# Switching mortgage to another bank with Negative Equity.



## Kluivert (19 Jan 2010)

I have recently discovered that I can not switch my mortgage from PTSB to either AIB or BOI in order to avail of cheaper interest rates. 

Currently paying 5.25% when I could get 2.9% with BOI. 

However both BOI and AIB have a Credit POlicy whereby the LTV can not greater than 90% and 92%. 

Our LTV is 125%. Property worth 180k and mortgage balance of 225k. 

The banks will not consider the individual applications. 

Mortgage repayments are 1k per month and we're actually paying 1260e for the last two years since we took out the mortgage. 

On top of that we have been able to save 500e per month towards our wedding. 

OH has a car loan with repayments of 400e per month finishing in Mar 2011 and I have a small loan of 110e per month. 

Surely after the taxpayer is bailing out banks that banks should in turn be assessing individual cases rather than sticking to a credit policy. 

IF the BOI came back to us and said in the morning, right we will take on the mortgage, we would get a cheaper rate and would save roughly another 200e per month. Thats 2400 per year. 

I would understand is we where always behind on our repayments etc but we're not. 

I think this is a matter that needs to be looked at.


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## RIAD_BSC (19 Jan 2010)

You're stuck, I'm afraid, like many other people..... I'm one of them. If you look at it from BOI and AIB's point of view, why would they let you move over to them? You wouldn't be able to give them full security on the 225k loan, so they would be giving you 45k of an unsecured loan at tiny mortgage interest rates. They aren't refusing you on the basis of your ability to repay.

It's unfortunate for the likes of us, but entirely rational. Risky lending got the banks into the mess they are in now. Risky lending won't get them out of it.


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## Kluivert (19 Jan 2010)

RIAD_BSC said:


> why would they let you move over to them?
> .


 
1. The taxpayer is providing a Deposit Gaurantee. Pray to god it is never used.
2. The taxpayer has already provided funds by the way of purchase of shares using the National Pension Funds and raising Bonds on the International Markets. 
3. Nama will soon be taking effect. I know Bonds can cashed at the ECB but at the end of the day, this is medicine for a cold. The taxpayer will be picking up the bill for this as well. 

The banks have got away with murder and people like you and me bust are backsides and get treated like crap.


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## patftrears (19 Jan 2010)

Kluivert said:


> The banks have got away with murder and people like you and me bust are backsides and get treated like crap.


You are not getting treated like crap. You are getting a fair deal.
Technically you should be on a massive interest rate. Due to the fact you are sub prime. ie 225k loan on 180k house


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## Mpsox (19 Jan 2010)

Let's assume for a second that a bank took on your negative equity and lent you the funds backed by an asset worth less then the loan

Let's then assume you default, the bank sells the house and based on your original post, are then left with a loss of €45k

Who do you expect to take the loss? If you expect the bank to do so, then this is what happened with property developers and the state had to bail them out. If you expect the state? the tax payer has to pay.

In fact, either way, the state would have to pay which means the tax payer would have to pay. Given that the state is not taking in enough money to pay for basic services, I don't think you can expect the tax-payer to potentially bail out people in negative equity.


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## RIAD_BSC (20 Jan 2010)

Kluivert said:


> 1. The taxpayer is providing a Deposit Gaurantee. Pray to god it is never used.
> 2. The taxpayer has already provided funds by the way of purchase of shares using the National Pension Funds and raising Bonds on the International Markets.
> 3. Nama will soon be taking effect. I know Bonds can cashed at the ECB but at the end of the day, this is medicine for a cold. The taxpayer will be picking up the bill for this as well.
> 
> The banks have got away with murder and people like you and me bust are backsides and get treated like crap.


 

I have to say, as someone who is probably €200k in negative equity, I completely disagree with you. Just because taxpayers bailed out the banks, it doesn't mean that banks should take on undue risks as some form of 'thank you' to anyone who indignantly identifies themself as a taxpayer. Otherwise we'll be bailing the banks out all over again in a few years time, on all their dodgy home loan losses.....

There_ is_ a case to be made for the government to lean on banks to allow existing mortgage holders, who are in negative equity, to carry the negative equity on to a larger mortgage with the same bank, so that people can trade up from FTB homes to bigger family homes.... In such cases, there is no extra risk to the bank, the negative equity exists anyway. It may as well exist on the mortgage of a bigger home.

But why you think AIB or BOI should let PTSB off the hook, and take on your negative equity on an unsecured basis, is beyond me. PTSB took the risk to lend to you at the height of the boom (me too, by the way). PTSB should continue to carry the risk that comes with that.

Also, I don't consider myself bust (and my negative equity is four times larger than yours).... I borrowed €x... i still owe €x.... regardless of how property prices have gone. Neither of us is bust until we lose our jobs..... Let's both count ourselves lucky that that hasn't happened to either of us. There are 400,000 people on the dole who are worse off than us.


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## Kluivert (20 Jan 2010)

I understand your point of views and some I agree with and some I dont. 

The reality of the fact is that the banks have their credit guidelines and that is how they operate and thats fine - life goes on. 

I can not understand how a person on the social welfare can get mortgage approved for 240k. 

This was Gerry Ryan one morning last week when discussing the 2010 financial annual. 

I doubt there is no truth in it but you wonder!

Thanks for all your in put - I guess I very annoyed and bias in my view.


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## Bronte (21 Jan 2010)

Can you think of solutions to your predicament? You can try to use all your money to pay down as much mortgage as possible to get down to the 92% threshold.

Another idea would be to borrow from a relation the difference of the negative equity, pay this to your current bank, switch lenders, get the lower rate, pay back your relation with the savings you are making. Bit of a mad idea but we do live in strange times.

I don't like the fact that the banks have a lot of people completely goosed because of the negative equity that they themselves caused.


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## Quest (21 Jan 2010)

Just out of interest (excuse the pun) but the 5.25% you are currently paying with PTSB, is this a fixed or variable rate?


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## Kluivert (21 Jan 2010)

5.25% is Fixed but the Fixed Term is up now at the end of the month. 

I can not decide whether to choose 

Tracker Variable 4.25% (3.25% + 1% ECB) or 
Standard Variable 3.65%. 

Any ideas? 

Am afraid the savings are ring fenced for our wedding in 2011.

The savings to date wouldnt make much a dent in the negative equity to impact on the LTV. 

I rang PTSB - they have our home at LTV 98% according to the latest valaution of the property on file. Where did they get that from? 

Its been a long long engagement and with a baby due now next month I would like to keep a pool of money to one side.


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## Kluivert (21 Jan 2010)

@ Bronte: Thanks for your input - some very good ideas there.


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## elcato (21 Jan 2010)

> I rang PTSB - they have our home at LTV 98% according to the latest valuation of the property on file.


If you are moving this is irrelevant. The new bank will get your property valued and that is the figure you will need to reduce to 92%. Also, some banks offer 92% on variable switches but want 90% or less for fixed rate so be aware of the rules.


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## Bronte (22 Jan 2010)

Kluivert said:


> @ Bronte: Thanks for your input - some very good ideas there.


 
It's always nice to know that people get help, can't always be sure if one is talking to thin air etc .


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## Kluivert (25 Jan 2010)

I decide to go with the LTV Variable at 4.25%. (3.25 + 1)

Just reading about other people who also fixed for a long term and will not benefit from cheaper Interest Rates. 

I think Variable Rates over the long term seem to work out the cheapest.


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## pjmn (25 Jan 2010)

Kluivert,

That looks like an expensive variable rate (especially given the liklihood that rates will rise over the next 12/24 months).

Would you not consider their five year fixed rate at 3.7% for even a portion of your mortgage..  

https://www.permanenttsb.ie/whatweoffer/mortgages/interestrates/


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## RIAD_BSC (26 Jan 2010)

pjmn said:


> Kluivert,
> 
> That looks like an expensive variable rate (especially given the liklihood that rates will rise over the next 12/24 months).
> 
> ...


 

You need a LTV of less than 50% to fix with PTSB. This is not an option for an OP in negative equity


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## Colndas (26 Jan 2010)

Kluivert,

Before you agree to anything with your existing mortgage lender, it may be advisable to check the original loan offer and see if there is anything included regarding the rate at the end of the fixed term.

If you were on a different tracker before you switched to the fixed rate or a specific tracker rate was mentioned in your loan offer then the FSO has set a precendent already.

If neither hold true then I am afraid that you are stuck.


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## pjmn (26 Jan 2010)

RIAD_BSC said:


> You need a LTV of less than 50% to fix with PTSB. This is not an option for an OP in negative equity




Thank you - I didn't know that...


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## Brendan Burgess (31 Jan 2010)

Folks

I have deleted a post with bad language in it, and all responses to that post.

if you see a post with bad language, you are better off not replying as the post will be deleted as will your response.

Just to remind people, we have a zero tolerance approach to bad language.

Brendan


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