€1,000 payout for Ulster mortgage holders
ULSTER Bank mortgage holders who bought at the height of the boom are in line for payments of up to €1,000 each off their mortgages after the lender messed up.
This is because they qualify for extra tax relief granted in the last Budget to such buyers.
The payments will have to be backdated because the bank has been unable to process the full amount of the new higher reliefs almost a year after the Government announced the measure.
Ulster Bank is the last lender to get its systems updated to pay the new relief because the summer-long IT collapse has caused massive problems for the lender.
The payout is worth up to €166 a month, and has been granted to the "negative equity generation" after being promised in the last Budget.
The almost year-long delay at Ulster Bank in paying out the higher relief will mean a lump sum of €996 will now come off the mortgages of those home loan holders who qualify.
Ulster has been paying some of the extra tax relief, but has been unable to get its systems to cope with the full higher rate. It now hopes to finalise the higher-relief payments by the end of the year.
Finance Minister Michael Noonan said in the Budget the amount of mortgage interest that qualifies for tax relief has risen from 20pc to 30pc.
In the meantime, Ulster Bank has been giving the "negative equity" generation an interim mortgage relief rate of 25pc.
The extra 5pc of relief is worth a maximum of €1,000.
The bank said: "Ulster Bank is liaising closely with Revenue to implement TRS ( tax relief at source) changes for our eligible mortgage customers as soon as possible.
"We are making arrangements to reimburse the shortfall to all eligible customers before end of 2012 and to put the 30pc rate permanently in place from early 2013.
"Payments will be brought up to date via a single credit to eligible mortgage accounts. The amount that each eligible customer will receive is dependent on their personal circumstances."
The move by the State to pay out €52m in additional tax relief, which will be paid out each year, will provide some breathing space to the thousands of people who bought at the height of the market.
The Budget increase in mortgage interest relief was supposed to be applied from the start of January last for the 270,000 people who bought houses between 2004 and 2008. Most banks took a while to program their systems to be able to calculate the new higher mortgage tax relief.
The money is forwarded to the lender from Revenue, with amount paid based on the interest being paid on the mortgage.
Mortgage interest relief is paid using the "tax-relief-at-source" system, so that the banks can reduce the mortgage repayments by the correct amount.