Submit an offer to end tracker mortgage early? What to offer?

Butter

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Could anyone advise me on how to work out a realistic early surrender offer on a tracker mortgage?

Stats are: €175,000 outstanding over 15 years at 0.5% above ECB. No arrears & paid on time since it was taken out. Bank not interested in staying in Ireland.

What surrender value could we offer the bank that would benefit them by enough that they might accept & that would also benefit us? How would I work it out?

Any help or opinions on the numbers would be appreciated except the ones that say "don't do it, you'll never borrow money so cheaply again!"
 
I'd be interested in a response to this too. Owe €88k over 12.5 yrs on ECB + 0.5. Was thinking of offering €45k I used jeacle calculator to see what I'd pay in the 12.5 yrs if on an average of the variable rates plus allowing myself 10k discount.
 
Using Karl's calculator I will pay the bank a mere €7,340 in interest in the next 15 years (the assumption being the rate stays the same, which of course isn't the case). Total repayment of €182,340
If I were on a rate of even 4.0% my interest payment would be €57,920 & total repayment of €232,920.

But I think the bank would laugh me out of it if I suggested €57,920 - €7,340 = €50,580 knocked off my mortgage for early surrender. I have no idea how to calculate an offer.
 
Hello,

Have the Bank indicated a willingness to consider a discount on the full debt ?
 
We were told that the official bank line is that no deals are being done but that we should submit a settlement offer. Who knows exactly what that means?!
We've othing to lose by doing it though.
 
Hi Guys

In the past, I thought that this might happen. I now believe that there is absolutely no chance of it for the continuing banks, AIB, BoI, UB, ptsb and KBC.

BoI's cost of funds is 1.15% , so they are making a small margin on their tracker book overall.

AIB and ptsb come in at around 1.6%, so they are losing around 0.5% on their tracker book.

I also used to do the comparison with the SVR, but I now realise it was a false comparison. This rate is artificially high and will come down. Anyway, if you pay off your tracker, they won't be able to lend at this rate as there is no demand for mortgages.

If you are with Bank of Scotland or Danske Bank, I suspect that they won't bother doing a deal either. They are losing little or no money on these mortgages as their cost of funds is very low as well. Especially if they are performing mortgages and probably in positive equity.

There is no harm in making an offer, but I see little point in offering less than a 10% discount.
 
I actually agree with you Brendan. I think there is nothing to lose by sending in an offer - I had a 10% discount in my head as the maximum that was likely to even be considered.
 
Is the mortgage in negative equity? This could influence the discount.

If it were me I would go back and say "You make me an offer if you want out". Seems to me you have noting to lose by maintaining the status quo so why would you be the first to show your hand.

One final point are you going to be able to raise the money to buy the thing out? When doing a negotiaition like this its always good to have a bogeyman to refer to e.g. if the bank came back to say 155k would buy it out you come back with "I'd love to be able to give you 155k but all my bank will lend me is 135k.
 
Not in negative equity, thankfully.
Although maybe from the bank's point of view it would be better to get a mortgage on a house in negative equity off the books in case of default.
 
I am really interested to know how this discussion progresses and/if there's any success.

I owe around 230k at 0.69% over ECB, and I would estimate this house to be around 200k - well in negative equity (90% mortgage + have been paying since 2005 + still in negative equity = depressing reality)
 
So you're basically thinking of selling your property, which is worth over €175k, for €50k?
 
Eh, no. I'd like to know what if any discount on the total mortgage owing that the bank might give me to pay off a loss-making tracker 15 years early.
 
From my limited knowledge and nil working experience in this, is a net present value calculation required to determine an acceptable offer? You owe 175k to the bank and the time erosion of money and bank's costs for 15 years mean that an NPV calculation will yield an acceptable offer figure now rather than 175k slowly in 180 monthly installments.
 
Eh, no. I'd like to know what if any discount on the total mortgage owing that the bank might give me to pay off a loss-making tracker 15 years early.
Butter .

I think at present Trackers are not loss making to Banks.
That was the case when they had to fund deposits that were costing more than your Tracker.

I see no financial benefit today in them giving you a discount.
 
Thanks Gerry. I think it's a long shot alright, but nothing ventured nothing gained!
 
Ulster Bank also not making deals, tried to haggle with paying off our (performing) tracker too :-(
 
One danish bank is in process of selling its loan book on
. There online acesss is wrapping up on December 4th
. so still holding out for the new year
 
Interesting potnoodler. Thanks for that. Wonder if the new purchaser might be more interested in doing a deal, depending on what they buy the loan book for.
 
Eh, no. I'd like to know what if any discount on the total mortgage owing that the bank might give me to pay off a loss-making tracker 15 years early.


OK, I get you now. €0, I say.
At the depth of the crisis the most I'd heard of was €1,000 when all trackers were loss making.
Now that trackers are no longer loss making (according to numerous posts here) I doubt there would be any discount offered.
Even if yours still is loss making, that may not be the case for long.
 
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