Jill Kerby

How to reach the heights with your summit funds

MD writes from Dublin: I have two EBS Summit Funds, one is Mutual, the other is Investment. Both funds are in Growth. What is a Mutual fund? What is difference between Mutual and Investment funds? Q3: Which is the best to be in?

A ‘mutual’ fund is another description of a pooled, unitised investment fund that people with a regular amount of money or a lump sum can purchase that is then managed on your collective behalf by professional fund managers.  In your case, Irish Life Investment Managers (ILIM) manages the Summit Funds on behalf of the EBS. 

There are four EBS Summit funds - Summit Balanced, Global Leaders, Growth and Technology, each one targeting a different group of sectors, assets and geographical areas. They also represent different degrees of risk. You need to double check in which fund or funds your money is invested, but the Summit Growth Fund includes a wide range of global consumer goods and services, mostly located in Europe and the USA. 

I suggest you speak to an independent, fee-based financial advisor about your holding.  Better-late-than-never this person can properly explain to you exactly what it is that you have bought, how much the investment is now worth and whether the fund (s) are suitable for your needs. If it isn’t, the advisor will be able to present you with other options.

NJ writes from Dublin: Last year I purchased shares in a French company listed on the Paris stock exchange. On receipt of my dividend from the Irish broker I discovered that both French tax of 27% and Irish tax of 20% had been deducted. Can I apply for an exemption for either of these deductions?

On your annual Form 11 income tax return you will be asked to record the gross dividend you were paid by this company, the French withholding tax and the Irish "Encashment’ tax, says Barry O’Donnell, a director of Foreign Tax Returns Ltd, a Dublin tax services company.

“There is a complex formula used in order to work out whether a further credit is due in Ireland in respect of the French withholding tax already suffered on the dividend,” says O’Donnell. “But you will be able to claim a full credit against your tax liability for the Irish encashment tax paid by your broker on the receipt of the dividend. If you have no tax liability you will be given a full refund of the encashment tax.”

A tax advisor can help you correctly claim a refund.

JC writes from Dublin: I have a cash offer of €160,000 on my house, my principal private residence. I owe Bank of Scotland €113,000 on a tracker mortgage with a 21 year remaining term. The interest rate is 0.6% above the ECB rate, or 1.6%.

I am wondering if the bank will settle for less than I owe them to clear this mortgage, which I believe is unprofitable for them. If you believe they will, what should I offer them? I didn’t talk figures but they have asked for my offer in writing. I realise it has to be an attractive offer to them as well as for me.

The banks that have a particularly heavy exposure to tracker mortgages – like Bank of Scotland Ireland, the PTSB and Bank of Ireland, are certainly keen to get these loss-making mortgages off their books and to put their customers onto better value (for the bank) standard variable rate ones for the duration of the loan terms.

If you were offering to trade in your tracker in exchange for an standard variable rate (SVR) mortgage, you might be able to convince them to give you a very competitive interest rate or maybe even write-off part of your outstanding balance, but Karl Deeter of Irish Mortgage Brokers in Dublin is not very optimistic the bank will do so once they find out that you already have a buyer for your property.

“If your reader had a bank account full of cash ready to clear the loan, that might be one thing. But if they find out there is a buyer, which they will because you can’t show them the cash upfront, then they will likely refuse. The bank will probably be of the view that they don't really need to give a discount to someone who is going to sell anyway.”

“Still,” says Deeter, “there’s nothing to lose from trying.”  Good luck.  

SC writes from Galway: I have a question about fire brigade charges for domestic homes: is there a specific levy on insurance policies of 1.5% for fire charges, which is not being passed onto local authorities?  Also, imagine my shock upon checking my home policy and finding out that I'm only covered for €1,500 (buildings and/or contents). This is totally inadequate cover for any standard sized domestic home. If I had a domestic fire incident, then two fire brigades would be likely to attend that's €460 x i2 = €980 and God forbid the incident wasn't dealt with within 60 minutes, the bill would rocket to €1,840! Surely it is in the insurance company’s interest to have realistic fire brigade cover considering their action and professionalism would minimise the size of the insurance claim.

It is not correct, says Sean O’Connell of the Insurance Shop in Fairview, despite such a claim last year by Dublin’s Lord Mayor, that insurers designate a 1.5% of the buildings insurance value to the cost of fire brigade call-outs. Some home insurance policies simply state that they will cover the cost of valid claims for call-outs, “without specifically stating the amount or a ceiling, while others will indicate the amount they cover.” he says.  Royal Sun Alliance, for example, fall into the former category, says O’Connell, and Zurich Insurance, the latter with a €1,500 payment limit.

“The best thing to do is to always check the contract carefully,” for exactly the reason you state: a large fire with multiple fire tenders could leave you with a very large bill and a much higher renewal premium the next year.