Wednesday 22 October 2014

Mortgage holders face €330 bill for Ulster Bank blunder

Published 09/07/2014 | 02:30

An Ulster Bank blunder could cost consumers
An Ulster Bank blunder could cost consumers

A blunder by a leading bank has left thousands of mortgage holders facing a hike in their repayments.

Ulster Bank has admitted that it miscalculated the tax relief on 7,500 home loans and will now take the money off the mortgage holders over the rest of the year.

The move to recoup the money will wipe out reductions for the bank's tracker holders from last month's European Central Bank (ECB) cut, the Irish Independent has learned.

Some people are now facing having to repay up to €330 over the remainder of the year after Ulster Bank miscalculated the tax relief they are due.

Huge

Most of those affected bought during the height of the boom and have huge mortgages.

The mess affects people with trackers and those with standard variable and fixed-rate mortgages.

It is just the latest mistake by the bank that has been bailed out by the British taxpayer at a cost of €16bn.

Last year the bank was forced to apologise to 1,300 mortgage holders after making an error calculating their repayments.

And two years ago the bank was unable to process ATM and other electronic payments after a month-long crash of its IT systems across the island.

Now Ulster Bank has been forced to apologise again after getting the amount of tax relief on mortgages wrong for 7,500 homeowners.

Tax relief for mortgage holders was withdrawn in 2013, but thousands of buyers still have the tax break which normally lasts for seven years.

In the 2012 Budget the relief was doubled for those who bought during the boom, between 2004 and 2008.

The higher tax relief is worth up to €2,000 a year for some couples. Banks calculate the amount of tax relief due to borrowers based on the mortgage and the interest paid, and then apply that and recoup the money from Revenue.

Ulster Bank said the miscalculation amounted to around €64 on average for each householder affected. It said it would raise repayments by €16 a month, on average, until December to reclaim the money after giving the 7,500 mortgages too much tax relief in the year.

The bank said: "We are aware of an error in tax relief at source collection earlier this year which resulted in reduced payments from some customers. The issue has been resolved and we have written to customers to advise them of the process. Ulster Bank apologises for any inconvenience caused."

Absorb

It insisted that no customers would go into arrears as a result of the bank's mistake, but did not answer questions when it was put to the bank that it should absorb the loss as it made the error.

One customer said: "We have never missed a mortgage payment. We are Ulster Bank current account holders, who were also affected by their current account fiasco and now this. And because we are mortgage holders they know they have us."

She said bank staff told her 10,000 customers had been affected, but Ulster Bank denied this. Other customers complained that the bank had broken its word to call bank customers to explain what went wrong.

Irish Independent

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