# Moving Tracker Mortgage with BOI?



## dragonboy (1 Sep 2012)

Hi 
Has anyone had any luck in transferring their Tracker Mortgage with BOI, we took our loan out in 2007 and we are now in negative equity but now 3 kids later we really need to upgrade to a larger property, fortunately we have family that are willing to provide the additional capital to upgrade, therefore we do not want to increase or decrease our loan amount just simply transfer it to another property & at least the Bank will now have an asset on their books that will be in a lot less negative equity. so far the Bank have firmly refused. Has any one had better luck with them or any advise.

By the way we cant move out and rent as we would still have to heavily subsidise out mortgage and therefore the new rent and mortgage repayments would be more than our current mortgage, also we cant afford to move to a new variable mortgage. Basically we are keeping up current repayments with out any problems but could not possibly afford a penny more.


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## Brendan Burgess (1 Sep 2012)

> By the way we cant move out and rent as we would still have to heavily subsidise out mortgage



Can you show the calculations you used to arrive at this conclusion? 

Bank of Ireland are not allowing people to transfer their trackers. The only bank which allows this is UB.

Brendan


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## dragonboy (1 Sep 2012)

We took out mortgage for 440, its now down to 390 our repayments are 1850 per month, if we rented the house out we would only get about 1200 per month, (its in Monkstown farm) and as we want to upgrade any reasonable size house rent would be at least 1900 in the greater area + have to subsidise mortgage + pay tax on rental income.


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## Brendan Burgess (2 Sep 2012)

You have a great deal with a cheap tracker for €390k.   It's best to keep this as long as possible.  

There is a possiblility, but only a slight possibility, that BoI may give an incentive to people to pay down cheap trackers early.  With family cash available and the sales proceeds of the house, you might be be able to exit negative equity earlier than you would otherwise. This is not a reason for staying where you are, but it would be a factor to bear in mind.

As it is, it appears you have no choice but to stay where you are.


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## Brendan Burgess (3 Sep 2012)

dragonboy said:


> We took out mortgage for 440, its now down to 390 our repayments are 1850 per month, if we rented the house out we would only get about 1200 per month, (its in Monkstown farm) and as we want to upgrade any reasonable size house rent would be at least 1900 in the greater area + have to subsidise mortgage + pay tax on rental income.



Let's look at this again as it shows a fundamental misunderstanding about mortgages. Don't worry. You are not alone.



Mortgage|€390k|
Interest|€8,000| per year - assuming ECB + 1.25%
Repayments| €22,000|per year
Capital repaid|€14,000| per year.
.



Rental income|€14,400 
Interest paid|€8,000
Gross profit|€6,400 
Tax |€4,000|
Net profit|€2,000So what do these numbers tell us? 

Renting out your current home would make a  small profit for you after tax as you have such a cheap loan.  You may need to adapt the figures and allow something for the cost of renting, but the overall point is that you can rent your house out without it costing you anything. 

The problem for most people would be that they could not make the €14,000 capital repayments each year. But in your case, your family has the capital which they can give you each year. 

So, let your house. 
Borrow €14,000 a year from your family
You will be reducing your bank loan by €14,000 a year.
You will be increasing the amount owed to your family by €14,000 a year.
Your overall indebtedness won't change.

Rent a house to suit your family at €1,900 a month which is roughly what you are repaying on your loan at the moment. 

*However, you would still be better off staying where you are as long as possible 

*The real cost of your cheap tracker mortgage is €8,000 per year.
The cost of the house you want to rent is around €24,000 a year

The additional cost of moving house will be around €16,000 per year. 

You would be much better off using this to start paying down your mortgage and your negative equity.


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## Bronte (3 Sep 2012)

What is the value of the property? Would it be better if your family paid you the 'negative equity' so that you can sell it and then you can easily afford to rent for the current amount you are paying on the mortgage. 

Are family loaning or gifting money to you?

Taxes on property are only going one way.  It's not as easy to be a landlord as some might believe.


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## Brendan Burgess (3 Sep 2012)

Hi Bronte

Would that work? 

Assume 


 Mortgage|€390k
House|€250k
Negative equity|€140k€1850 represents €390k @ 1.5% over 20 years. 

Buy a house for €300k @ 4.5% over 20 years and the repayments would be €1600 a month

They can trade up a bit for €50k but not as much as I would think that they are planning. 

They will have to have a deposit. So the total cost to the family could be in the order of €200k. 

I think it's much better to rent as dragonboy has €390k at such a low rate. 


Brendan


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## dragonboy (3 Sep 2012)

Hi all, 
Thanks for responses, family are willing to give 100k as a gift/advance on inheritance. The house is worth 220/230 so in negative equity of 160/170, so if we sold we would still owe 60/70 and I don't think a bank would approve us for any more than 300 which just leaves 220 to buy some where which is impossible. We recon we need 330/340 to upgrade. Re renting with the 14 per year that is only a temporary solution till the money runs out and then chance of ever moving would be gone as inheritance gone. By the way we can't extend the garden is too small.


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## Brendan Burgess (3 Sep 2012)

dragonboy said:


> Re renting with the 14 per year that is only a temporary solution till the money runs out and then chance of ever moving would be gone as inheritance gone.



Hi dragon

That is a 7 year solution to your current problem. 

What is the worst outcome? After 7 years, you will have to move back into your present home. 

At that stage, you will have reduced your mortgage to €290k. 

Lots of other good things could happen


Your house may have increased in value and so the negative equity will be eliminated.
Your income may have increased
Overall, I still reckon your best plan is to stay living where you are for the moment. With €100k cash available, there is a chance that BoI might do a deal and with that and the sale of the house, your negative equity would be gone. 



Things may be physically tight at the moment, but you seem to have a good income and the financial backing of your family. This is a huge security.


If you move now, it will be a lot more expensive and you may end up becoming financially tight.


Brendan


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## dragonboy (3 Sep 2012)

Thanks Brendan, yes I think we are here for a while. All the best .


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