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I am very confused as to what is happening to my Ulster Bank mortgage and the interest rate I am paying on it – what are my best options for switching and securing a lower interest rate?

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I am very confused about my mortgage. I am a customer of Ulster Bank and on the one hand I have been told not to do anything about the switch although I also need to move my current account and overdraft but my mortgage rate is 3.1% which I believe was a fixed rate , but I’m not sure if it still is.

I have about €135,000 left in 9 years. If I were to move it myself, is it worth it, or will the bank moving it give me a better deal? I am particularly concerned as I see interest rates rising. My brother in law says he is switching to AIB as they have better ‘green’ rates – what should I do?

Ulster Bank is selling its strong non-tracker mortgage book to Permanent TSB, so your mortgage will most likely be assigned to PTSB, who will become your lender. Unlike your checking account, which you have to actively switch because it is being closed, your mortgage stays in place.

You decide whether to stay with Ulster Bank or switch to another lender when it makes financial sense. It is important to understand whether your current interest rate is fixed or floating. 3.1 per cent is a high rate relative to the market and even Ulster Bank’s current fixed rates are lower.

If you have a variable rate you have the option of committing yourself with Ulster Bank and assuming your loan to value is less than 60 per cent you could for example get a 5 year fixed rate of 2.35 per cent or a 7-year rate of 2.35 percent secure 2.8 pcs. If that’s the case currently, you might want to see if there would be a penalty to break out of your fixed contract and commit to one of these lower fixed rates or switch to another lender.

If you decide to make the switch, there are some excellent rates on the market, including the green rates mentioned above, which are available if your building energy rating is B3 or higher and starts at 1.9 percent.

Interest rates are expected to rise in the near future, so now is the time to explore all options.

My father owns a small commercial building with attached flats in a market town in the Midlands which is worth around €225,000 at the latest appraisal.

It takes a bit of work, and given the cost, he’s not sure he should do it – he won’t get credit at his age. The office is rented to a long-term tenant, but the apartment is vacant due to its condition.

My father is now 78 years old and as his only son it is supposed to come to me when he dies but his question (through me) is whether it is more tax efficient or makes a difference if he gifts it now or tests it too me? If it goes to me, could I invest in it now as an owner?

Barry Prendiville of Nolan & Partners points out that the transfer of ownership from your father to you (a lifetime transfer) can trigger a capital gains tax (CGT) for your father and possibly a capital acquisitions tax (CAT) and stamp duty liability for you.

If ownership is transferred on your father’s death, only CAT needs to be considered as there is no CGT or stamp duty.

If you want to calculate your father’s potential CGT liability in a lifetime transfer of ownership to you, you need to determine a base value for the ownership. Depending on the history of the property, this may not be easy.

This also assumes that your father has no CGT loss carryforwards from previous disposals. Since the transfer is between related parties, your father is deemed to have transferred the property to you at market value.

CAT’s liability may arise upon the transfer of ownership to you. This liability arises whether the property is transferred now or upon death and is generally based on the market value of the property at the time of transfer.

CAT liability only arises if you have previously received gifts/inheritances from your parents that exceed your lifetime Group A tax-free threshold (currently €335,000). If this is the case and the annual small gift exemption is disregarded, the CAT liability is calculated at 33 percent of the market value of the property.

Barry advises that any CGT paid by your father resulting from the transfer of ownership to you can be used as a credit against your CAT liability arising from the same transaction. The credit will be limited to the actual CGT liability resulting from the transaction.

Finally, stamp duty arises upon the transfer of the property to you for life. It will be important to establish the market value of residential property as distinct from commercial property, stamp duty of 1 percent is due on the residential portion of the building.

Martina Hennessy is Managing Director of doddl.ie

Email your questions to siryan@independent.ie

https://www.independent.ie/business/farming/farm-property/i-am-very-confused-about-whats-happening-with-my-ulster-bank-mortgage-and-the-interest-rate-i-am-paying-on-it-what-are-my-best-options-for-switching-and-securing-a-lower-rate-41737847.html I am very confused as to what is happening to my Ulster Bank mortgage and the interest rate I am paying on it – what are my best options for switching and securing a lower interest rate?

Fry Electronics Team

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