Now you can move house and keep your tracker

cork_south

http://www.independent.ie/business/personal-finance/property-mortgages/now-you-can-move-house-and-keep-your-tracker-3063196.html

HOMEOWNERS who have a tracker mortgage will be able to move home and keep their valuable tracker rate.
Ulster Bank is set to launch the radical new offering today in a move that is likely to be replicated by other lenders.
It is the first time a lender in this market will allow a homeowner to retain a tracker, sometimes described as more valuable than a gold bar.
The new lending arrangement will allow borrowers to transfer the outstanding balance of their existing tracker mortgage to their new home, while financing the remainder of the purchase price with a mortgage at an agreed interest rate.
If the new offer takes off, it could blow open the mortgage market, where lending is at a 40-year low.
At the moment the "tracker trap" means that those who have a good value tracker mortgage are reluctant to move to another property because the tracker rate will be ended.
Some of those on trackers have lending rates as low as 0.5pc about the European Central Bank.
This means they are paying as little as 1.5pc.
Homeowners who have to give up a tracker are forced to take up a variable rate loan, where the rates as as high as 5.19pc.
The new offer will also allow those who are in negative equity -- where they borrowed more than their home is now worth -- to move home and keep the tracker.
It comes weeks after this newspaper revealed that Bank of Ireland and Permanent TSB would allow those in negative equity to take the negative equity portion of their loan onto a new mortgage. But these lenders do not allow those taking up the offer to keep their trackers.
Now Ulster Bank is set to let those who have tracker either trade up to a bigger mortgage and larger house, or trade down to a cheaper property.
One source close to the bank explained that if a family has a €300,000 mortgage and need to move to a larger home worth €500,000 they will be allowed to transfer the existing tracker loan to the new property.
The extra €200,000 needed to buy the new home will be borrowed at Ulster Bank existing variable rate of 3.9pc.
Only those on good incomes and those buying a good value property will qualify for the deal.
Profits
Banks are losing money on tracker mortgages. But a deal where someone was repaying a mortgage with both a low tracker rate and a higher variable rate would mean profits for Ulster Bank from the variable portion of the loan.
The deal would also help stimulate the property market. At the moment homeowners are reluctant to move because they do not want to lose a low-priced tracker.
Property prices have been falling now for five years. On Monday the Central Statistics Office said prices were down 49pc, but others have put the fall from the peak of the market at closer to 60pc.
The ongoing falls in home prices have frightened potential first-time buyers and mover purchasers out of the market.
This is despite the Government attempting to stimulate the market with generous tax breaks for new buyers who purchase before the end of the year.
- Charlie Weston Personal Finance Editor
Irish Independent

Zamboni

Thanks but I'll wait until I can see the detail from Ulster Bank.
I hate Charlie Weston's use of the English language.

daltonmd

I can't see how this will "blow open the mortgage market", I think that's wishful thinking on Charlies part.

Let's say I own a house that I bought for 200k on a tracker, I sell it for 100k, carry the 100k at the tracker rate and even if I buy a new house for 100k - my repayments could be 300 or 400 euro more per month.

The reason more people aren't in trouble is because of the trackers. Adding more debt to that is really going into dangerous territory.

touts

Well the bailed out banks (Permanent TSB, AIB, BOI) are about to dump their trackers into the IBRC (formally known as Anglo) so Ulster bank have to do something radical with their trackers or be forced out of the market. To be honest even with terms and conditions the Ulster bank tracker holders could still be better off as IBRC will view the tracker holders as a liability just like the developers. They won't be interested in good customer service or stuff like that. They are glorified debt collectors and all they care about is getting their money back.

seamus

More info here:
http://www.rte.ie/news/2012/0328/mortgage.html

Only available to existing UB customers with no arrears. And, I suspect, with a fairly healthy cashflow and absolutely no missed payments in their history.

It makes sense from their point of view. Lending is a money-maker for them, so they need to encourage it. A direct move from tracker to full rate might not be feasible for someone, but retain part of their tracker, will allow them more flexibility.

It's win-win for the bank as they get to change, for example, a 200k tracker, into a 200k standard variable + 100k tracker.

As pointed out though, the main issue is the number of customers in a position to realistically take one of these mortgages.

Sarn

If I heard correctly on the radio, you have to be in positive equity for this option.

daltonmd

Sarn wrote: »

If I heard correctly on the radio, you have to be in positive equity for this option.

Would you need it then though?

daltonmd

daltonmd wrote: »

Would you need it then though?

There are more than a few folk out there who bought at the right time, are still on decent cash and who are on trackers who for €100,000 or so could move to a much nicer house that would suit them and who really don't want to lose the benefits of there tracker at all.

It's a minority but they are out there

daltonmd

RoverJames wrote: »

There are more than a few folk out there who bought at the right time, are still on decent cash and who are on trackers who for €100,000 or so could move to a much nicer house that would suit them and who really don't want to lose the benefits of there tracker at all.

It's a minority but they are out there

What I mean is that the biggest obstacle, in my opinion, stopping people from moving is negative equity - not the loss of the tracker per say. If you are in positive equity and want/need to move somewhere then if you can, without carrying NE with you, granted for a couple more % points (which you can always negotiate with the bank, they would be more than willing) then it's not really aimed at you, is it?

Let me add - people can't have it everyway - if you signed a tracker and are now in a position to trade up/move then you can't really expect to keep the same tracker on a new mortgage?

Well if I was in positive equity and fancied trading up as they say, keeping my tracker and perhaps €200 in my pocket would appeal, that €200 can go towards the new mortgage on the variable rate. It's defo an incentive.

The negative equity problem is a huge issue.

If you can afford to move and can also keep your existing outstanding amount on the tracker rate you're on now it's defo an incentive.

Helping those who can is easier and more fruitful than helping those who can't, at the end of the day the banks want to make money with little risk

daltonmd

RoverJames wrote: »

Well if I was in positive equity and fancied trading up as they say, keeping my tracker and perhaps €200 in my pocket would appeal, that €200 can go towards the new mortgage on the variable rate. It's defo an incentive.

Yes but here's the thing - I rent and would like to buy a home at some stage - where's my tracker? Where's my low interest rate for a portion of my house purchase? If you have a home, that's in positive equity (I'd love to see the stats on that from somewhere) you now have yet another advantage over me. I think there's something very unfair about that scheme.

RoverJames wrote: »

If you can afford to move and can also keep your existing outstanding amount on the tracker rate you're on now it's defo an incentive.

If you can afford to move, are in positive equity, can pay your mortgage no problem - why give you a leg up? (Obviously not you personally!!)

RoverJames wrote: »

Helping those who can is easier and more fruitful than helping those who can't, at the end of the day the banks want to make money with little risk

But they're not the ones who need help. It's those in NE, it's FTB's, renters.

Let's say you have a 200k home with a 150k mortgage on it and you want to trade up - you get 150k on your tracker of say 2.5% - and let's say I want to buy that home - I'm going to be subsidising your tracker. Why should I?

I'm all for helping those who need it (See repossession thread) but this isn't the bank handing out fair practice - this is literally passing your debt onto me - there aint no favours being done here. Except of course to those who are not in trouble.

Iago

daltonmd wrote: »

Yes but here's the thing - I rent and would like to buy a home at some stage - where's my tracker? Where's my low interest rate for a portion of my house purchase? If you have a home, that's in positive equity (I'd love to see the stats on that from somewhere) you now have yet another advantage over me. I think there's something very unfair about that scheme.



If you can afford to move, are in positive equity, can pay your mortgage no problem - why give you a leg up? (Obviously not you personally!!)



But they're not the ones who need help. It's those in NE, it's FTB's, renters.

Let's say you have a 200k home with a 150k mortgage on it and you want to trade up - you get 150k on your tracker of say 2.5% - and let's say I want to buy that home - I'm going to be subsidising your tracker. Why should I?

I'm all for helping those who need it (See repossession thread) but this isn't the bank handing out fair practice - this is literally passing your debt onto me - there aint no favours being done here. Except of course to those who are not in trouble.

How is this passing a debt onto you? Will you be expected to pay for the additional mortgage amount?

You will be offered a mortgage at a rate of interest, that rate of interest may be higher than you would like but then you don't have to take the mortgage. Nobody is being forced to do anything.

In reality this is no different than the various LTV offerings that are in the market today.

If you take a loan that's worth <50% of the property you get a better rate than if you take a loan that's worth >50% of the property.

All they are doing is ensuring that your next mortgage is with them, and to do so they are offering a reduced price on a portion of that mortgage.


~~~~

Incidentally the 3.9% doesn't really apply, it's actually 4.95%, you only get the reduced rate if you sign up to private banking and the fees associated with those accounts.

seamus

Sarn wrote: »

If I heard correctly on the radio, you have to be in positive equity for this option.

It appears you're correct:
http://www.irishtimes.com/newspaper/ireland/2012/0329/1224314050944.html

A nice incentive I guess, but very few people will be able to avail of it. At a guess I would imagine that nearly every tracker mortgage was taken out in the last ten years (when were trackers first offered?) in which case a sizeable number, if not the majority of those on tracker mortgages are also in negative equity.

Though the article does say that UB are in negotiations with the central bank about offering a similar deal to bring negative equity across.

If you can afford to move, are in positive equity, can pay your mortgage no problem - why give you a leg up?

They're basically trying to get people in the door looking to borrow. Presumably they've done some research and found that for those with trackers in positive equity, current lending rates and the loss of the tracker are a significant barrier to moving house.

okedoke

cork_south wrote: »

sometimes described as more valuable than a gold bar.

This is how a 5 year old would describe something really valuable

daltonmd

Iago wrote: »

How is this passing a debt onto you? Will you be expected to pay for the additional mortgage amount?

No - but I'll be subsidising the old mortgage amount, which is still at a tracker rate.

Iago wrote: »

You will be offered a mortgage at a rate of interest, that rate of interest may be higher than you would like but then you don't have to take the mortgage. Nobody is being forced to do anything.

Variable/fixed rate customers are being charged higher interest rates because of the amount of trackers in the banking system - this is part of the banks problem.

Iago wrote: »

In reality this is no different than the various LTV offerings that are in the market today.

Which are high because of the amount of trackers - they have to get the money elsewhere - from new customers.

Iago wrote: »

All they are doing is ensuring that your next mortgage is with them, and to do so they are offering a reduced price on a portion of that mortgage.

All they are doing is ensuring that everyone else pays more to subsidise tracker mortgages.

Put it this way - let's say you have two buyers purchasing the same house for 200k. One is trading up under this scheme and the other a FTB the repayments for the FTB is €1,043.29 yet the repayments for the trader up is €844 - for the same mortgage?

I've used 3.5% fixed for 2 years for the FTB and 2.5 on 100k and 3.5 on the other 100k for the trader upper.

killers1

I think there's a point being missed here. There is no new funds being issued at tracker rates. The tracker portion of the new loan being transferred to the new property is an existing exposure to the Bank and is covered by the sale proceeds from the existing property. The bank don't have to fund that element by purchasing the monies themselves. The bank then have the opportunity to lend the remaining balance needed at their more expensive SVR which will go some way towards offsetting the losses they are currently facing on the existing tracker element.

Talk of this being unfair to renters as they are subsidising the new mortgage is incorrect in so far as they are subsidising no more than they would if this option didn't exist and the borrower remained in their current property on their current tracker mortgage.

Iago

daltonmd wrote: »

No - but I'll be subsidising the old mortgage amount, which is still at a tracker rate.

Variable/fixed rate customers are being charged higher interest rates because of the amount of trackers in the banking system - this is part of the banks problem.

Which are high because of the amount of trackers - they have to get the money elsewhere - from new customers.

All they are doing is ensuring that everyone else pays more to subsidise tracker mortgages.

Put it this way - let's say you have two buyers purchasing the same house for 200k. One is trading up under this scheme and the other a FTB the repayments for the FTB is €1,043.29 yet the repayments for the trader up is €844 - for the same mortgage?

I've used 3.5% fixed for 2 years for the FTB and 2.5 on 100k and 3.5 on the other 100k for the trader upper.

First, mortgage rates are still very very low. Somewhere between 9-12% would be a norm, people who think that todays rates are high are in for a big surprise before the end of their term.

Second, it's not the same mortgage. It's a different mortgage, no different to taking one of the other options from the same bank or indeed a different bank.

Lastly, you're "subsidising" no more than you would be if that person didn't move. In fact you're "subsidising" less if a lot of people take up this offer as they will be "subsidising" themselves by taking the additional money at a higher rate.

The whole notion of subsidising is ridiculous anyway. The banks wouldn't drop the rate even if the trackers didn't exist, it's just a convenient message for them to flog to the public.

daltonmd

Iago wrote: »

First, mortgage rates are still very very low. Somewhere between 9-12% would be a norm, people who think that todays rates are high are in for a big surprise before the end of their term.

Absolutely spot on - mortgage rates are way too low in this country - do you think that will last? One of the big issues is trackers. If you have a tracker on a loan for a property and you can move then you should lose your tracker and pay market rates. Yet you see no issue in these trackers being extended? Seriously?

Iago wrote: »

Second, it's not the same mortgage. It's a different mortgage, no different to taking one of the other options from the same bank or indeed a different bank.

No it's not the same mortgage - so it's not the same loan. If a bank can pull your tracker if you rent out your home and that's deemed unfair - yet they can change the rules which "appear" to suit an individual, when really they are prolonging a loss making product and making money off that customer - then that's ok? That's double standards.

Iago wrote: »

Lastly, you're "subsidising" no more than you would be if that person didn't move. In fact you're "subsidising" less if a lot of people take up this offer as they will be "subsidising" themselves by taking the additional money at a higher rate.

No - you are still subsidising it and the buyer of that property is.

Iago wrote: »

The whole notion of subsidising is ridiculous anyway. The banks wouldn't drop the rate even if the trackers didn't exist, it's just a convenient message for them to flog to the public.

The banks are haemorraging because of the trackers - what would be fairer for everyone if they bought out the existing tracker particulary of those in NE (a writedown if you will) and allowed them to carry part of the debt.

This is yet again intervention into the property market. It's the wrong solution targeted at the wrong problem.

killers1

People are reading too much into this product and what it is designed for. This is not a solution to an arrears problem, a negative equity problem, a housing market problem and people should stop analysing it as such.

This is simply a product introduced by a lender with a large tracker loan book that cannot afford to compete rate-wise with the likes of AIB & BOI in attracting ftb's to borrow from them. In terms of new lending there is very little being issued by them. This is an attempt by UB to find a way to lend new money at their expensive SVR rate to existing tracker mortgage holders. End of.

k123456

Hi Looking for some advice please re Uls Tracker

We are in Positive Equity and no arrears

We have a tracker, and want to buy a bigger house, we have savings , which would cover the bigger house, the plan was to sell smaller house (Tracker on this house) and bank the proceeds , sale value less outstanding mtg amount

We are thinkng, can we transfer the tracker to new house, without taking out an additional mtg

If it is a stipulation, that an additional mtg is taken out, what is the minimum additional mtg, we would need to take out

Can we redeem , pay off the additional mtg, ideealy sooner rather than later, leaving us with our tracker only (on the new house)

Thanks

killers1

k123456 wrote: »

Hi Looking for some advice please re Uls Tracker

We are in Positive Equity and no arrears

We have a tracker, and want to buy a bigger house, we have savings , which would cover the bigger house, the plan was to sell smaller house (Tracker on this house) and bank the proceeds , sale value less outstanding mtg amount

We are thinkng, can we transfer the tracker to new house, without taking out an additional mtg

If it is a stipulation, that an additional mtg is taken out, what is the minimum additional mtg, we would need to take out

Can we redeem , pay off the additional mtg, ideealy sooner rather than later, leaving us with our tracker only (on the new house)

Thanks

You 'll need to check the fine print of the Ulster Bank product. I wouldn't imagine you could move property & keep your tracker without taking some level of new mortgage at higher rate. Usually the minimum loan amount is around €40k but will depend on their policy. You also need to make sure there are no sneaky conditions such as any lump sum repayments are made off the tracker portion initially.... I'm sure given your financial position you'll be able to structure it in such a way to be able to borrow (short term) to qualify and then move & keep the tracker and then repay the SVR portion...

Doodoo

cork_south wrote: »

http://www.independent.ie/business/personal-finance/property-mortgages/now-you-can-move-house-and-keep-your-tracker-3063196.html

HOMEOWNERS who have a tracker mortgage will be able to move home and keep their valuable tracker rate.
Ulster Bank is set to launch the radical new offering today in a move that is likely to be replicated by other lenders.
It is the first time a lender in this market will allow a homeowner to retain a tracker, sometimes described as more valuable than a gold bar.
The new lending arrangement will allow borrowers to transfer the outstanding balance of their existing tracker mortgage to their new home, while financing the remainder of the purchase price with a mortgage at an agreed interest rate.
If the new offer takes off, it could blow open the mortgage market, where lending is at a 40-year low.
At the moment the "tracker trap" means that those who have a good value tracker mortgage are reluctant to move to another property because the tracker rate will be ended.
Some of those on trackers have lending rates as low as 0.5pc about the European Central Bank.
This means they are paying as little as 1.5pc.
Homeowners who have to give up a tracker are forced to take up a variable rate loan, where the rates as as high as 5.19pc.
The new offer will also allow those who are in negative equity -- where they borrowed more than their home is now worth -- to move home and keep the tracker.
It comes weeks after this newspaper revealed that Bank of Ireland and Permanent TSB would allow those in negative equity to take the negative equity portion of their loan onto a new mortgage. But these lenders do not allow those taking up the offer to keep their trackers.
Now Ulster Bank is set to let those who have tracker either trade up to a bigger mortgage and larger house, or trade down to a cheaper property.
One source close to the bank explained that if a family has a €300,000 mortgage and need to move to a larger home worth €500,000 they will be allowed to transfer the existing tracker loan to the new property.
The extra €200,000 needed to buy the new home will be borrowed at Ulster Bank existing variable rate of 3.9pc.
Only those on good incomes and those buying a good value property will qualify for the deal.
Profits
Banks are losing money on tracker mortgages. But a deal where someone was repaying a mortgage with both a low tracker rate and a higher variable rate would mean profits for Ulster Bank from the variable portion of the loan.
The deal would also help stimulate the property market. At the moment homeowners are reluctant to move because they do not want to lose a low-priced tracker.
Property prices have been falling now for five years. On Monday the Central Statistics Office said prices were down 49pc, but others have put the fall from the peak of the market at closer to 60pc.
The ongoing falls in home prices have frightened potential first-time buyers and mover purchasers out of the market.
This is despite the Government attempting to stimulate the market with generous tax breaks for new buyers who purchase before the end of the year.
- Charlie Weston Personal Finance Editor
Irish Independent

Sorry for dragging up an old thread but i was just wondering after 7 months since this was originally talked about has anyone sucessfully moved their tracker to a new house with Ulster Bank in any shape or form.

diceyreilly1

Can I confirm that this may prove that the security on a mortgage is transferable.
If I have a BTL tracker (thank the Lord) and I would like to replace secured asset with another asset without diminishing the banks security that this is possible. This may be useful if I can replace an asset that I have a chance of selling and advertise as non encumbered which could attract buyers who would like a quick purchase.

Tombo2001

Again, would like to ask if anyone has done this?

Would like to do so with AIB.

touts

Tombo2001 wrote: »

Again, would like to ask if anyone has done this?

Would like to do so with AIB.

I think the deafening silence answers your question. In theory the banks have lots of money to lend and are open to this sort of deal. In practice however....

killers1

Tombo2001 wrote: »

Again, would like to ask if anyone has done this?

Would like to do so with AIB.

Not a hope in hell with AIB I'm afraid, they just don't have the product. Ulster Bank are the only ones offering it at the moment with strict conditions and an element of new borrowing at expensive current rates.

overthebridge

Tombo2001 wrote: »

Again, would like to ask if anyone has done this?

Would like to do so with AIB.

I have been holding off replying in this thread until such a time as my own sale had gone through but..

Just sold my old house and moved into new house.
We were 9 years into a tracker mortgage with Ulster bank and they let us avail of this product.
We had well over the 10% deposit for the new house and had many years of savings history with no outstanding loans. I have a good job for last 6 years.
Our existing home was sold at a price just above what we currently owe on it, so no negative equity. The house we have bought is 30k less of a mortgage than the one we had
The terms & conds are exactly the same as what we had except our repayments are about 60E a month less. There are absolutely no hidden extras or fine print charges that I or my solicitor can see.
As for what Ulster Bank are getting from this deal I don't know. I know the couple who bought our old house have their mortgage through Ulster bank also. So maybe that's where they are making money.
But when we made the initial inquiry about this the only stipulation given was that they would not process our application until we had an offer accepted on our own house. They did not at any time say that the buyers had to have a mortgage from them.
Overall it was an extremely long winded and drawn out process. From the time of the initial application until we moved house it was almost 5 months. I don’t know is this the norm in these times ?

So for anyone who is in a similar situation there is a hop eof moving/porting your tracker to another home. Just have patience

killers1

overthebridge wrote: »

Our existing home was sold at a price just above what we currently owe on it, so no negative equity. The house we have bought is 30k less of a mortgage than the one we had
The terms & conds are exactly the same as what we had except our repayments are about 60E a month less. There are absolutely no hidden extras or fine print charges that I or my solicitor can see.
As for what Ulster Bank are getting from this deal I don't know.

Ulster Bank have got a capital reduction of €30k from you off the original mortgage. They also have gone from a situation where your loan to value was just under 100% to a much lower level which gives them added protection in the event of you defaulting in the future and a drop in property value. The fact that they have less money o/s on the loss making tracker rate and have also increased their security is what's in it for them..

overthebridge

killers1 wrote: »

Ulster Bank have got a capital reduction of €30k from you off the original mortgage. They also have gone from a situation where your loan to value was just under 100% to a much lower level which gives them added protection in the event of you defaulting in the future and a drop in property value. The fact that they have less money o/s on the loss making tracker rate and have also increased their security is what's in it for them..

I see what you are saying there but we did get approval for an amount that was the equivalent of our older mortgage.
It was by chance that we secured a property for a significantly smaller amount.
I'm not complaining ;-)

killers1

overthebridge wrote: »

I see what you are saying there but we did get approval for an amount that was the equivalent of our older mortgage.
It was by chance that we secured a property for a significantly smaller amount.
I'm not complaining ;-)

In either instance their security would have been enhanced. You were at 100% finance (more or less). If you borrowed the same amount as the mortgage o/s it would still have been adding at least 10% to the value of their security.

tinkerbell

PTSB and BOI now offering this:
http://www.independent.ie/business/personal-finance/property-mortgages/homeowners-can-move-and-keep-their-tracker-mortgages-29279412.html