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MORTGAGE INTEREST RELIEF

Permanent TSB has intensified its efforts to end interest-only mortgages for its buy-to-let customers, according to The Sunday Business Post. A number of the bank’s customers received letters in the past couple of weeks notifying them of the changed terms, including a warning that they could lose their tracker-rate mortgages.

“Customers retain their current tracker mortgage rate once they agree to move to interest plus capital repayments or, where they choose to remain on interest-only, they will be charged an extra 1% on their current interest rate,” the bank said.

The bank also said there were no plans for similar moves for homeowners with interest-only mortgages.

Meanwhile, The Financial Services Ombudsman has predicted another jump in the number of complaints about mortgages in the next year. Bill Prasifka said there had been a “sharp upswing” in the number of complaints in the second half of 2010 and there would be more of the same this year.

“It’s quite obvious that complaints about mortgages, payment protection insurance, mortgage protection insurance – products that are directly related to people in financial distress – will, unfortunately, be the largest source of increase in complaint numbers, “Prasifka said.

Issues related to tracker mortgages are an ongoing source of complaint, he said.

“In circumstances where people were on a tracker rate and then elected themselves to go onto a fixed rate, the question then is: what happens when the fixed rate expires?”

Meanwhile, over in The Sunday Times, personal finance editor Niall Brady is advising first-time buyers they risk losing €26,100 in mortgage interest tax relief if they don’t buy this year.

Even if the current wisdom dictates buyers should still hold off in what is still a falling market, the gains may be more than offset by the loss of this relief, which is due to be phased out over the next couple of years.

Couples buying this year can claim tax relief on interest up to €20,000, taking €31,500 from the cost of their mortgages over seven years. If they wait until next year, relief is due to be capped on interest up to just €6,000 over six years, giving a maximum tax break of €5,400.

The phasing out of mortgage income tax relief has been agreed with the European Commission and the International Monetary Fund as part of the four-year austerity plan and is unlikely to be reversed whoever takes power after the election.

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