Walking away from Mortgage

A

appd

Registered User
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Hi

My current situation is as follows:

2005
35 year mortgage
266,000

Purchase Price 328,000

Tracker rate +1.1%

I think I currently have about 235,000 remaining on the mortgage.
I think the house would be worth about 160-170K.

I was a first time buyer, the house is a small 2 bed.

I no longer want the house, and would like to sell if possible. The mortgage is not in arrears, and I would keep it rather than have to fund the 75K difference between the current selling price and the remaining mortgage.

However, after hearing that all trackers are loss making for banks, it has occurred to me that if the back are currently borrowing at a rate 2-3% to fund my mortgage and I am only paying 2%, then at best the bank is breaking even, at worst they are loosing 1%.

If I were on a standard variable at 4.5% then the opportunity cost is 2.5% for them.

Does anyone think I could come to an arrangement with them to sell the house and wipe out a large proportion of the remaining negative equity. They would get rid of a loss making tracker and I could walk away?

thanks
 
I would assume it would depend on the shortfall left between mortgage & selling price allowing for fees - approx 70 - 75k. Would that be too high of a shortfall for them to write off even on a tracker loan? Especially as the loan is being paid and I'm assuming that you can afford the repayments, maybe they would be happy to have a 75k tracker balance over a shorter term but wont allow a write off just because its a tracker loan.
 
if the bank are loosing 1% per month (130 euro) x 12 months x 28 years, that is a 43K loss for them over the remaining life of the mortgage. would there not be scope for saying "here is the 170k from the sale of the house and 20/30/40K to cover the losses the bank will suffer on the loan"?
 
I think you'd have a very good chance of getting this through IF you were in arrears.

Otherwise, from what I can gather, Banks do not seem to be doing deals on trackers, for performing loans

It's quite clear why the banks will not be interested in writing off a chunk of money on an otherwise performing loan. The write off will go straight to their bottom line immediately which is something they dont want. Long term smaller annual losses on your tracker are more attractive to the bank than immediate write off of a lump sum. Remember the banks are in survival mode and it really is about minimising loan write offs at all costs.
 
No. Unless the Banks substantially change their current stance on this issue, only Certus (as far as I am aware) is currently prepared to do dels on tracker mortgages. that does'nt mean that you should not put an offer to the Bank in writing. They can only refuse!
 
I note that US house prices are on the way up again.

Cannot of course say when it will happen here ..

But lets put it this way I would rent the house out if you dont want the mortgage and sit for a while.
 
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