PTSB reported to be making limited offers to customers to come off trackers
- Thread starter Brendan Burgess
- Start date
I wouldnt go for any of those options if there are conditions.
At the moment for people on trackers, the bank has no power to screw you. And they are very good at that as we've seen the non-stop recent rate rises.
Basically the bank wants it to appear that you are gaining, and then lock you in so that it is actually them gaining in the long run, with no advantage to you at all.
Keep your potential overpayments in the highest interest account you can find. That way you are getting interest which is greater than the rate on your mortgage. If you feel like paying a lump sum off the mortgage at a later date, or when the interest rates no longer work in your favor, do so. This way you are winning, and you are in total control of your money.
If the bank offer you a nice lump off your mortgage in exchange for getting you off the tracker, ONLY TAKE IT IF THERE ARE NO CONDITIONS ON WHEN YOU ARE ALLOWED TO PAY OFF YOUR DEBT. That way you could accelerate payments or even pay it off completely if you have the funds. But you do not relinquish control to the bank.
Remember, the bank is still trying to make a profit off you. They are not doing you any favors here unless you remain in control.
At the moment for people on trackers, the bank has no power to screw you. And they are very good at that as we've seen the non-stop recent rate rises.
Basically the bank wants it to appear that you are gaining, and then lock you in so that it is actually them gaining in the long run, with no advantage to you at all.
Keep your potential overpayments in the highest interest account you can find. That way you are getting interest which is greater than the rate on your mortgage. If you feel like paying a lump sum off the mortgage at a later date, or when the interest rates no longer work in your favor, do so. This way you are winning, and you are in total control of your money.
If the bank offer you a nice lump off your mortgage in exchange for getting you off the tracker, ONLY TAKE IT IF THERE ARE NO CONDITIONS ON WHEN YOU ARE ALLOWED TO PAY OFF YOUR DEBT. That way you could accelerate payments or even pay it off completely if you have the funds. But you do not relinquish control to the bank.
Remember, the bank is still trying to make a profit off you. They are not doing you any favors here unless you remain in control.
J
JoeB
Guest
Interesting point.
The mortgage interest relief is paid by Gov.ie.. i.e someone else. So again, people may be better off with a mathamathically fair deal, as some of the extra interest will be paid by the Gov, so the mortgage holder benefits.
But the Gov can change the rules about relief...
I think it'd be possible to work out how the interest relief affects the calculations although it'd be slightly complicated.
For people interested in maths...
This link
oakroadsystems.com/math/loan.htm
gives a complete mathamathical breakdown on how these figures are calculated. It also links to an Excel file that contains the formulas and performs all the calculations as well, very useful, and the results agree with previous knowledeable posters.
The calculations are complicated, involving exponents, logs and geometric series. Some variables cannot be solved for exactly, and numercial or approximate methods must be used. (Newtons Method etc, explained in above link.. this applies to solutions for the interest rate.)
Quote from above link
http://oakroadsystems.com said:
Cheers
I've run a couple of scenarios on my own debt which assesses what is a fair number in terms of giving up your tracker. Based on funding to me at 2%, the banks being funded at 6%, a discount rate of cashflows of 12% (may not be appropriate), and the fact that I will see the mortgages I have run both full terms (ie. 20 and 30 years remaining) at a linear declining balance
The outcome is that the bank would need to compensate me 36% debt write off, ie. €36k in credit for every €100k I chose to pay down in cash, to give up a tracker on 2% and move to a SVR of 6%. I'm interested in people's challenges of this analysis. Obviously it assumes an ongoing differential of 4% between the banks cost of funds and the tracker rate, so assumes the banking situation doesn't really improve significantly in 5-10 years.
Based on PTSB's reported 3% 'bonus', and my 36% needed... I would beware. Additionally, any offer is naturally going to be in the interests of the bank, so the only way to do it would be to pay down the mortgage immediately after the move to SV rates.
Any thoughts on this.
The outcome is that the bank would need to compensate me 36% debt write off, ie. €36k in credit for every €100k I chose to pay down in cash, to give up a tracker on 2% and move to a SVR of 6%. I'm interested in people's challenges of this analysis. Obviously it assumes an ongoing differential of 4% between the banks cost of funds and the tracker rate, so assumes the banking situation doesn't really improve significantly in 5-10 years.
Based on PTSB's reported 3% 'bonus', and my 36% needed... I would beware. Additionally, any offer is naturally going to be in the interests of the bank, so the only way to do it would be to pay down the mortgage immediately after the move to SV rates.
Any thoughts on this.
The banks are never going to compensate you fully. Why would they?
If they offer you a deal, then it will definitely be in their favour as far as they have calculated.
It is similar when the banks offer fixed rates. They expect to make more out of it, otherwise they wouldn't be offering them.
If they offer you a deal, then it will definitely be in their favour as far as they have calculated.
It is similar when the banks offer fixed rates. They expect to make more out of it, otherwise they wouldn't be offering them.
Based on some of the examples on the previous page if the banks were to write of approx 80k on a 250k mortgage and switch people from tracker to standard variable they would still receive the same amount of money over the course of the loan. If this is the case is it not in their interest to try and do this if they could lock people in for the full duration on the balance?
Brendan Burgess
Founder
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Folks
As the calculations here were very confusing and used wrong figures, I have started a fresh Key Post on the topic here.
http://www.askaboutmoney.com/showthread.php?t=153229
Brendan
As the calculations here were very confusing and used wrong figures, I have started a fresh Key Post on the topic here.
http://www.askaboutmoney.com/showthread.php?t=153229
Brendan
If you were stressed and needed to restructure the mortgage deal, then the bank would nail you to the wall.
In this case, the bank is stressed and needs to restructure the mortgage deal. And yet they still want to nail YOU to the wall.
Dont accept that kind of treatment.
In this case, the bank is stressed and needs to restructure the mortgage deal. And yet they still want to nail YOU to the wall.
Dont accept that kind of treatment.
PTSB To Reward Trakcer Overpayers
Here we go again or will it actually happen?
[broken link removed]in the IT.
For every €1000 paid off, PTSB will reduce sum owed by €1050.
Handy if you are already overpaying but will it incentivise those saving in a high interest current account to start overpaying their mortgage instead?
Here we go again or will it actually happen?
[broken link removed]in the IT.
For every €1000 paid off, PTSB will reduce sum owed by €1050.
Handy if you are already overpaying but will it incentivise those saving in a high interest current account to start overpaying their mortgage instead?
Sounds better than "For every €100 paid off, PTSB will reduce sum owed by €105"
Believe it not there are people about who are in a position to over pay their mortgages or pay lump sums.
I have a friend who I had to almost physically restrain from paying off a significant lump some last year in anticipation of PTSB being forced into this situation - by the sheer weight of numbers.
Again I had to force her to stop overpaying a month ago. There is no likelihood the bank would offer the same incentive to someone who is already overpaying.
There are an awful lot of people sitting on highly competitive trackers. Whilst a lot may be struggling to meet repayments another significant number of quietly trying to pay down their debts to get out of Neg Eq and move on with their lives. These are financially astute and will have been waiting on a deal like this. If only because it has been so widely flagged at this stage.