# Reduced income really struggling - will we lose our tracker?



## Susan O (13 Feb 2016)

Age: 35
Spouse’s/Partner's age: 37

Annual gross income from employment or profession: €24000 ( working 3 days per week )
Annual gross income of spouse:€30000

Monthly take-home pay €3840

Type of employment: e.g.  *Both employed in private sector*

In general are you:
(a) spending more than you earn, or – *Spending more or breaking even*
(b) saving?

Rough estimate of value of home €350000 - €400000
Amount outstanding on your mortgage: €300000
*What interest rate are you paying? .9% tracker*

Other borrowings – car loans/personal loans etc Credit Union loan €8000

Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? €2500

Savings and investments: 0

Do you have a pension scheme? Yes but stopped paying into it due to childcare costs 

Do you own any investment or other property? No

Ages of children: 4 & 2

Life insurance: Yes


*What specific question do you have or what issues are of concern to you?*

*When we took out our mortgage 8 years ago we were both earning much higher salaries which left us comfortable. Unfortunately both of us lost our jobs 4 years ago. We were lucky to find employment soon after but at much lower salaries. We have always met our repayments and have no arrears but in order to do this we have sacrificed living. Out of our net monthly income we have nothing left when we pay our mortgage, huge childcare costs, utilities, insurance, food, running cars etc. We don’t eat out, haven’t had a holiday in years, drive two old cars ( both over 10  years old – both cars are essential as we live in the country), both myself and my husband cant remember the last time we bought new clothes. If something comes out of the blue like a car repair or house repair we have to put it on the credit card because we don’t have any spare cash. What really gets me down is we cant afford activities for our children like swimming etc. – things kids should be doing. We just work to pay our bills. This miserable existence is really getting me down. I worry about the future and not been able to provide for our children. *

*I was wondering if our mortgage which has 27 years remaining could be recalculated over 35 years to free up some cash?*

*Would I lose tracker mortgage if this was done? *


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## Palerider (13 Feb 2016)

Yes you will lose your tracker, your mortgage is not making any money for your lender, the opposite in fact.

You are the squeezed middle, making ends meet just about, all credit to you as well, best advice is keep it up, any opportunity for a promotion, longer hours re overtime or change job to get a better salary should be in the mix but keep that tracker at all costs, as you are good payers your bank may grant you an interest only period but can't stress enough keep that tracker.


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## Brendan Burgess (13 Feb 2016)

Palerider said:


> Yes you will lose your tracker,



Palerider - why do you say this?  

The Code of Conduct on Mortgage was revised in 2010 to stop lenders removing trackers as a condition of restructuring.

While it was revised again about two years ago, and lenders can remove trackers in exceptional circumstances, I have yet to hear of a case of it happening?


Brendan


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## Palerider (21 Feb 2016)

Brendan Burgess said:


> Palerider - why do you say this?
> 
> The Code of Conduct on Mortgage was revised in 2010 to stop lenders removing trackers as a condition of restructuring.
> 
> While it was revised again about two years ago, and lenders can remove trackers in exceptional circumstances, I have yet to hear of a case of it happening?



not sure it is as simple as that in this instance, both employed in the private sector on modest salaries, spending more or breaking even monthly and asking for a seven year extension with loan to value of almost 86%, not sure how it makes sense for any prudent lender to agree an extension and certainly if it was agreed commercial reality is a prerequisite with this one, not as simple as saying the code protects the applicant' there are many ways to skin a cat.


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## Brendan Burgess (21 Feb 2016)

It really is as simple as that. 

I have not heard of any lender taking a tracker from anyone on their family home.

The lender may refuse to give them a restructuring of any sort but they will not take their tracker from them.

Brendan


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## Sarenco (21 Feb 2016)

But isn't the OP asking whether their lender will insist that they give up their tracker in return for agreeing to the loan extension?  The OP is not in arrears so I'm not sure that I see how the CCMA is relevant.

I wonder would their lender agree to let them port their tracker to a less expensive property?


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## Brendan Burgess (21 Feb 2016)

Sarenco said:


> The OP is not in arrears so I'm not sure that I see how the CCMA is relevant.



From the CCMA



You might argue that the borrower is not in pre-arrears. But no lender would take the tracker off a borrower as the borrower could subsequently claim that they were in pre-arrears. 

So the OP can apply for an extension without fear of losing their tracker.   If the lender offers them a restructuring which involves losing their tracker, they can take an immediate complaint to the FSO. 

Brendan


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## Sarenco (21 Feb 2016)

Fair enough but I'm pretty sure a bank would successfully argue that this is not a genuine pre-arrears case and that the CCMA does not apply. 

Things may indeed be tight but the OP has met their repayment obligations for the last four years - is there anything to suggest that circumstances have changed so that they are only now in danger of going into arrears?

Extending the remaining mortgage term from 27 to 35 years would bring them into their 70s with a mortgage outstanding.  Does that sound sensible?

It strikes me that €350-400k would be pretty expensive for a house in the country and trading down to a more affordable home would have a much more dramatic impact on the OP's family finances than extending the existing mortgage term.


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## Brendan Burgess (22 Feb 2016)

The lender will either 
1) Say that the mortgage is sustainable and offer no deal
2) Say that the mortgage is not sustainable and suggest that they sell it or trade down. 
3) Offer them some form of alternative repayment arrangement not involving a loss of the tracker 

I would be really shocked if the lender offered to extend the loan in exchange for sacrificing the tracker.


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## Bronte (22 Feb 2016)

Susan O said:


> *I was wondering if our mortgage which has 27 years remaining could be recalculated over 35 years to free up some cash?*



The first thing you need to do is talk to your bank and see what is possible.  I'm worried that they won't give you a term extension because of your ages.  35 extra years = 70 and 72.

How much is your mortgage costing you? Ditto the credit union loan. And how much in savings do you have with them?

Have you considered trading down.  Or renting.  How much is a three bed to rent near you.  If you sold you have 50K in equity, you could wipe out the credit union loan and the credit card.  That straight away takes a monthly cost out of the equation. And you'd still have 30K left (another 10 gone to auctioneer and legal fees)  But if you have equity of 100K you'd have 80K left based on the same asssumptions and that's a deposit of 20% on a 200K house.

Your biggest problem is that you might go under financially if you have a major cost item like a new car and you mentioned they are both over 10 years old.

Is there a possibility for the person working 3 days to go to 5?  Many people with young children and a large mortgage find life a struggle.  You mentioned swimming costs, the children are still young enough this is not an issue right now.  You probably are paying high childcare costs but this should ease in another couple of years.  There are things you can do with children that don't cost anything or a lot.   You need to be imaginative.  From you post I can only imagine your stress I find as a family the thing that cheers the children up the most is getting them outside to go walking or cycling.  It always amazes me how they change from non stop fighting to a good mood after an hour or so outside.  In fact it cheers everybody up even though they whinge about it and I'm driven nearly demended to get them out the front door but it's always worth it.


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## 44brendan (22 Feb 2016)

Sarenco said:


> It strikes me that €350-400k would be pretty expensive for a house in the country and trading down to a more affordable home would have a much more dramatic impact on the OP's family finances than extending the existing mortgage term.


Unless you have a realistic opportunity of increasing your earnings in the short/medium term you need to re-assess the sustainability of retaining a 300k HL. CCMA is designed to give you some short term relief in the event that your finances are under pressure and either have lead or may lead to you not being in a position to afford your mortgage. You have not stated your monthly mortgage payment but based on figures given this should be c€1,043 pm. reasonable living expenses for your family would be €1,860pm plus reasonable child-care costs (2nd car would normally be disallowed). I.e. mortgage would be classed as affordable on these figures. Extension to 35 years would not be considered given your ages.
I appreciate the difficulties and strain you are under but realistically I don't see any option for you to extend the mortgage or get a reduction on payments given your circumstances.
Trading down would appear to be the most realistic option for you to retain your tracker and reduce your mortgage payment. Obviously flexibility here will depend on the house prices available in your area.


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## Susan O (23 Feb 2016)

Thank you all for your replies. We are both employed in small companies that are just managing to stay afloat. We have both been refused payrises as companies are struggling. We are both employed in Managerial positions so really there is no chance of promotion.I hope to have the opportunity to work 5 days soon but with childcare and travel costs and paying higher taxes Im not sure if I'll be better off at the end of the week. Both of us are applying for higher paid jobs so hopefully something will come up for us.

I have decided to go to the broker we arranged our mortgage through to get some advice. Selling is an option but will involve moving to an urban area which will be a huge change for us as we are both used to the country and having fields surrounding us. No houses go up for sale in our area so staying in our locality is not an option but hey needs must. We are both downtrodden with working hard to just pay our bills. We have a roof over our head, heat and food but we have no enjoyment in our lives. We have been lucky that I am good at budgeting and living frugally and that is what avoided us going into arrears. It has now got to a stage where I am completely obsessed and will agonise over buying even something small. Every decision comes back to one thing how much will it cost. I am so embarrassed by our situation. Its not healthy. 
 Bronte we do go walking etc with the kids which is great but our eldest is now asking to do other things which her friends are doing and its very hard to come up with excuses why we cant do it. kids dont understand and really what they are asking for is reasonable.
I know there are many families in the same situation and worse over the country. A family with two incomes should not be living like this and we need to change our situation. Thank you all for your advice.


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## Sarenco (23 Feb 2016)

Hi SusanO

You have absolutely no need to be be embarrassed - far from it.  You are to be commended for taking a step back to see if you can resolve or improve your financial position.

When you took out your mortgage you could obviously comfortably afford it.  Circumstances change, often for reasons beyond our control, but that's no reflection on you.

Best of luck - it's only money at the end of the day.


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## Purple (23 Feb 2016)

OP, I often tell my kids that they can’t have something or go somewhere because I can’t afford it. There’s no shame in that.

Your best option, short of trading down, is to increase your income. Is there an option for overtime or an evening or weekend job for one of you so that there's no additional childcare costs?


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## Bronte (23 Feb 2016)

Susan O said:


> It has now got to a stage where I am completely obsessed and will agonise over buying even something small. Every decision comes back to one thing how much will it cost. I am so embarrassed by our situation. Its not healthy.
> 
> Bronte we do go walking etc with the kids which is great but our eldest is now asking to do other things which her friends are doing and its very hard to come up with excuses why we cant do it. kids dont understand and really what they are asking for is reasonable.
> 
> I know there are many families in the same situation and worse over the country. A family with two incomes should not be living like this and we need to change our situation. Thank you all for your advice.




It is a good thing that you make a decision based on cost, that is the right way to do things.  And it's actually good for your children that you teach them the same thing.  It is what this website is about, money management and budgeting.  It is rare indeed the parent that doesn't have to tell their children we can't afford that.

My children don't ask to shop in Brown Thomas like some of their cousins, they love Penneys same as me.  There is no shame in that.  And you shouldn't feel embarrassed by it.  My brother gives me second hand clothes for my children and I give my kids clothes to my youngest sister.  I once even managed to get a small bicycle into a suitcase and bring it over to Ireland for a nephew.

What does your four year old want to do that you can't afford?

Susan how about some concrete help, you list your monthly spending and we see where savings can be made.  Things like switching ESB supplier, moving to a cheaper insurance, getting rid of Sky.


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