Tracker Mortgages & Negative Equity

Trotter

Hi all, could anyone tell me if the following news could be of benefit to someone who has a tracker mortgage but is in negative equity?
It says negative equity is included but will it be a widely available option or just people in 5 or 10k N/E?

Homeowners can move and keep their tracker mortgages

Could a family with the deposit saved for a newer house, but who are stuck in a small house with 80-100k negative equity bring that negative equity with them to a new home and still keep the tracker on the negative equity portion of the new mortgage, or better still, the whole lot?

tinkerbell

Interested to know the answer to this too

celt262

me 3

Tombo2001

Trotter wrote: »

Hi all, could anyone tell me if the following news could be of benefit to someone who has a tracker mortgage but is in negative equity?
It says negative equity is included but will it be a widely available option or just people in 5 or 10k N/E?

Homeowners can move and keep their tracker mortgages

Could a family with the deposit saved for a newer house, but who are stuck in a small house with 80-100k negative equity bring that negative equity with them to a new home and still keep the tracker on the negative equity portion of the new mortgage, or better still, the whole lot?

In theory, yes you can do that.....within the framework of a single bank.

E.g. you could bring an Ulster tracker on to a new Ulster mortgage.

However you could not bring an AIB tracker on to a new Ulster mortgage (as confirmed to me by Ulster).

Also, I asked AIB about this today and they said they are not currently doing it at AIB......you can not bring an AIB tracker onto a new property.

Which makes it a right pain in the ass for me when I see the headlines such as the one above.

When the AIB CEO says that the bank is 'looking at this as an option'.....they end up getting credit for things that they are not doing. They could be looking at a million different things as an option, and if a reporter asks them, thats a suitably vague answer.

seamus

Reading that article again, it doesn't seem to apply to negative equity mortgages, though the wording is ambiguous.

The idea is that let's say your house is worth €150k and you owe 100k on it @ tracker rates.

If you sell it @ €150k and buy a new place for €200k, that means you will require a new mortgage for €150k. The bank in this case will give you €100k at tracker rates and €50k at variable rate.

To me, all indications at the moment are pointing to negative equity owners being basically locked out of the market until they clear the negative. The market will simply "skip" over them when normal borrowing and buying resumes, as the longer time goes on, the more younger people there are with no mortgages who can start buying again.

roro2

seamus wrote: »

Reading that article again, it doesn't seem to apply to negative equity mortgages, though the wording is ambiguous.

That's also my understanding of the proposal, if and when its introduced. You wouldnt be able to bring both your negative equity and tracker rate to a new mortgage.

Trotter

roro2 wrote: »

That's also my understanding of the proposal, if and when its introduced. You wouldnt be able to bring both your negative equity and tracker rate to a new mortgage.

I'm wondering could you bring the tracker rate with the negative equity, assuming you've sold the house and cleared all but the NE, and be on a variable rate for the amount of the new mortgage.

That would improve the banks loan to value for that customer. Improve it for 100 such customers and it starts to positively effect their books no?

Old Scenario - House Value €100k , Loan €160k (Hypothetical) - L:V 1:0.63

New Scenario (House sold for €100K)- New house value €220K, Loan €280K - L:V 1:0.79

roro2

Trotter wrote: »

I'm wondering could you bring the tracker rate with the negative equity, assuming you've sold the house and cleared all but the NE, and be on a variable rate for the amount of the new mortgage.

That would improve the banks loan to value for that customer. Improve it for 100 such customers and it starts to positively effect their books no?

Old Scenario - House Value €100k , Loan €160k (Hypothetical) - L:V 1:0.63

New Scenario (House sold for €100K)- New house value €220K, Loan €280K - L:V 1:0.79

In that example you're effectively getting 100% finance on the mortgage plus the full 60k negative equity carryover - I don't think this is likely. At best, it will probably be 90% of the new property + negative equity. And this is before looking at whatever T&Cs are introduced on the scheme - maximum amount of NE, max old/new LTV, etc.

This negative equity mover product will be different to a tracker mortgage mover product, and there is no information on whether they could be combined or the details, other than one vague unsupported comment in the Independent article. If a bank does combine these options, I'd say the conditions will be very restrictive.

Outsidethebox

I called into my bank PTSB today for a bit of ball hopping.

Wife and I six years into a thirty five year tracker mortgage and carry about 80/90k negative equity. We pay €500 a month but could easily afford twice that.

I asked the lady working there could we sell and move up and carry the negative equity with us she said it is possible but we'd lose our tracker meaning we'd go from 1.6% to nearly 4%.

Fairly gutted. Had been told by a friend we'd keep our tracker.

We'll fill out the form anyway and see how much we'd get for the remainder 29 years at roughly 1k a month.

Trotter

Outsidethebox wrote: »

I called into my bank PTSB today for a bit of ball hopping.

Wife and I six years into a thirty five year tracker mortgage and carry about 80/90k negative equity. We pay €500 a month but could easily afford twice that.

I asked the lady working there could we sell and move up and carry the negative equity with us she said it is possible but we'd lose our tracker meaning we'd go from 1.6% to nearly 4%.

Fairly gutted. Had been told by a friend we'd keep our tracker.

We'll fill out the form anyway and see how much we'd get for the remainder 29 years at roughly 1k a month.

Thats interesting. I'd look at it this way though.. Your first negotiation point was.. Let me bring my tracker based NE with me.. All of it. Their first negotiating position was.. its possible but you'll lose the tracker.

With some professional advice or someone working on your behalf who's used to getting down and dirty with banks, I'd say it might work out for you!

Outsidethebox

A broker?

Trotter

Outsidethebox wrote: »

A broker?

I'm not sure exactly, but theres lots of mention in the media of different people who specialise in one way or another in representing people who are dealing with banks. If it was me, I'd ask a friend I know thats a broker and sorted my mortgage on day one. I'm not sure who you could ask but I'd imagine someone would be qualified and willing to help.