# Will KBC give me a discount for early repayment of my tracker?



## Dustyman (4 Jun 2019)

Hi all and thanks in advance for replies.

Situation;
3 Bed Duplex apartment.
Value: E110K
Mortgage balance: E134k
Neg. Eq. 24K
Tracker mortgage with KBC
Term left: 19 years 9 months.

Would KBC do a deal with me? i.e write off the 24k considering I have a Tracker with nearly 20 years left on it. Should they take their money and run?!

And finally, IF KBC did agree a deal with me would it affect my credit rating?

Any advice greatly appreciated and thanks again.

Dm


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## Palerider (5 Jun 2019)

Why do you think they will do a deal just because your choice of property to mortgage has not worked out !


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## peemac (5 Jun 2019)

Unlikely unless your tracker is under 0.5% above ecb.

Banks can currently borrow at 0%. Cost of servicing a mortgage is less than 0.5% overall and less than that if you have a good record.

So the loan is profitable for them, albeit a tiny profit. So zero chance of doing a deal.


I'll guess the property is in a secondary location, but even then, your mortgage is circa €640/month and even in a secondary area you should be able to get €850 a month rent from a good tenant which would probably cover your costs and maybe see it as a long term investment.


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## NoRegretsCoyote (5 Jun 2019)

The interest component of your mortgage is not much more than €100 a month.

You can make an after-tax profit on this easily enough I would think. 

You are amortising pretty fast. If nothing happens to house prices you'll be in positive equity in about five years, at which point you could sell and walk away.


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## Brendan Burgess (5 Jun 2019)

No, KBC will not give you a discount.  

Why do you want to sell it? 

If you are thinking of moving home, KBC will allow you to transfer it to another property but charge you an additional 1%. So that is probably worth doing depending on what margin you are on at the moment.

If you are not moving home, then consider renting it.   The rental income will well exceed the interest charge so it's a very profitable investment.

It might not appear profitable to you as the rent might  not cover the full repayment. But most of your repayment is capital which means that over time you will have paid down the mortgage in full.

Brendan


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## Dustyman (5 Jun 2019)

Thanks to all (except 'Palerider said') for informative respectful replies. 

Brendan I wanted to sell it as circumstances changed including got married and have a child. Running out of space! Other factors at play too. Probably have to rent it in the future but don't want to be a Landlord. Just posted here to see if their were options.

All advice above much appreciated and thank you.


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## Brendan Burgess (5 Jun 2019)

Dustyman said:


> Brendan I wanted to sell it as circumstances changed including got married and have a child. Running out of space!



Are you able to buy a new house? If so, then you could move the tracker. 

Brendan


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## Dustyman (5 Jun 2019)

Not an option at present, but possibly later. will hold out until out of the NE.


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## Dustyman (5 Jun 2019)

Brendan Burgess said:


> Are you able to buy a new house? If so, then you could move the tracker.
> 
> Brendan



We have a site and E150k in cash. We are hoping to build a house on the site with that E150K, and a loan of cE30k. 
However we're having problems with Planning as site already failed percolation test but there may be a change in percolation test values shortly which could benefit us. But waiting. May have to jump through many hoops with still no certainty of getting PP.

As stated earlier our current property (home) is in cE25k in NE. We want out from it now. Don't want to rent it/be landlord's.

We're with KBC and have Tracker as already mentioned.

Would it be possible to negotiate with KBC to sell our property and get a loan from them for the new build?
i.e NE 25K (from current property) and loan 30k (to add to cash on hand of E150k to build new house). 
Therefore new loan with KBC would be E55k , and keep Tracker mortgage and reduce the term (from current 19 years)? 
Would they convert this E55k into a remaining mortgage with retained tracker?
(Or would KBC just get rid of our mortgage and turn it into a regular loan?)

Other option would be to sell the site, worth c.E60k, and buy house, ballpark figure for detached in our area is cE250K.
i.e NE 25k, further loan E100k (as we have cash of E150k).  However our current saving record is not good. 
Therefore, detached house worth E250k, new loan with KBC E125k (NE25 + new loan E100k), and keep tracker? 
(Current mortgage balance with KBC is E132k and we want totally out from where we are).

Therefore we're rid of this current property. Have a detached house worth E250k and have smaller mortgage then we have now, with tracker retined and same term left + living where we want to! (life is short). 
Current mortgage is cE640 per month.
P.s We want to trade up instead of down hence why I mentioned detached house. Growing family too!

P.s We do realize how fortunate we are to have the site and cash but really really want to move and get rid of our current property.


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## Brendan Burgess (5 Jun 2019)

Dustyman said:


> Would it be possible to negotiate with KBC to sell our property and get a loan from them for the new build?
> i.e NE 25K (from current property) and loan 30k



Probably, but difficult to organise. 

In any event, it would not be worth that much to you €55k @ 2% Tracker rate instead of @3% market rate would be a saving of €500 a year at the start and quickly reducing as you reduce the balance. So if this fits in with your timeframe, go for it, but don't change your plans just to keep your tracker.




Dustyman said:


> Other option would be to sell the site, worth c.E60k, and buy house, ballpark figure for detached in our area is cE250K.
> i.e NE 25k, further loan E100k (as we have cash of E150k).




Cost of house€250kAdd negative equity€ 25kTotal required€275kExisting cash€150kSale of site€ 60kBorrowing required €65k 

I would say that KBC would be delighted with this.  They replace a tracker of €134k at 1% in negative equity with a tracker of €65k at 2% with plenty of positive equity. 

Brendan


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## Dustyman (6 Jun 2019)

Brendan. Thank you for your detailed reply. Much appreciated. Good to get it down on paper and looking at the options.


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## Dustyman (8 Jul 2020)

Please feel free to close this thread. Thank you.


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