Ulster Bank is to sell a €400m portfolio of what formerly were "offset" mortgages to Dilosk, the owner of ICS Mortgages.
The portfolio is made up of around 4,000 performing residential home loans.
The deal removes one of the final hurdles which Ulster Bank had to overcome as part of it phased withdrawal from the Republic of Ireland market.
Offset mortgages are effectively tracker mortgages with additional features that are linked to current and/or deposit accounts.
While the interest rate tracks the ECB rate with a set margin, the offsetting facility allowed the Ulsber Bank customers to reduce their mortgage interest by using the funds in their current and/or savings account to reduce their loan balance.
They were also able to move money they had on deposit into their mortgage account to reduce the balance and interest, but could also pull back or withdraw the funds up to a limit if they need them.
Last November, Ulster Bank began informing the customers concerned that they would lose the offsetting facility from May 23rd of this year, as part of a plan to try to sell the portfolio.
However, the borrowers were also told they would receive thousands of euro in compensation at the start of the year for the change.
They were also told they would retain the tracker element of the mortgages, which are now to be renamed "Flexible Mortgages", as well as the "pay and redraw" feature, which enables them to reduce interest payments.
Ulster Bank said completion of this sale would remain subject to regulatory approvals being obtained and legal and regulatory protections attached to the mortgage product will not change as a consequence of this sale.
"Today is a significant milestone of our phased withdrawal from the Republic of Ireland as we announce our final loan sale," said Ulster Bank CEO, Jane Howard.
"I am delighted we have reached an agreement with established Irish mortgage provider Dilosk, that will allow customers to avail of the unique features of the Flexible Mortgage product. I would like to extend my thanks to these customers for their custom over the years and for their patience while we worked on a solution for their product."
Ms Howard said the bank will be communicating with customers over the coming months to keep them appraised of progress.
The purchase is a significant win for Dilosk, a non-bank lender which is building market share.
It said the acquisition will be seamlessly integrated into the existing ICS Mortgages business, ensuring continuity of service and terms for all transferring customers.
It added that the acquisition is expected to be completed over the coming months.
"We look forward to welcoming our c.4,000 new customers and assure them of our dedication to meeting their mortgage needs today and into the future with the utmost care and professionalism," said Fergal McGrath, chief executive of Dilosk.
"This acquisition marks a significant milestone for Dilosk and ICS Mortgages as we increase our mortgages under management to c.€2 billion".
