What would it take for you to give up your tracker mortgage?

MMAGirl

Just heard on the radio that boi are doing research into how to get people to give up trackers.
I would think they are worth a lot and the bank will have to offer serious incentives.

Borderfox

From my cold dead hand :-)

Zaph

My tracker is at ECB +0.5%, so they'd need to write off a minimum of 75% of what's outstanding before I'd even have the discussion with them.

MidlandsM

Write off more than half off my existing principal, and I'd consider it, otherwise........NOPE!

How Strange

Yes, for us it'd have to be a substantial write down in the region of 50-75% which isn't going to happen.

We'd be fools to give up our tracker otherwise.

On a side note; is it worth paying extra against the principal on a tracker?

Wise Old Elf

Was discussing this at lunch time in work.
My tracker is ECB +1.25% (Zaph, I'm jealous!). Realistically, I wonder would a 25% write off of outstanding capital be reasonable, or would I push for more!
Hypothetical anyway, as I don't think it'll happen.

Edit: I just did some rough calculations based on current figures, and ye're all right. If I had 25% of the capital written off and a variable rate of 4.4% applied, then I would end up paying back approximately the same amount of money over the remaining life of the mortgage as if nothing had changed, so 50% or nothing!

Pawwed Rig

I wouldn't give it up unless there was a benefit to me. By that I mean if they gave me €10,000 off the principal there would be no benefit as I would end up paying back more. I currently have a 0.8% tracker which is a dream of a rate these days. I would need a big enough reduction in the principal and a guaranteed fixed rate until the end of my mortgage meaning my repayments would be at worst equal to what I am paying now. The bank will not do this however as there would be no benefit to them. Therefore to quote a previous poster (and the NRA) 'from my cold dead hands'.

Before anyone gives up a tracker they should consult a financial person to go through it with them.

Corkbah

only way they would get me to get rid of my tracker is .... if they clear my mortgage completely !!

jester77

Would a decent long term fixed rate, 15-20 years, not make people consider?

ECB rates are not going to stay low for ever and when they start to move up, they will probably move quick.

Bigcheeze

Funny that people say 50-75% without even doing the maths.

One important factor that everyone has ignored is that if you intend to move house say 5 years from now you are going to lose the tracker anyway, so an offer today that might not make a lot of sense over the whole life of the mortgage could save a lot of money over 5 years. I don't know the stats but if say the average person own 3 houses in a lifetime, then the majority of mortgages never go to their full term.

fyfe79

How Strange wrote: »

Yes, for us it'd have to be a substantial write down in the region of 50-75% which isn't going to happen.

We'd be fools to give up our tracker otherwise.

On a side note; is it worth paying extra against the principal on a tracker?

In 2006, I took out a 30 year mortgage with PTSB. After a year on a fixed rate I switched to a tracker (thank jeebus!) of ECB +0.95%.
Since about 2008/9 I've been overpaying it and if I continue overpaying until the principle is paid off, the mortgage should be completed in 2024.

Basically I've shortened my mortgage by 12 years which should save a lot of money due to paying less overall interest due to having a smaller principle (certainly towards the end).

A couple of years ago, PTSB were trying to get people to pay off their trackers quicker by suggesting paying one-off sums of 5k (the lowest being 5k, the highest being 50k) against your mortgage and they would donate a sum of 5% (I think it was) against your principle.
I didn't partake but it was worth it if you had a lump sum like that hanging around!

By that stage they had probably conceeded defeat in actually bribing people OFF their trackers, as I knew of other banks (not necessarily PTSB) offering customers smallish lump sums (eg 5k) if they came off their trackers and switched to variables... I'm sure some unfortunates did it for quick cash without realising the consequences in the long run!


IMO, nothing is worth giving up your tracker, as the banks would never give you a deal that's worth it for you, as that would simply cost them even more money. Having said that, if you had serious cash-flow problems, and I mean serious, you could probably do a deal with them to come off your tracker which would leave you slightly/moderately worse off in the long run but would give you decent cash flow in the short term. Certainly more than a paltry 5k would need to be on offer though!

fyfe79

Bigcheeze wrote: »

Funny that people say 50-75% without even doing the maths.

One important factor that everyone has ignored is that if you intend to move house say 5 years from now you are going to lose the tracker anyway, so an offer today that might not make a lot of sense over the whole life of the mortgage could save a lot of money over 5 years. I don't know the stats but if say the average person own 3 houses in a lifetime, then the majority of mortgages never go to their full term.

You're right. I forgot about the moving house factor. Certainly worth a consideration of a deal if you're planning a move. I'm not, so I guess that's why I didn't consider it.

Pawwed Rig

fyfe79 wrote: »

In 2006, I took out a 30 year mortgage with PTSB. After a year on a fixed rate I switched to a tracker (thank jeebus!) of ECB +0.95%.
Since about 2008/9 I've been overpaying it and if I continue overpaying until the principle is paid off, the mortgage should be completed in 2024.

the current ECB rate is .75%. Therefore you are paying interest at 1.7% (.95+.75) on your mortgage payments.
If, instead of reducing the principal you invested your excess cash in a fixed rate deposit account of say for example 3%, then even after DIRT you would be better off than overpaying the principal of your mortgage. This would allow you to pay off your mortgage earlier than 2024.

To put it simply, if you pay off €1000 of principal now you will save the accumulated interest of €203 before 2024 (11 years) whereas at a 3% interest rate on depositing your cash you will earn €384 by 2024*. 384 less DIRT = €257.

That is assuming all you can get is 3%. If you look at alternatives than fixed rate deposit accounts you should be able to get more. I would recommend you talk to a Financial advisor.


*taking as 11 years, hopefully my maths are right as I did this in a hurry

fyfe79

Cheers Pawwed Rig. Yeah, it's something I've thought about.

I've a deposit account with BOI for the past 3 years or so which is paying out 2%. Which crowd offers 3%? I'm interested in that!

You're right regarding paying the overpayment (€300) into a deposit account instead of off the mortgage, I should really get my arse in gear and do that sooner rather than later. Makes total sense. I think I just like the idea of over-paying my mortgage for some reason!

How Strange

Unfortunately with the negative equity on our home it's very doubtful that we'd be able to sell in 5 years time. Maybe in 8-10 years if the market picks up a bit we'll be able to break even.

Pawwed Rig

fyfe79 wrote: »

I've a deposit account with BOI for the past 3 years or so which is paying out 2%. Which crowd offers 3%? I'm interested in that!

I got a good rate with KBC a year ago so you could try them.
At 2% with BOI you are better to pay off your mortgage.
You could also look into some of the funds the banks are offering. They will meet you and go through them for free although the higher the return, the higher the risk.
Also try the post office. They may have government bonds on offer at a higher rate.

murphaph

Pawwed Rig wrote: »

the current ECB rate is .75%. Therefore you are paying interest at 1.7% (.95+.75) on your mortgage payments.
If, instead of reducing the principal you invested your excess cash in a fixed rate deposit account of say for example 3%, then even after DIRT you would be better off than overpaying the principal of your mortgage. This would allow you to pay off your mortgage earlier than 2024.

To put it simply, if you pay off €1000 of principal now you will save the accumulated interest of €203 before 2024 (11 years) whereas at a 3% interest rate on depositing your cash you will earn €384 by 2024*. 384 less DIRT = €257.

That is assuming all you can get is 3%. If you look at alternatives than fixed rate deposit accounts you should be able to get more. I would recommend you talk to a Financial advisor.


*taking as 11 years, hopefully my maths are right as I did this in a hurry

...and that's not even accounting for the opportunity cost of having no cash on hand for emergencies. Life can throw curve-balls at us as the yanks might say. Having cash on deposit as opposed to having it paid off your (attractive) tracker is a benefit in itself.

I have a ECB +0.75% tracker on a BTL (currently my only mortgage) and there's no way I'd pay it off early when I can get more (and do) on deposit. If my German bank ever collapses I can assure you we'll all be in the sh!t and I won't be worrying about my outstanding mortgage anyway.

The funny thing is, trackers are still available here in Germany but the margins never got so crazy generous as in Ireland. A tracker is not "dangerous" to a bank if they set a reasonably safe margin. Irish banks got so greedy for market share that they began offering silly margins (ECB + 0.5% is just crazy stuff and always was)

vicwatson

Worth making a submission to the Central Bank of Ireland to this e-mail address -

code@centralbank.ie

Put "CODE OF CONDUCT ON MORTGAGE ARREARS " in the subject box

Here's the proposed code.....it doesn't look good for tracker mtg holders if the CB push this part of the code through

http://www.centralbank.ie/regulation/poldocs/consultation-papers/documents/cp63%20review%20of%20the%20code%20of%20conduct%20on%20mortgage%20arrears/consultation%20paper%20cp63%20final.pdf

Make your submission by tomorrow 10th April 2013

Guy was talking about it on the Joe Duffy show today, here's the link (bottom of page under "mortgages") -

http://www.rte.ie/radio1/liveline/

Pawwed Rig

vicwatson wrote: »

Here's the proposed code.....it doesn't look good for tracker mtg holders if the CB push this part of the code through

Can you be more specific? I haven't got time to read a 39 page document.

vicwatson

MMAGirl wrote: »

Just heard on the radio that boi are doing research into how to get people to give up trackers.
I would think they are worth a lot and the bank will have to offer serious incentives.

Here's the Charlie Weston Article in The Indo -

http://www.independent.ie/business/personal-finance/property-mortgages/storm-over-banks-dirty-tricks-on-tracker-loans-29182682.html

vicwatson

Pawwed Rig wrote: »

Can you be more specific? I haven't got time to read a 39 page document.

So you want me to read it for you :pac: ?

Send in a submission specifying that you are against allowing the banks automatically remove your tracker mortgage.

vicwatson

Pawwed Rig wrote: »

Can you be more specific? I haven't got time to read a 39 page document.

Page 4 just for you

viii) Tracker mortgages – The Central Bank is considering whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate, where the lender has offered an alternative arrangement which is advantageous to the borrower in the long term, e.g., a debt write off.

Bits_n_Bobs

The top couple of tiers within the banks, central bank, financial regulator and dept of finance, and a few ministers hung drawn and quartered MIGHT tempt me off.

Except they've all retired with their squillions, so that's not likely to happen.

fyfe79

vicwatson wrote: »

viii) Tracker mortgages – The Central Bank is considering whether there is merit in allowing a lender to move a borrower in arrears off a tracker rate, where the lender has offered an alternative arrangement which is advantageous to the borrower in the long term, e.g., a debt write off.

Well that is a lot less scary than this:

vicwatson wrote: »

Here's the proposed code.....it doesn't look good for tracker mtg holders if the CB push this part of the code through

The CB are exploring the possibilty of moving someone off a tracker if they're in arrears and are being offered a debt write-off that's beneficial to the borrower.
Tracker holders who are on top of their payments should be safe then, no?

From a legal point of view, what's stopping the CB abolishing trackers in the future and terminating all current trackers? (ie. ripping off everyone on a tracker because they're loss-making). Is it at all possible? Wouldn't surprise me.

vicwatson

fyfe79 wrote: »

Well that is a lot less scary than this:

"it doesn't look good for tracker mtg holders if the CB push this part of the code through"

The CB are exploring the possibilty of moving someone off a tracker if they're in arrears and are being offered a debt write-off that's beneficial to the borrower.
Tracker holders who are on top of their payments should be safe then, no?

From a legal point of view, what's stopping the CB abolishing trackers in the future and terminating all current trackers? (ie. ripping off everyone on a tracker because they're loss-making). Is it at all possible? Wouldn't surprise me.

It still doesn't look good for holders of tracker mortgages if this part is pushed through. FACT.

Pawwed Rig

fyfe79 wrote: »

Well that is a lot less scary than this:

.

Exactly. I saw the bit about arrears but assumed I had missed something due to the posters sensationalist headline.

vicwatson wrote: »

So you want me to read it for you ?

Send in a submission specifying that you are against allowing the banks automatically remove your tracker mortgage.

Yes if you are going to post a document to back up a point it is better to focus on what you are trying to say as people have not got time to read large volumes of text.

See link below this proves all of my points
http://www.independent.ie/

fyfe79

vicwatson wrote: »

It still doesn't look good for holders of tracker mortgages if this part is pushed through. FACT.

I agree.
But do banks only have a legal leg to stand on if the account is in arrears?
What about tracker holders that are meeting repayments? Can they just axe all trackers if they wish? Would that be illegal?

I suppose, does it even matter anymore if it's legal or illegal, banks seem to do as they please anyway and get away with it. Some new form gets signed and hey presto, all trackers are history :-(

Pawwed Rig

Well it is a legal contract you have with the bank for whatever that is worth. Someone in arrears would already be in default of that contract so you could argue that the contract is null and void. Not sure what the point would be in loading more debt onto someone who is already struggling but sure that is what the government do every day.
The banks need to repo more properties so this might be one method of getting people to give up and walk away.

Tombo2001

the day someone tells me they had X% of their mortgage written off to switch off their tracker is the day I'll start having this conversation....

Its like wondering who you would pick if you were Ireland manager.

I'm not Ireland manager. Banks are not negotiating deals to get people off trackers.

Whats the point?

handlemaster

50% would be about right. the banks have obviously done the numbers and its not viable at the moment. the loss making trackers not only make a loss on these loans but make overal borrowing by the banks more expensive not to mention holding back share prices. look at danske bank they have mentioned it in their financials

MMAGirl

We paid our mortgage off with about 20 years remaining. We were on a tracker of ECB + 0,75 at the time.
The more I think about it the more annoyed I am that we paid it off. Should have put the money in a deposit account and made a bit of a profit.