Q&A: What will happen to my mortgage since Ulster Bank left the Irish market?

I have an offset mortgage with Ulster Bank and they have still not told me what is happening with it since Ulster Bank left the Irish market. It was not one of the mortgage types that moved to AIB or Permanent TSB.

I was wondering if there was any way of finding out what is going to happen to these mortgages.

Mr R.S.

The past year or two must be deeply unsettling for any customer of Ulster Bank – or those with accounts in KBC Bank.

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They keep hearing the bank is closing and that they need to act in moving their accounts. I’ll be honest. I thought all the mortgage loans had been shifted off to AIB or Permanent TSB . . . but apparently not.

So what has happened?

Well, AIB bought Ulster Bank’s performing tracker mortgage book last year. It has since had not one but two “mishaps” with some former Ulster Bank customers.

It’s not hard to see how that might be unsettling for customers.

A second tranche of performing loans was subsequently sold to Permanent TSB and a third group of distressed mortgage borrowings were previously sold to Pepper Finance/CarVal.

Then there are people like you who held offset mortgages with Ulster Bank, which was designed to reduce your interest bill by offsetting funds from your current account to lower the balance on your mortgage account.

I gather that the bank is still getting its head around what to do with these loans. I presume the issue is that no one else in the Irish market now offers a similar product. In fact, Ulster’s offset mortgage book is itself a legacy from its acquisition of First Active Building Society.

You’d hope it would come to a decision soon. It’s obviously a tricky issue as we are now close to a year after the decision on the last of their other home loans was announced.

I am assured they will write to you to let you know the outcome when they have one.

Meantime, you are somewhat in no man’s land. I understand you can apply to top up your loan if you need to. But you cannot switch to a different rate in Ulster Bank, such as a fixed rate, as these are no longer available.

If you want to switch, you’ll need to move banks yourself. And that might be worth considering if you want to retain control of your fate.

The issue for you is that if you do not want to take the risk of finding yourself with Pepper or one of the other mortgage servicing companies from which it might be difficult to switch subsequently, you would need to switch provider now. There is nothing to suggest that is where Ulster will eventually move these loans but, equally, there is nothing to reassure people that they will not.

What is clear is that, aside from paying off your loan, you will have no say in it.

I should mention that, despite the bank’s recurring communications to customers to close and/or move their bank accounts to new providers, you definitely should not do this if you have a current or savings account that is linked to the home loan or you could imperil your offset loan.

The bank does have a page on its website looking at frequently asked question from offset mortgage customers. It won’t give you any more clarity on what will happen your loan but it should reassure you about where you currently stand.