pay tax?

Mr G.K., e-mail

Gifts between people fall under the provisions of capital acquisitions tax, as do inheritances. There are a series of thresholds below which tax is not paid and these depend on the relationship between the person making the gift and the person receiving it.

In the case of a gift made from a parent to their offspring, this threshold is currently €466,725.It is worth noting that any gifts received by the beneficiary since December 1991 are taken into account when determining whether the threshold has been breached. Again, the important thing is the relationship between the donor and the beneficiary. In this case, only previous gifts between the parents and the child are taken into account. Any gift, say, from an uncle falls into a different threshold category.

There are a number of gifts that are excluded when calculating liability to capital acquisitions tax. Maybe the most significant one in terms of gifting your son over a period of time is the exclusion of the first €3,000 of any gift received by a particular person from any other specific individual in a calendar year. For instance, your son could receive €3,000 from you this year without worrying about CAT and also receive €3,000 from his mother, uncle, grandparents or a friend without worrying about the tax.

Equally, this €3,000 is not taken into account when aggregating historical gifts. A further important exemption covers the gifting of a property that is the principal private residence of the beneficiary - when they remain in that accommodation for six years following receipt of the gift.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into