# Paying off tracker earlier



## gilboy (18 Dec 2010)

Hi

I have a tracker mortgage of about 60k.

I also have savings of 60k. Since banks are not making money on trackers, I am wondering if I approach the bank and suggest paying of the mortgage early would they reduce the principal to entice me to take this option, i.e. I pay something like 55k.

Thanks!


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## NorfBank (19 Dec 2010)

This has been discussed before, try a search.

The general consensus is no, they will not give you a reduction.

www.moneybackmortgages.ie


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## Brendan Burgess (19 Dec 2010)

Hi gilboy

They should bite your arm off, but they are not doing so. 

Brendan


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## DingDing (19 Dec 2010)

Probably waiting for them to be taken into NAMA to make the rest of us take the hit for it.


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## Lobby (20 Dec 2010)

I enquired this off PTSB and the answer I was given was "Officially - NO, unofficially, on a case by case basis"

So it depends on who you speak with and what the circumstances are.

It's certainly worth a try, a NO won't offend!!!!!!!


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## Brendan Burgess (20 Dec 2010)

DingDing said:


> Probably waiting for them to be taken into NAMA to make the rest of us take the hit for it.


.

Hi DingDing

This is a common misconception about NAMA. 

If NAMA were to buy the tracker mortgages from the banks, they would pay the long-term economic value of those loans. Thus the banks would take the hit immediately as low-cost trackers would be worth a lot less than the book value of the mortgages. 

I have a low cost tracker with AIB. I suggested to them that I would pay it off early if they gave me a discount. They were not interested. 

Would I like to see this loan transferred to NAMA?   If NAMA bought my mortgage from AIB for 70% of its book value, they might be happy to accept, say 80%, to get it off their books at a profit. Or AIB might be much more flexible now before they are forced to sell it to NAMA. 

Brendan


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## DerKaiser (20 Dec 2010)

Chances are that someone offering to pay chunks off their mortgage is good for 100% of the repayment, so you certainly shouldn't expect any default probability to be built in to a pay down.  

NAMA focussed on high worth individuals for a reason, the administration of going through hundreds of thousands of mortgages to assess who's good for repaying and who's not would be very labour intensive and an absolute neccessity (and practically impossible) in making an assessment of economic value.

As for the cost of funding issue, I expect the banks fully understand that in the short term trackers will be loss making simply because of the cost of accessing funds.  In the medium to long term, however, they would probably have an expectation of accessing cheaper credit, perhaps by increasing their deposit base and keeping deposit interest low as the ECB increases the interest rate again. So I would expect that the banks believe most trackers still have a positive economic value over longer terms.

That said, no harm to keep asking.


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## Brendan Burgess (20 Dec 2010)

I emailed my bank again today, offering to settle a .6% above ECB rate for a 20% discount, and got an immediate reply that they are not doing such discounts.


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