Will the bank do a deal if I buy out my tracker?

spida · 03-08-2012 09:10PM #1

My wife and I are in the enviable position of having come in to some money. We currently live in an apartment which has a tracker mortgage with BoI.
So the tracker mortgage is 'cheap money' but may not always be. Also, we are paying interest on the money that we don't have to as we can now afford to buy it out.
My question is this: when discussing with the bank, should I ask them to do me a deal on the tracker?
Bearing in mind that they would love to get rid of the trackers on their books and I'm in no hurry to do anything, should I propose that I pay 90% and they write the rest off? Should I say 80%?
Thoughts?

sunnysoutheast · 03-08-2012 11:16PM

spida wrote: »

My wife and I are in the enviable position of having come in to some money. We currently live in an apartment which has a tracker mortgage with BoI.
So the tracker mortgage is 'cheap money' but may not always be. Also, we are paying interest on the money that we don't have to as we can now afford to buy it out.
My question is this: when discussing with the bank, should I ask them to do me a deal on the tracker?
Bearing in mind that they would love to get rid of the trackers on their books and I'm in no hurry to do anything, should I propose that I pay 90% and they write the rest off? Should I say 80%?
Thoughts?

Do some research on what return you can get (net of DIRT) on leaving your money on deposit for 1yr, 2yr, 5yrs etc. and compare it with your tracker rate. I think you'll be pleasantly surprised.

You can always revisit paying off your mortgage if ECB rates start going up (further 0.25% cut expected in September).

Obviously it depends on your situation - age, gearing, future plans to buy etc. - but I doubt that you will ever be able to borrow at such low rates again, at least for the foreseeable future.

I'd keep the flexibility of having money in the bank earning a return. That's what we do, we could pay off our mortgage but there is no current incentive to do so at present.

SSE

The_Conductor · 05-08-2012 08:59AM

Inclined to agree. You're probably better off investing the money- unless your bank are willing to make a reasonable offer to buy out the mortgage. Will they or won't they make you an offer- no idea unless you ask........

spida · 05-08-2012 10:23AM

@sunnysoutheast I totally get your point about investing the money as I'd make a better return than what I'm paying in interest. I just don't want to do either! I just want to have fewer accounts and monies owed/invested/at risk etc. So, to simplify my 'porfolio' I'd like to do a deal with the bank. They write off a chunk of my mortgage and make it worth my while to cash in now, despite income being greater than expenditure.

As smccarrick said,

smccarrick wrote: »

no idea unless you ask........

Henry Ford III · 05-08-2012 10:44AM

Why would the bank write off a portion of your mortgage?

godtabh · 05-08-2012 10:46AM

Henry Ford III wrote: »

Why would the bank write off a portion of your mortgage?

Trackers cost them money

spida · 05-08-2012 11:05AM

Henry Ford III wrote: »

Why would the bank write off a portion of your mortgage?

As I see it, my tracker mortgage is costing the bank money on an on-going basis. So, if over the life of the morgage that cost to the bank is 10k, then I want that 10k. Cheeky, I know but what the hell, it's business!

What will probably end up happenning is that my bank and all the others will be off-loading their trackers to IBRC at a knocked-down rate i.e. minus the 10k (or whatever that figure is) so they shouldn't have any problem off-loading it to me, effectively, before then.

Fingers-crossed!

Henry Ford III · 05-08-2012 03:29PM

It's probably costing them a little over the term of the loan ok, but that might be over a long term.

If the loan is up to date and the borrowers offer to repay ahead of time they won't offer any discount I reckon.

Bigcheeze · 05-08-2012 04:21PM

I tried it with EBS. They said they didn't have a "product" for it. Banks will only do case by case deals with distressed mortgages. I think PTSB were running a early repayment scheme for a while but not sure if it's still going.

One thing that was confusing me is if banks can borrow from the ECB at 0.75%, how are they losing money on trackers?

pwurple · 05-08-2012 04:39PM

Banks can't borrow at ECB... That's their problem.

You need to approach the bank differently I think. Ask if there is any incentive to switch off a tracker to a fixed rate mortgage. See if there is something they can do there.

Watch the terms in the fixed rate mortgage, and see if there is any penalty for paying off early.

Your tracker is a valuable item, it is worth something to them to get rid of it. Don't give it up easily. Invest your cash in a high interest account if you get nowhere with them.

GALWAYLAD777 · 05-08-2012 08:11PM

spida wrote: »

My wife and I are in the enviable position of having come in to some money. We currently live in an apartment which has a tracker mortgage with BoI.
So the tracker mortgage is 'cheap money' but may not always be. Also, we are paying interest on the money that we don't have to as we can now afford to buy it out.
My question is this: when discussing with the bank, should I ask them to do me a deal on the tracker?
Bearing in mind that they would love to get rid of the trackers on their books and I'm in no hurry to do anything, should I propose that I pay 90% and they write the rest off? Should I say 80%?
Thoughts?

Why not tell the bank you ll come off the tracker and get the financial incentive they offer for that. Then, after a period of time, go in and pay off the mortgage with the money you have? Sounds to me like you want to put investments and all that crap behind you.

GALWAYLAD777 · 05-08-2012 08:15PM

GALWAYLAD777 wrote: »

Why not tell the bank you ll come off the tracker and get the financial incentive they offer for that. Then, after a period of time, go in and pay off the mortgage with the money you have? Sounds to me like you want to put investments and all that crap behind you.

Obviously read the terms of the new mortgage carefully.

Henry Ford III · 05-08-2012 08:17PM

GALWAYLAD777 wrote: »

Why not tell the bank you ll come off the tracker and get the financial incentive they offer for that. Then, after a period of time, go in and pay off the mortgage with the money you have? Sounds to me like you want to put investments and all that crap behind you.

That's not a bad idea. A variable rate loan can be repaid anytime without penalty.

GALWAYLAD777 · 05-08-2012 08:26PM

Yes it can, play the bank at their own game, say nothing about having money, take their money for switching reading the new contract carefully first, then switch, take the cash, pay the mortgage for a while, and then pop in some day and say "guess what, id like to pay off my mortgage"... thats what I would do. please pray for me that i get a windfall. Up to my eyes in it!!

murphaph · 05-08-2012 08:32PM

Henry Ford III wrote: »

That's not a bad idea. A variable rate loan can be repaid anytime without penalty.

Depends entirely on the individual loan offer. From my reading of various forums, no banks are giving haircuts on any mortgages (tracker or not) that are not in arrears. They are losing money right now on many of these mortgages, but they know that may not always be the case, so they won't rush to offload them as many people might hope for.

They will also not be so stupid as to offer anyone a variable rate replacement product with no strings/penalties attached for early redemption, probably requiring the "discount" to be repaid in full etc.

The_Conductor · 05-08-2012 08:33PM

Just be aware- not all lenders will play ball. BOI and AIB for example, securitised grade 1 and 2 mortgages ages ago- anything that was considered investment grade was offloaded on investors- so while AIB or BOI may be the nominal lender- they are more loan managers than having a vested interest in what happens- as they've offloaded a lot of their residential mortgages elsewhere.......

Play them at their own game by all means- but just be aware of what their position is, as it will help you decide whether its worth chasing them or not......

GALWAYLAD777 · 05-08-2012 08:53PM

murphaph wrote: »

Depends entirely on the individual loan offer. From my reading of various forums, no banks are giving haircuts on any mortgages (tracker or not) that are not in arrears. They are losing money right now on many of these mortgages, but they know that may not always be the case, so they won't rush to offload them as many people might hope for.

They will also not be so stupid as to offer anyone a variable rate replacement product with no strings/penalties attached for earlyedemption, probably requiring the "discount" to be repaid in full etc.

I agree with respect to arrears that banks wont reduce the amount owing, but it depends on your current financial situaion, usually they wont talk to you until you are in arrears, i fully understand that, that isn't to say that other deals can't be done with the bank. Only recently PTSB offered their tracker customers a 10% bonus on extra monies paid off ones tracker mortgage.

http://www.moneyguideireland.com/ptsb-10-bonus-on-tracker-repayments.html

juan.kerr · 05-08-2012 09:04PM

Surprised no one has asked what your tracker rate is?

spida · 05-08-2012 10:09PM

GALWAYLAD777 wrote: »

Why not tell the bank you ll come off the tracker and get the financial incentive they offer for that. Then, after a period of time, go in and pay off the mortgage with the money you have?

I think if I went in and asked if I could replace my tracker with a variable they'd have questions. I'd much rather be completely up-front and say "this is what I want, this is what I'm willing to do, what's it worth to you".

GALWAYLAD777 wrote: »

Sounds to me like you want to put investments and all that crap behind you.

Absolutely. The sooner I stop paying a financial institution for the pleasure of borrowing money that they don't actually own, the better. It makes my skin crawl.

GALWAYLAD777 · 05-08-2012 10:47PM

spida wrote: »

I think if I went in and asked if I could replace my tracker with a variable they'd have questions. I'd much rather be completely up-front and say "this is what I want, this is what I'm willing to do, what's it worth to you".

Absolutely. The sooner I stop paying a financial institution for the pleasure of borrowing money that they don't actually own, the better. It makes my skin crawl.

same here.

Henry Ford III · 06-08-2012 07:44AM

spida wrote: »

I think if I went in and asked if I could replace my tracker with a variable they'd have questions. I'd much rather be completely up-front and say "this is what I want, this is what I'm willing to do, what's it worth to you"....

If you do that they'll just say "go ahead if you wish".

Another option might be to do a back to back set off. Zero rate the deposit (no D.I.R.T.) and pay a small margin.

[Jackass] · 08-08-2012 06:32PM

Very smart idea OP. Hope it works out, let us know what you propose, but I feel there's potential, if you pitch it right, that you could get a write down to clear the mortgage in full.

I also agree that clearing debts off at the moment is probably more wothwhile than investing in the current turbulant market, and savings are worthless, so why not?

(unless you have a strong investment strategy, the return potentially is much greater, but it depends on your attitude towards risk vs wrapping up your afairs and having financial freedom).

spida · 14-01-2013 12:01AM

Thanks all, for your replies. Only noticed this thread now when I am back on Boards with other stuff!

So, I wrote to my bank and a few weeks later they wrote back to say, thanks but no thanks. If I wanted to pay off my mortgage they'd be happy to talk to me. Just don't come looking for any freebies. They also sent me a list of phone numbers which I'm sure they insert with every letter regarding mortgages these days, MABS and the like. Reminded me again just how lucky I am.

Thank you all for your comments. Good to know I wasn't completely off my trolly at least!

D3PO · 14-01-2013 12:57AM

[Jackass] wrote: »

I also agree that clearing debts off at the moment is probably more wothwhile than investing in the current turbulant market, and savings are worthless, so why not?

(unless you have a strong investment strategy, the return potentially is much greater, but it depends on your attitude towards risk vs wrapping up your afairs and having financial freedom).

Nobody is suggesting investing in high risk equities. There are plenty of high interest products that will yield more from the savings than paying off the mortgage and saving the Mortgage interest and they arent high risk products.

The National Savings schemes run by the NTMA are Dirt free and yield way more than any tracker will cost for the short term.

OP another thing to consider is if you still get MIR you will lose that by paying off early so you would want to ensure you build that into your figures.

If I had the money Id be straight up with the bank I want X off my mortgage if I agree to pay it off now, needs to be beneficial to you but also to the bank, you are essentially asking them to crystalise a loss so it needs to be of benefit to them.

Logically they should do a deal but if I were betting Id say they wont. They seem to be clueless with little strategy on how to manage their loan books at the moment.

JustAThought · 15-01-2013 01:26AM

There was an article a while back in either the Sunday Business Spost or the Aitish Times - cant remember the small print ; but it said if you were looking to " change" from a tracker the bank should be giving you e45k for it.

As said - the devil was in the detail!!!

makeorbrake · 15-01-2013 01:57AM

I put this proposal to NIB back in Sept. 2011....No dice!

For kicks, I've just emailed them the very same proposal. I'll post back here whenever I get their response.

realgirl · 15-01-2013 09:01AM

I tried this with Ulster bank late 2011, no joy there either. The mortgage was performing fine so they had no interest in any kind of deal.

D3PO · 15-01-2013 10:43AM

JustAThought wrote: »

There was an article a while back in either the Sunday Business Spost or the Aitish Times - cant remember the small print ; but it said if you were looking to " change" from a tracker the bank should be giving you e45k for it.

As said - the devil was in the detail!!!

Thats a toally random figure. It depends on your term, your mortgage size etc. You cant just arbritaraly say everybodys tracker is worth €45k

Ive calculated mine to be workth €80k so if I were to do a deal with the bank Id want €50k off the settlement figure, but I know they wont do a deal, it is illogical but like I said they eithe rdont know how to manage their loan books or theres so much red tape they cant manage to do the logical thing.

makeorbrake · 15-01-2013 11:02AM

D3PO wrote: »

it is illogical but like I said they eithe rdont know how to manage their loan books or theres so much red tape they cant manage to do the logical thing.

It's pretty frustrating. The very same banks are prepared to take massive haircuts when selling tranches of their loan books onto some other faceless corporation - but they won't do deals one by one with your regular joe. It seems like the rules of the game are that the small guy should never catch a break...

D3PO · 15-01-2013 11:49AM

makeorbrake wrote: »

It's pretty frustrating. The very same banks are prepared to take massive haircuts when selling tranches of their loan books onto some other faceless corporation - but they won't do deals one by one with your regular joe. It seems like the rules of the game are that the small guy should never catch a break...

The funny thing is the small guy isnt catching abreak if this deal is done. The bank are.

THe little guy can make the same savings by investing the savings into a high yield interest account whilst the bank suffers the full brunt of losses onthe tracker.

The little guy is actually in a position to save the bank money long term whilst getting a little reward they would by having the money earning a yield elsewhere.

No logic from the bank at all. The bank also then has more liquidity / ability to reinvest the lump sums into further loans generating more profit.

Its win / win no reasons not do except they banks are inept

makeorbrake · 15-01-2013 12:04PM

D3PO wrote: »

The funny thing is the small guy isnt catching abreak if this deal is done. The bank are.
THe little guy can make the same savings by investing the savings into a high yield interest account whilst the bank suffers the full brunt of losses on the tracker

Well, if the sums didn't add up on the deal offered (were it ever to happen), I wouldn't go for it.

Some seem to think that once the banks have deleveraged back to a certain level, deposit rates will no longer be as attractive as they are now.

D3PO wrote: »

No logic from the bank at all. The bank also then has more liquidity / ability to reinvest the lump sums into further loans generating more profit. Its win / win no reasons not do except they banks are inept

I can only imagine that they believe the majority who find themselves in a position to pay off early - will probably do that anyway - ultimately. Some feel more secure having the mortgage on their PPR paid off. Others will want to trade up - and the desire to do that will possibly result in them surrendering their tracker.

Without a deal, I have vowed to go the full distance with my own mortgage - with not one overpayment

Will the bank do a deal if I buy out my tracker?

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