Key Post Are lenders giving discounts for the early repayment of tracker mortgages?

Brendan Burgess

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This comes up from time to time on askaboutmoney so I am compiling all the information in the one Key Post and hope to keep it updated if the situation change

Some people claim that the lenders are doing deals
Here are some of the claims on askaboutmoney: Minion But no one has yet reported that they themselves got a deal. A user on boards.ie claims he was proactively called by his lender and offered €10,000, which they upped to €16,000 to switch to a variable rate, which is not quite the same thing, unless you can then redeem your mortgage without penalty.

I have no first hand or second hand evidence of this. Commercial reports in this thread that he works in the area and has not seen any evidence either. Nor has Norfbank, a mortgage broker.

There is plenty of, direct evidence of refusals e.g. RMCF, tatapeg(twice), PC Dave and diddler on this boards.ie thread


While there is no formal evidence that banks are doing deals, you should ask anyway.
In case the rumours are true.

You are more likely to get a deal if you are in serious arrears and you want to sell your home.
This is the same for all customers who are in serious arrears, whether they have trackers or not.. If the sale proceeds are not enough to cover the mortgage, then the borrower still owes the lender the balance. Lenders will not formally and legally agree to writing this off, but they may give an oral undertaking not to pursue the deficit.

I think it’s more likely that the lender will facilitate the sale of your home at a loss but issue you with an unsecured loan for the deficit at the same tracker rate as the mortgage. Ulster Bank are doing this selectively.

Discussed further in this thread

Don’t tell your lender you want to move home
The main reason lenders are not doing deals is because they expect a certain percentage of customers will pay off their mortgage early anyway, if they want to move home.

Bank of Scotland and Halifax
Bank of Scotland/Halifax have stopped doing new business in Ireland and want to wind down their mortgage book as quickly as possible.

They are offering €1,000 in legal fees to home owners who want to switch to another lender. Full Story

They have said, publicly, that in reality, they are facilitating the sell-off of buy-to-let properties which are in serious negative equity.

In early 2010, there were reports of BoS proactively calling some of their borrowers offering them up to 10% to switch off cheap trackers. They never put the offers in writing and BoS denies that such offers were ever made.

Sub-prime lenders who are no longer in the market may do deals
I suspect that the sub-prime lenders who want to exit the Irish mortgage market would be very open to facilitating the sale of properties in negative equity. These include
GE Mortgages
Stepstone
Nua Mortgages

Permanent TSB are reported to be about to announce a deal
The Sunday Business Post have reported this, but it doesn’t seem to be that generous.




I have a lump-sum, should I pay it off my cheap tracker?
This is discussed at length in this thread.

While the safest place for your deposit is to reduce your loan, I think it’s worth waiting to see if the banks might do deals.



What would be a good deal?

What is a fair price for paying off a tracker early?


The Irish Brokers Association reckons that lenders should offer a discount of around 25% on the capital for it to be a fair deal.
Here is how one user on Boards.ie reckoned they should give him up to 75% off the capital.
 

Brendan Burgess

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Are the banks likely to become more willing to do deals?
The banks are under pressure to deleverage. What better way than getting customers to repay their loans?

If the lenders are forced to sell their cheap trackers to a foreign lender or to some form of Personal NAMA, they will presumably sell them at a fairly big haircut. I would guess that a borrower who has money on deposit would probably pay a higher price to "buy back" their loan than a third party would.

The Central Bank may force the lenders to make provisions against cheap trackers. I understand that they are not making any provisions at present, unless the loan is also in arrears. If a bank has a cheap tracker with a face value of €200k on its books at an accounting value of €120k, their reported profits would increase if they settled with the borrower for any amount in excess of €120k.
 

Commercial

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I am heavily involved in putting together proposals for various borrowers since Christmas. To date I have 2 formal written proposals put forward to the Banks, had initial discussions on 2 other deals and in the midst of gathering information for 4 other proposals.
One bank in Ireland is actively pursuing BOSI commercial clients, once they are of high quality. I have spoken to a senior lending manager and they are open to refinancing.
IMO deals will be done, at what level depends on the borrower the nature of the security and what potential it has.
 

Brendan Burgess

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38,435
This is a very broad issue. Please stay on topic.

This thread is simply to establish whether this is happening or not.

If you want to discuss the tax implications or anything else, go to another thread.
 
H

HenryC

Guest
Hi All,

I'm just wondering if anyone knows if Ulster Bank are offering discounts to pay off trackers early?

I have recently come in to some money and was thinking of using it to pay off my mortgage.

Another option might be to see if they would give a discount to switch to a variable rate mortgage and then simply pay off this reduced sum.

Thanks all.

Henry
 

pudds

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1,708
There was a man on live line today telling Joe that he had a bond worth €70k which had just matured and he was thinking of paying off some of his tracker mortgage with it and he said he thought the bank(s) might be offering an incentive for doing this.

The bank told him that there would be a penalty for paying it off early, and it would amount to 2k in this case.

The bank in question was not named.
 

wbbs

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He actually did say it was PTSB

No direct knowledge but based on some experience seriously doubt UB would give a discount.
 

Harry31

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We contacted Bank of Scotland with a view to paying off our mortgage for our rental house - were turned down flat. So won't be doing that - the house is rented at the moment anyway & covering the mortgage, so we've put the money in an An Post 3 year investment. Just hope we did the right thing!
 
O

OH1

Guest
We have a tracker mortgage with BOS, we rang them and said we wished to redeem it and were told to submit a proposal in writing suggesting a figure and they would then decide on it, said it would take six weeks. Had a look at the Irish Brokers Assoc and they indicated banks should offer between 10% - 25% of the capital. Does anyone know where I can get proper advise on this before submitting a letter asap?
 

kildon

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I enquired with EBS this year and they flatly refused to even consider it however a friend who was in arrears, they offered him 30k by way of clearing the arrears and reducing the term, although he never got this in writing, this was back in early 2010
 

Commercial

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Writedowns are being done by some banks. I have experience with ACC Bank and BOS and AIB. However, it all depends on your circumstances and where you are currently at in your finances.
This is not a simple process and the success rate at present is relatively low
 

Bronte

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What kind of write downs are they offering and to whom? People in arrears or people with money?
 

Commercial

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I don't mean to be vague but it is a case by case basis. If you have no money you are in a better position. You don't necessarily have to be in arrears
 

Brendan Burgess

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Hi Commercial

It's not very useful information other than saying it is relatively low.

Which banks have actually written down loans?
Which banks have actually refused to write down loans?

Can you give even one case study?
 

seantheman

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Hope this is'nt a stupid observation but this thread is about discounts for early repayment of tracker mortgages.How are you in a better situation to get a discount if you have no money?
 

Bronte

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Because there really is not point giving a discount to those who can pay but those who can't pay will get the discount, probably a relative or someone else stumps up the cash. Look at all the posts on here on credit card debt, those that got the discounts were those in long term arrears with no hope of payment.
 
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