# Tracker Mortgage - Break tracker mortgage in exchange for 'pay off'



## fscott

Tracker Mortgage - Break tracker mortgage in exchange for 'pay off'.

Hi, we have a tracker mortgage. My partners business is really struggling and will probably go into liquidation soon. We are trying to plan as best we can for what might happen over the coming months.

One option is to sell our house. We have a tracker mortgage. If we sell the house we will loose this very valuable 'asset'. However, events may force us to sell.

I am thinking of approaching our bank now to see if we could do a deal where we release them from the tracker mortgage and in return they reduce some of the capital on our mortgage.

Has anyone any experience or knowledge of such deals?

Thanks.


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## NorfBank

fscott said:


> I am thinking of approaching our bank now to see if we could do a deal where we release them from the tracker mortgage and in return they reduce some of the capital on our mortgage.



I think this idea is fast approaching becoming an urban myth but there are some who have heard of people doing it.


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## minion

I know for a fact it has been happening.
Thats all I can tell you though. I cant go into detail.  Sorry.

But I dont see why the bank would agree to it unless they stood to make more over the remaining term of the mortgage by doing it than not.


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## Brendan Burgess

minion said:


> I know for a fact it has been happening.
> Thats all I can tell you though. I cant go into detail.  Sorry.
> 
> But I dont see why the bank would agree to it unless they stood to make more over the remaining term of the mortgage by doing it than not.



Hi Minion

You don't need to go into any details,but
1) Did it happen to you? 
Did someone tell you that it happened to them? 
or did someone tell you that it happened to someone they knew? 

2) What were the rough circumstances? 
Were they an arrears case?  
Did they sell the house? 
Did they just pay off the mortgage? 

3) Was it an investment property or their home? 

4) Which lender? 

5) Did it happen more than once?


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## minion

My brother has been the go between for the banks for several people who he knows.
In almost all of cases he got he banks to write off large amounts of debt in exchange for clearing the mortgage or coming off the tracker to variable.

I spoke to him this morning and the one with the tracker was for a couple.
He approached the bank for them and (these are only example figures im putting here) the bank agreed to a reduction of €35000 off a debt of €350000 if they switched from ECB + 0.75 to 5% variable.
So the bank stood to make money over the term of the mortgage.

Where I didnt understand that it was advantageous to the couple, as they would end up paying more over the term is this :

If the couple have savings with another bank and will just clear, or almost clear the mortgage now, then they have just saved themselves €35000.

Thats all I know.  I wouldnt say they were in arrears as they had money to lower he debt straight after the deal - though i wouldnt imagine the bank knew this at the time.

If you are in a position to do this get someone who is good at negotiating to talk to the bank for you.  My brother has done it for some friends, but then word got around and more of them have been asking him to do it.  He has stopped now, because it was a favor to a friend and now its just getting out of hand.  Im sure you'll find people who can help you with it.  Maybe AAM can set up something for people in this situation.  Or perhaps MABS can help too.


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## Brendan Burgess

> He approached the bank for them and (these are only example figures im  putting here) the bank agreed to a reduction of €35000 off a debt of  €350000 if they switched from ECB + 0.75 to 5% variable.



I am glad that is an example, as it would be a very bad deal for the borrower in most circumstances. 

They pay at least, an extra 3.25%, or around €10,000 in interest per year. 

This would only be value if they were planning to sell their home and had to redeem the mortgage anyway.


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## fscott

Hugely helpful everyone. Many thanks. F


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## minion

Brendan Burgess said:


> I am glad that is an example, as it would be a very bad deal for the borrower in most circumstances.
> 
> They pay at least, an extra 3.25%, or around €10,000 in interest per year.
> 
> This would only be value if they were planning to sell their home and had to redeem the mortgage anyway.



That was my point.  The bank must have something in it for them or they will never go for it.  There is only something in it for the mortgage holder if they can get rid of the new liability.  If the bank know they can just pay it off though, then they wont go for it.  But there are other deals to be made in that case.

Although I made up those numbers, the real numbers were actually that penal to the borrower.  That was specifically a carrot for the bank.


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## Brendan Burgess

minion

In this thread you say your brother is a solicitor in the UK. Are the deals you are referring to being done in Ireland or the UK? 

Brendan


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## minion

Ireland.  Hes doing it as a favor to people, nothing to do with his job.  Hes just a good negotiator, so they asked him to negotiate for them.  Word got around.  Now friends of friends are asking, so hes but the brakes on it.

This will only work with a tracker, where the bank have lost their bet on interest rates and you are costing them money.  On a fixed or variable, the bank have all the control (as with variable), or will have the control back soon (fixed).

For anyone thinking of doing this, the banks are never going to admit that this is a possibility.  You must have an offer for them that they will see as advantageous to themselves.  They dont care about you at all.  Get an offer together and send it in writing and then contact a person who has the authority to deal in the bank.  No point going to the counter or the call center.
If the bank asks for proof of income or savings, dont give it.  They only want to see your hand.  You already have a mortgage with them where they are losing on you.  Use it and give them no more.

This deal is not really good for people who cant get rid of their mortgage to realize the savings, as they will only be clawed back.
If you are in that position then
To pay off the mortgage altogether after getting your discount there must be a very good saving for you.  Otherwise you just keep the tacker at 1.75% or whatever and keep your cash somewhere else earning more than that plus dirt and you are winning anyway.


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## mathematics

*Buying out tracker mortgage*

I am reading in the newspapers today Sun Mar 20, similar story regarding Irish Permanent.
However my question is.

Assuming an individual with a tracker mortgage could assess funds, does anyone know if anyone considered the total buyout of the tracker mortgage.  Perhaps using a lump sum payment of the current loan Discounted at a certain percentage.   This could result in a total buyout of the tracker mortgage which provides a discount of between 40%-50%.   

The bank would get the loan of its books; the bank would get a lump sum today which they can lend out at the rate higher than they are currently getting .  This could help their stress test numbers .   It could be a one off arrangement which would be open for a certain duration of time.


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## WinWin

mathematics said:


> anyone know if anyone considered the total buyout of the tracker mortgage.



This is probably similar to minion examples, in his post the bank is reducing the capital remaining to covert to a SVR, but in reality the bank probably know the person wont be paying the SVR for long and they pay off the mortgage soon.
I cant see the banks believing someone with (e.g) 20 years left on a mortgage dropping a tracker to move to the SVR for only a 10% reduction in capital.  I dont believe the bank goes into this thinking the person is going to be paying the SVR for the next 20 years.


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## Brendan Burgess

I have written a systematic Key Post on the topic.


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