Business Irish

Thursday 22 February 2018

NIB may have to refund hundreds of buy-to let investors

Charlie Weston Personal Finance Editor

NATIONAL Irish Bank faces the prospect of refunding money to hundreds of small-time property investors. The bank has lost a string of cases with the Financial Services Ombudsman over moving buy-to-let investors on to higher mortgage rates.

Many of those investors who complained about being moved on to a more expensive variable rate than those with residential mortgages have already been compensated.

Now NIB is likely to have to compensate thousands of other buy-to-let investors and those who borrowed to buy holiday homes.

Yesterday the bank denied that it had moved to unilaterally change the terms and conditions on buy-to-let mortgages.

But consumer advocate Brendan Burgess, of the website, called on the Ombudsman to force the Danish-owned bank to compensate all those impacted and restore investors to the original home-loan rate they took out.

NIB had originally offered all those who took out a mortgage to buy an investment property or a holiday home what it called a "variable rate home loan", with the rate on this described as the "home-loan rate".

A number of investors contacted by the Irish Independent said they had decided to take out their investor mortgage with NIB as it was the only one to offer a home-loan rate, rather than an investor rate, for those purchasing a buy-to-let or holiday property.

Other lenders were charging a premium of 1pc to 1.5pc for investment-property mortgages, said Michael Barrett, of Sligo, one of those who won an Ombudsman case against the lender on the issue.

But in 2009 NIB changed the name of the loan to an "investment mortgage" and applied what it called an investment rate to the mortgage costs.

This new rate was 0.75pc higher than the home-loan rate, a move which meant additional repayment costs of €750 on

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