# Second SFS turned down- update Danske agrees to reschedule tracker



## bannerman (30 Nov 2015)

In a nutshell we entered MARP with Danske Bank last year and received a 12 month approval to reduce our mortgage payment from approx. €1100 per month down to €190 per month. After the 12 month period we resubmitted our updated SFS and have a current capacity to repay €195 per month.
We feel this is very much a medium term issue.I and my wife are both 37 and foolishly took out a very short term mortgage (approx 17 years).We currently have approx 8 years left.A combination of childcare costs and my wife being out of work means paying the full amount is not sustainable, again in the medium term.I am fortunate to be in the public sector so essentially have guaranteed works and pay until I am 65 so no risk there!
Our most recent SFS was turned down and I am in the process of appealing.Based on the Central Bank options outlined on P.17 of their MARP booklet I feel we are being unfairly treated as we will have capacity to return to full payment and could do this through, for example an extension of our mortgage term, capitalisation of arrears, etc etc.I genuinely feel that a combination of us being on a tracker rate and not being in negative equity makes us a profitable target for the bank.Are the banks not OBLIGED to consider all the central bank options when trying to help a mortgage holder?
We have three small children and are finding this incredibly stressful.  I am about to progress to internal appeal stage... and onto the Financial Ombudsman, but hope it won't get to that.I just really need some advice so that hopefully we win the Appeal.  Thanks in advance


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## Brendan Burgess (30 Nov 2015)

How much is your mortgage? 
What is the interest rate? 
What is the house worth?
What is your salary?


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## bannerman (30 Nov 2015)

Hi Brendan... details below

*How much is your mortgage?* Main mortgage subject to MARP is approx €90,000. Second mortgage equity release approx. €16,000 (not subject to MARP and currently paying the full amount)
*What is the interest rate?* Tracker of 1.25%
*What is the house worth?* €165,000
*What is your salary?* €3,250 per month (€58,656 GROSS per year)

Thanks for your help


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## Brendan Burgess (30 Nov 2015)

I am confused. If your wife is out of work, why do you have child care expenses?

A couple with 2 children would have Reasonable Living Expenses of €1,800. This would leave you with €1,400 to pay the mortgage.

€106,000 @ 1.25% over 8 years would be €1,160 per month. You can well afford it. And after 8 years, you will own your house mortgage-free. 

Danske Bank have been very reasonable in giving you interest only for a year on such a cheap tracker, when you can easily afford it.

I don't think that they should be required to extend a loss-making contract beyond the original term.

I think that you need to be realistic. You need to make a more serious offer much closer to the full repayment. 

Brendan


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## bannerman (30 Nov 2015)

The childcare is there, unfortunately, to keep our place in creche and represents the minimum they will permit.  My wife is a newly trained teacher so to have no childcare completely prevents her taking any sub work and building a relationship with schools that could lead to full time work in the future.  It is costing us €445 per month. All our kids will be out of creche in 2 years time.

Our SFS for the two adults and three kids is based on the Minimum Standard of Living Guidelines, which in a few cases we are below the agreed minimum. So the most we can pay is the current €195 plus the €445 on childcare - total €640 (that would preclude any future work for my wife which would make paying the full amount even less likely).

All we are seeking is a medium term solution - the tracker issue shouldn't be used against us. We overpaid our mortgage for a number of years and the arrears we are currently incurring could be dealt with through a 2-3 year extension of term.  It is in out best interests to clear as much of the capital as possible given the historic low interest rates; the simple fact of the matter is that we cannot.  And with all due respect I appreciate the answer but to be accused of needing to be more realistic and stating Danske have been very reasonable (also it is not interest only, it is reduced capital plus interest) is a bit uncalled for considering the scope of the information I provided.


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## Brendan Burgess (30 Nov 2015)

Hi bannerman

What Minimum Standard of Living Guidelines are you using? I have put your figures into the ISI's Reasonable Living Expenses Calculator and they come out at €2,038 which leaves you with €1,200 for your mortgage. 

I appreciate the dilemma over the childcare. But you can save €445 per month by minding the kids yourselves.  



bannerman said:


> the tracker issue shouldn't be used against us.



It's not being used against you as such. You have a cheap tracker mortgage, and by my interpretation of the ISI's guidelines you can well afford to meet your repayments in full.  I really don't think that any lender should be forced to reschedule a loss making mortgage, unless it's absolutely necessary.  

Even by your own guidelines, you could pay €640 per month, but you want to pay only €195. 



bannerman said:


> We overpaid our mortgage for a number of years



OK. What would be the balance today if you had not overpaid it and if had not received a reduced payment period? Would you be ahead or behind. If you are ahead, then I think it's reasonable to ask to be put back on schedule. 

Based on the original information you provided, you are being unreasonable.  Danske reduced your repayment from €1,100 to €195, which was very reasonable of them.  There are very few families of 5 expecting to pay as little as €195 per month for their accommodation expenses. 

Brendan


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## Gerard123 (30 Nov 2015)

Hi, sorry to hear this is so stressful but no need to shoot the messenger, you did seek feedback.  Brendan's advice is quite reasonable and fair.

I took a quick look at the gross vs net salary.  €58,650 based on the info provided (married, one earner, 3 kids) usually equates to 3,650 per month take home.  Are there other deductions from your salary or how come your take home is €3,250 - something not making sense here to me. Also childcare allowance, TRS, etc.

It does seem that the Bank have been pretty fair and accommodating, extending the period for reduced payment, etc.  There is only so long that can continue.  Your costs, and particularly paying €445 per month to in effect retain the option on a place in a crèche - does that really make sense in the circumstances?   You could seek to refinance with another Bank but that will inevitably be at a higher rate so if I was you I would absolutely want to retain the tracker.  Admirable that you took out a shorter term (17 years) mortgage, unfortunately that is working against you.

My suggestion is to tighten the spending, look closely at the childcare costs, other costs and put a proposal to them, offering a higher payment per month.  Unrealistic to expect the Bank to continue for the medium term accepting 195 per month.

I have been through the FSO process on something so I think based on my reading of above you are most likely wasting your time and just going to get more frustrated and stressed.  Better to use your energy to look at how you can solve the problem, consider options, etc.  Good luck!


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## bannerman (30 Nov 2015)

Hi Brendan/Gerard

Maybe I'm being naive but is it _unreasonable_ to ask for a further 1-2 year extension and then return to full repayment with an optional 3 year add on in term?  That way the bank gets all its due and a bit more interest given the extension in term.

The creche issue is as frustrating to us as it is to the bank but in the long term in the best interests for us and the bank as it makes it possible for us to pay back the mortgage.  If we pulled the creche we would be guaranteeing no work for my wife; this way we at least keep that door open.

The reduced monthly income is down to the fact she got a few months sub work last year so used some of her own credits - the income she got (not paid for holidays etc.) covered the childcare, literally! So again this only becomes sustainable in 2 years time when all kids are in school and we have the creche money plus her earnings (if any) to put toward the mortgage.

We are using the minimum standards from the Vincentian Partnership for Social Justice.

Never meant to shoot the messenger but believe me, we are being realistic but you can't get money where there is none to give!


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## 44brendan (30 Nov 2015)

It's not a question of reasonableness here. Based on the SFS provided to the bank they have assessed that you can afford to meet your full mortgage payments. That is the purpose of the CCMA/MARP process. You are on a low rate tracker mortgage so in effect any increase in term would result in a loss of income to the bank.
The crèche issue is yours and not the banks to resolve. Their expectation is that you should use these funds to service your mortgage.


bannerman said:


> We are using the minimum standards from the Vincentian Partnership for Social Justice.


You can use what you like. However, the banks are required to use the Minimum Standards of Living guidelines so these are what you need to look up.

You may think you are being realistic, but there are only 2 options available to you. One is to comply with the MARP process and meet your monthly payments and the 2nd is to risk being thrown out of MARP and potential legal proceedings been taken against you. While you may not be forced out of your house you will have to ultimately bear the costs of legal action given that you have positive equity in your property. I would recommend that you meet the mortgage payments as required by the bank and look elsewhere for means of either cutting down expenses or increasing income.


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## Gerard123 (30 Nov 2015)

If your wife earned last year that has no impact on your tax credits this year.  Also means that your income would be even higher, as your wife earned something.  So far from your take home being lower, it would actually be higher. 

I input your figures into the Vincentian Partnership for Social Justice - 3 kids I assumed ages 3,4 and 5, owner occupier, etc.  On your salary, with children's allowances, etc, it implies your monthly expenditure is LESS than your salary, ie you have sufficient income to fully pay 1100 per month, live with their income levels and have something over.


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## epicaricacy (30 Nov 2015)

Hi Bannerman

Your wife and you are in an enviable position in that you will have your mortgage paid off by your mid forties. I can't understand why someone on a good public sectoral salary with a wife qualified as a teacher would decide to risk the wonderful postion you find yourselves in.  

The amount you're proposing is ridiculous in relation to your earnings. To put things in perspective - my wife and I paid 350 euros per month on a mortgage of approx. 1100 per month during the 12 month MARP when we were social welfare dependent (income 1343 per month) and the bank refused to extend this repayment amount for a second year. We appealed and our appeal failed. We didn't waste our time with the FSO.

I'd suggest you listen to the advice given by the other posters!!!


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## Pinkpanter (30 Nov 2015)

The take home pay is less due to pension related deductions ie pension levy!
Is there other expenses that you haven't mentioned in your budget! You have my sympathies but it doesn't add up!!


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## Dermot (30 Nov 2015)

Bannerman.  The advice above may seem harsh to you but I am in agreement with it.  What is the position with the allowance for the children.  Is there a deduction for health insurance at source. You probably have House Ins and Life Insurance and you need to review these to see are you getting best value for same and likewise with health Insurance.  You need to cut all these to the bone without having unnecessary cover. 
Have you credit card debt or other loans or paying into saving schemes.  Have you one or two cars.  
Your sums are not adding up and you need to give a lot more detail of your outgoings if you are to get any meaningful advice here.  I do not wish to be harsh here but your current payment is close to what a social welfare tenant has to contribute for a house out of their social welfare payments.  
You are in the lucky position to have this amount of positive equity and a low tracker rate and a good secure job. You cannot expect the bank to continue to accept that the total amount €44 per week is acceptable even in the short-term.


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## Brendan Burgess (30 Nov 2015)

Dermot said:


> your current payment is close to what a social welfare tenant has to contribute for a house out of their social welfare payments.



That is a really good comparison.

Brendan


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## bannerman (1 Dec 2015)

Thanks to everyone for their comments.  Just to finish we are not looking for special treatment, just an opportunity to engage with the bank (hard when there is a middleman doing their work).  We also don't epxect the bank to make a loss because of our arrears and would like to discuss captialising the arrears, going onto a variable after the current end of our tracker term, etc. etc.


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## Bronte (1 Dec 2015)

Would it be possible to move to a SVR mortgage with a longer term with your current bank and would that make the figure more manageable for you.  You'll have to input the figures to see if this is possible.  But you most certainly can extend the term given your ages.

And what is the 'vencentian' thing you used?

(I was told yesterday by an auctioneer in a city that his two bed has gone from 675 Euro to 1200 a month - not Dublin, so your mortgage looks reasonable to me)


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## dereko1969 (1 Dec 2015)

What is the full repayment on the equity release mortgage? You say you're paying that in full as it's outside of MARP but that must mean surely that you're proposing to pay more than €195.
Are the arrears solely from the current low payments or had you built up arrears before you entered MARP?
You might think you're not looking for special treatment but you are.


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## bannerman (18 Mar 2016)

Hi all. 

Just wanted to provide an update on our case that may be of interest/provide hope to others in a similar situation.  We _appealed_ the decision of Danske to reinstate our mortgage to full rate.  The appeal listed their non compliance with a number of agreed MARP procedures as well as some interesting statistics from the Financial Ombudsman Annual Report that don't paint them in a good light in terms of how they manage their mortgage portfolio. 

Thankfully they saw sense and agreed with our original argument that our financial situation was temporary, our previous repayment history was good and we now get to stay on the reduced ARA of €190 for 12 months and then got our term extended until I reach 60 that will result in a new monthly repayment of approx. €350, as opposed to €1,100.  Whilst this will of course lead to more interest accruing (we are lucky to have a tracker) it has provided the breathing space we needed and we can overpay this amount when we can.

To all those who felt we were seeking special treatment, that we were in a "lucky/enviable position", what we proposed was ridiculous, that I needed to "make a more serious offer much closer to the full repayment" etc. - the banks aren't always right and sometimes it takes us bringing them to task and not defending them as seemed to be the recurring thread in my case.

So I do very much appreciate the time you all took to offer your advice, I'm just thankful that I stayed the course and followed my instincts. To others in a similar situation, don't give up hope.


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## Brendan Burgess (18 Mar 2016)

Hi bannerman

That really is an astonishing deal for someone with a good salary, a tracker mortgage and positive equity.  

When you say you appealed it, I presume that was the internal Danske appeal? 

But well done! I have always argued that lenders have been very flexible with customers, but, from the information you have provided us with, it seems as if they have been more than generous.
Brendan


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## bannerman (18 Mar 2016)

Hi Brendan

Yes it was through their internal appeals system.  However a good salary, tracker mortgage and positive equity are of little use if the repayments are unsustainable! Whilst the deal is great for us, it was a long hard fight and I think people may take issue with any bank being called _generous_!  Let's face it, they only have a couple of things on their mind; profit and avoiding bad press!

All the best

Bannerman


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## Brendan Burgess (18 Mar 2016)

bannerman said:


> I think people may take issue with any bank being called _generous_!  Let's face it, they only have a couple of things on their mind; profit and avoiding bad press!



If profit was the only thing, they would just repossess as you have plenty of equity and they would be getting rid of a tracker. 

Danske don't care about bad press as they are no longer trading in Ireland. 

If it were AIB or Ulster, I would find it a bit easier to understand.

You must be a great negotiator. 

Brendan


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