On point 1, the lenders could have some sort of clawback condition but this could be messy.

www.moneybackmortgages.ie

- Thread starter Brendan Burgess
- Start date

On point 1, the lenders could have some sort of clawback condition but this could be messy.

www.moneybackmortgages.ie

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

Interesting point.THE FOLLOWING EXAMPLE IGNORES POSSIBLE INTEREST RATE INCREASES AND THE EFFECT OF MORTGAGE INTEREST RELIEF....

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:Interest Rate

This one, unfortunately, is trickier. Mathematicians say that there is no closed-form solution for interest rate, meaning that no straightforward formula exists to provide an exact solution with i on the left and other variables and functions on the right, in a finite number of steps. You can still find i, but you have to work for it. Here are several methods to choose from:

....

Cheers

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.

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.

- Messages
- 40,708

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

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.

Here we go again or will it actually happen?

Article 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"Here we go again or will it actually happen?

Article in the IT.

For every €1000 paid off, PTSB will reduce sum owed by €1050.

Believe it not there are people about who are in a position to over pay their mortgages or pay lump sums.Handy if you are already overpaying but will it incentivise those saving in a high interest current account to start overpaying their mortgage instead?

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.