# Compensation for giving up tracker mortgage



## Cliffman

Banks are leaking significant amounts of money as a result of funding their customers tracker mortgages. In other words the customer has a 'valuable asset' although most would not see it that way! Now as banks would love to shift their customers to mortgages with a more suitable margin attached, would they willing to compensate the customer if they volunatiliy switched from their tracker? I'm hearing they are open to these sort of conversations. Anybody have an experience of this?


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## steviel

Dont do it!!  Banks are offering lump sums because it is such a good deal for you and such a bad deal for them.  You are so much better off staying on your tracker.  Every radio financial pundit I heard talking about this when banks started offering the deal a few weeks ago said you'd be crazy to give up your tracker for a lump sum, that will be made nowhere near big enough.  If I were on a tracker theres no way I would give it up for all the tea in China. 

If the markets stay tight, and another country does a 'Greece', then sovereign debt margins will go up again, government borrowing costs will go up, and therefore bank borrowing costs will go up, which they will have to pass on to the customer.  If you are on a tracker you are immune to this.  If you are like the rest of us, prepare to be badly burned!


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## MortgageGuy

there are no formal offers out there for this kind of thing yet, and even if there was, do you reckon a bank wouldn't do the maths beforehand? You might win on a capital sum but they would claw it back on variable rates and likely stitch in a no-switch condition too.


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## Brendan Burgess

It would depend on the offer, and it's unlikely to be a good offer.

However, if you were in danger of losing your tracker anyway, because you were planning to trade up or down within a few years, it would be well worth doing...as long as there isn't an early termination fee.


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## Cliffman

*Gov expert group- a new ball game?*

I was thinking of going interest only to overcome some temporary difficulties but am aware that the price of this will be for me to give up my tracker.I am aware also that compensation for me will be weighted in the banks favour. However if I need to do it I'd be better of to get some compensation rather than not. I had decided to try and muddle through a few more months rather than give up the tracker but news from the government expert group suggests banks will soon be unable to force people to give up trakers if they reshedule payments. Any idea as to when these suggestions from the expert group will be put into practice?


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## marvin

Cliffman said:


> I was thinking of going interest only to overcome some temporary difficulties but am aware that *the price of this will be for me to give up my tracker*.I am aware also that compensation for me will be weighted in the banks favour. However if I need to do it I'd be better of to get some compensation rather than not. I had decided to try and muddle through a few more months rather than give up the tracker but news from the government expert group suggests banks will soon be unable to force people to give up trakers if they reshedule payments. Any idea as to when these suggestions from the expert group will be put into practice?


 

Not necessarily - we went interest only for the same reason and were allowed to keep our tracker.


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## RMCF

steviel said:


> If the markets stay tight, and *another country does a 'Greece'*, then sovereign debt margins will go up again, government borrowing costs will go up, and therefore bank borrowing costs will go up, which they will have to pass on to the customer.  If you are on a tracker you are immune to this.  If you are like the rest of us, prepare to be badly burned!



Best bet Ireland !

As someone on a tracker I don't see myself ever giving it up, nor do I expect the bank to make me an offer. 

If a bank did ever make you an offer, I'd guess it would only be in the ball park of maybe €2000 or so, which simply isn't good enough. They might of course catch a small number of people who would find €2000 cash very attractive to pay off some short term debt, but it would be a bad call on their part to accept it.

The only way I can see banks getting the likes of myself off the tracker is if I decide to move house or build in the next 3 or 4 years, when they will obviously tell me I have to cancel my tracker and take out a fresh variable mortgage.


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## darag

Banks are not going to offer big sums for people to switch from lower interest rates to higher ones.

Because the customer can generally pay down their mortgage at any stage, it is impossible for the bank to calculate the present value of the future monthly payments increases.

They could use some actuarial method (e.g. assume that the average mortgage is held for 7 years) to calculate how much they should pay customers to switch to a higher interest rate but this wouldn't make any sense as the customer has information that the bank doesn't (i.e. how long they intent to continue to hold onto the mortgage.)

For example, even if the bank offered a measly 1 or 2 grand for people to switch, then you can be sure that everyone would switch as closely as possible to when they were about to complete the sale of their house.  The bank would be relying on their customers being idiots to take 2 grand in exchange for an extra 100 euro a month when they intend to stay put for 15 years or so.

The only way this could make sense would be if the customer was contractually locked in to the mortgage for a minimum number of years as part of the switch.


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## Knuttell

> *The IBA said it believes tracker customers would need a break-deal  offer above 25pc (€75,000 on a €300,000 mortgage) to make it worth their  while. *He said that customers who dealt directly with the banks could  have significant pressure brought to bear on them to change their terms.
> "We  are urging mortgage holders not to feel pressured into changing their  loan terms or switching to another provider. People should see this as  an opportunity to perhaps secure a better deal in the market," Mr Kinane  said.
> 
> 
> [broken link removed]



If I really had to I would not give up trackers for less than 25% of loan outstanding.


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## JackN

Maryin,

Can you tell which bank allowed you to go interest only and stay on the tracker mortgage?

Thanks,


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## fababby

My sister went interest only for 6 months and kept her tracker mortgage of 1.9% - she is with ICS Building Society


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## cartman1

I don't think a bank can take you off a tracker if you ask for an interest only period or even a payment break because your loan contract is still in place. In case I'm wrong though, I'll add Bank of Scotland (Ireland) to the list. They did it for a friend of mine.


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## pc7

I rang First Active (now Ulster) about taking a break without losing my tracker, they said as part of my contract I am allowed take 6 months break without losing it over the lifetime of the mortgage.


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## Kitten

We switched both our investment property (used to be family home) and our home (used to be holiday home) to interest only and both are still on tracker without any threat to change it.  Permenant TSB and Bank of Scotland.


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