QI have a fixed-rate mortgage with KBC Bank. My mortgage is being transferred to the Bank of Ireland but I find that their interest rates are higher than my current rate. What does that mean for me? Will my rate go up?
A Consumer protection laws in Ireland mean that the Bank of Ireland is contractually obliged to honor the fixed rate consumers have agreed with KBC, according to Annette Moore, head of mortgages at broker MMPI Financial Services.
Therefore, when your mortgage is transferred to Bank of Ireland, the original interest rate you set will remain the same for the remainder of your fixed rate term. However, once this fixed rate term ends, Bank of Ireland will offer you access to their existing customer interest rates, both fixed and floating.
Bank of Ireland offers the same tariffs to both new and existing customers, Ms Moore said.
You should speak to a mortgage broker about three to six months before your fixed rate expires so you have time to evaluate the alternative rates on the market. If you’ve decided to switch, you can do so in the month your plan expires.
She said that in some cases there is no penalty for switching a fixed rate in the last few months. So the sooner you start the process, the sooner you can lock in the new interest rate.
Q In the 1980’s we bought five acres of land to the west. In the 1990s we built a holiday home that we all use a lot. We have three adult children. Aside from giving them equal shares of that wealth in our will, is there another tax-efficient way to give it to them now?
A Whether you give the property away or leave it to your children in your will, they would have to pay Capital Acquisitions Tax (CAT) if their gift/inheritance exceeds a certain amount, according to attorney Susan Murphy of MakeMyWill.ie Solicitors. A parent can leave each child up to €335,000, she said. Anything above that is taxed at 33 percent.
If you give it away now, they will also have to pay stamp duty on the value of the property.
This is 1pc for residential properties or 7.5pc for non-residential properties. There is no stamp duty on inherited property.
If you are gifted now, you may also have a Capital Gains Tax (CGT) liability as it is a disposal of an asset.
One way to reduce the tax would be to include your grandchildren in the gift/inheritance, if you have any, Ms Murphy said. They each have a CAT threshold of €32,500.
While it may not be practical to list too many owners on the title, if it made sense to indicate that the land in the west was to be sold upon your death, or that land was to be divided between your three children and your children, it could worth considering.
A call to your attorney or accountant would be a good idea to discuss the pros and cons, Ms Murphy said.
Q I recently read an article about how customers who stay with their insurance company longer end up paying more premiums. Then I thought about my home insurance. I haven’t changed it in about 10 years, although I change my car insurance every few years. I usually just automatically renew my policy, but now I’m wondering, am I paying a lot more than I have to pay?
A There is a practice in the insurance industry where loyal customers are charged higher rates than new customers, which People.ie chief executive said was the subject of a recent central bank review with reforms set to be introduced this summer Insurance Paul Walsh.
He said this is dual pricing, which refers to a price difference in the cost of rewards offered to new and existing customers.
This means that longer-term customers are charged more than new customers.
Price walking is the term for automatic increases in home and auto insurance policies year after year simply because a customer has been with that provider longer.
However, Mr Walsh said introductory discounts are a common feature for new customers with many providers.
The best defense against such practices is to look around, never automatically renew an existing policy, and never just take an insurer’s offer as gospel.
It pays to do your homework, Mr Walsh said.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-will-i-keep-my-rate-after-my-mortgage-is-transferred-to-bank-of-ireland-41672373.html Your personal finance questions – Will I keep my interest rate after my mortgage is transferred to the Bank of Ireland?