Any chance of Banks "wriggling out" of trackers ?

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txirimiri

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Great thread. I am particularly grateful to Marion for pointing out that unless your house is insured for the rebuild value stated in the original valuation report, it could be null and void. Am now frantically scrambling around to find the copy of the valuation report to double check, but as we could not have drawn down the mortgage without having proof of insurance to that value and our house is now valued for more than the original amount I think we could be safe.

Where we are not safe is on the LTV. Checked the mortgage docs and the LTV ration (50%) is explicitly mentioned. House is now nowhere near worth double the outstanding amount on the mortgage. It would take an injection into the mortgage of more capital than we have in savings to bring it down to 50% and we were planning anyway to spend some savings doing the place up on the basis that as we can never move without taking a giant whack on a new mortgage rate, we may as well do some improvements as we will be there for the long haul! Should we think again????
 

txirimiri

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Sorry, meant to say our house is INSURED for more than the what it was insured for when we took out the mortgage, not VALUED for more!
 

csirl

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Great thread. I am particularly grateful to Marion for pointing out that unless your house is insured for the rebuild value stated in the original valuation report,
Is this really the case? Surely the house must be insured for the rebuild value at any point in time? Otherwise the house isnt insured correctly. In any event, an insurance company will only pay the rebuild cost at the time the rebuild is done as you cannot profit from insurance.

In non-recession times, the rebuild costs will go up with inflation over time. There will come a point in time when they will exceed the amount to be repaid on the mortgage and ultimately will significantly exceed the original value of the house - remember that by year 24 of a 25 year mortgages, the original house pricwe will only be a fraction of the value of the house and rebuild costs will be multiples of what they were 24 years previously.

I would assume that the same holds true in the current deflationary circumstances. That if rebuild costs are lower, then the rebuild figure in the insurance premium will decrease.
 

txirimiri

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Marion's point was I think that the mortgage contract is contingent on the house being insured at a minimum for the cost of the rebuild as specified by the valuation report.

Its possible that either a homeowner might have let their insurance lapse since taking out their mortgage or that if they took their mortgage out at the height of the boom and have subsequently renegotiated their insurance, the current rebuild cost has been estimated by the broker as necessary to adequately insure the house would be lower than that in the valuation report (for instance, we took our tracker out in 2007 and insured for a rebuild cost of almost 500 grand - I doubt it would actually cost that now and I imagine I could find a broker to quote a lower rebuild cost - but Marion's point is that that could render the contract void, thereby giving the bank room to wiggle out of their side of the contract.

Of course you are right that in 25 yrs time, the actual rebuild cost would prob be higher than that quoted in the valuation report, but the issue on this thread is not whether your house is adequately insured for the actual rebuild cost if it burnt down or whatever, but whether it is adequately ensured to comply with the conditions set out in the mortgage agreement
 

Marion

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txirimiri said:
but the issue on this thread is not whether your house is adequately insured for the actual rebuild cost if it burnt down or whatever, but whether it is adequately ensured to comply with the conditions set out in the mortgage agreement

Txirimiri: You are absolutely correct. We are concerned with ensuring that our trackers are safe.

But of course we are also concerned that a house must be insured for its replacement value.

What is interesting/disturbing about this for me is that I have found out that I have been underinsuring my house.

I re-mortgaged just a couple of years ago and I spoke with my existing insurance company at the time and gave all relevant details regarding my extension size etc.

I re-insured my house as per my mortgage provider’s figure for the re-mortgage.

I recently checked insurance premium costs with different companies and it seemed to them that I was under insured by a significant sum. My insurance is due for renewal and I asked my existing company to double check. I am adequately insured in relation to my mortgage company.

But, they also stated that I am currently underinsured in relation to the replacement value of my house.

This is why I specified “at least” in my post above.


Marion
 

serotoninsid

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What is interesting/disturbing about this for me is that I have found out that I have been underinsuring my house.
Until your original post on this thread, I thought I was doing the smart thing - by reducing rebuild cost to a realistic level in light of the slump to save a few extra quid on insurance. It never occurred to me that my bank could claim I was in breach of contract and kick me off tracker-rate.
Have full rebuild cost back on policy now :)
 

RMCF

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Something that just came to me the other day and which might be worth bearing in mind for those on trackers.

The AIB take my mortgage payment each month from an account which I keep separate from my current account. Can't figure out why I did this originally, probably just for tidiness.

So each month I move money from current account to my 'mortgage' account. I tend to try to have 2 months payments in it at any one time.

The OH said to me the other day about always making sure that I have plenty of money in it, so that I don't default on a payment.

This made me think. If I did miscalculate and forget to put a payment in to cover the mortgage coming out one month, could they use this as a way to get me out of the tracker? Could they say I broke the contract?
 

txirimiri

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Until your original post on this thread, I thought I was doing the smart thing - by reducing rebuild cost to a realistic level in light of the slump to save a few extra quid on insurance. It never occurred to me that my bank could claim I was in breach of contract and kick me off tracker-rate.
Have full rebuild cost back on policy now :)
Marion - I owe you a bunch of flowers/bottle of champagne .... Just looking into renewing my house insurance. I asked the broker to recalcuate the current rebuild cost of the house using the standard formula for 2010 and it came to just over half the rebuild cost stated on the original valuation report! So if it hadn't been for this thread I would have merrily asked her to reset the rebuild cost to the new level, been delighted with myself for saving perhaps 150/200 quid for the year little suspecting that I was leaving myself open to loosing my dearly-beloved tracker ...
 

thedarkone

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Households facing new property tax in Budget

Reported in today's Indo:

w ww.independent.ie/national-news/households-facing-new-property-tax-in-budget-2230836.html

"Households facing new property tax in Budget
...it is understood self-assessment would involve homeowners getting professionals to value their properties"


What a nice, easy way for the banks to get us off trackers and avoid the hassle of getting everyone to conduct valuations to see if they satisfy the LTV! Nice one, Mr Cowen, you've saved the banks, now saving them hassle...
 
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