# Switching from a tracker rate to a SVR mortgage



## madlad (2 May 2014)

I am just wondering if AIB are doing deals for people in arrears that hold   tracker mortgages and are in negative equity of about €75-100k? E.g   recapitilising the arrears and switching to a SVR and receiving a   write-down for switching over? The reason I mention the write down is because there is €100k plus of a saving in the difference between paying back a tracker and a SVR in my situation. I know it may seem crazy to come off the tracker rate but if my arrears of slightly under €10k were recapitalised I could move on without the treat of legal action progressing which at this time is imminent. These arrears date back to early 2011 and i had made payments when it was possible due to unemployment. For the past 13 months I have made full monthly repayments due to being re-employment. Unfortunately I would not be in a position to clear the arrears at present. the outstanding balance on my mortgage is €255k and I have been informed the tracker rate will save me €100k-€110k over the next 24 years as compared with a variable rate. I understand the bank wont offer to write down the mortgage by €100k-€110k but is it realistic to say €80k as they would still be saving €30k and it would be another tracker mortgage off the books and I would get to keep my home? I don't know what way to go about this and any advise would be appreciated.


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## madlad (4 May 2014)

Thanks for the reply Cremeegg..

Age: *35*
   Spouse’s/Partner's age: *32*

   Annual *gross* income from employment or profession: *€42,000*
   Annual *NET* income of spouse: *€9,776 (Job Seekers Allowance)*

Monthly take-home pay: *€430 after all loans(incl mortgage) and bills are paid. *

   Type of employment: e.g. Civil Servant,  self-employed:*Private sector.*

In general are you:
(a) spending more than you earn, or
(b) saving?

*(a). spending more than we earn**.*

   Rough estimate of value of home:*€180,000*
   Amount outstanding on your mortgage: *€255,000*
*What interest rate    are you paying? Tracker rate of 1.45% (.85% adjusted for .6%)*

   Other borrowings – car loans/personal loans etc
*€96,000 for car/credit union/personal loans.*

   Do you pay off your full credit card balance each month? *Reduced Payments*
   If not, what is the balance on your credit card? 
*€8**,500*
   Savings and investments:
*€7,000 CU shares that cannot be touched.*
   Do you have a pension scheme? 
*Yes**.*
   Do you own any investment or other property? 
*No*
   Ages of children: 
*None*
   Life insurance:
*Yes*


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## madlad (8 May 2014)

Hi cremeegg can you offer me any advise on this?


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## madlad (15 Aug 2014)

*Surrendering a tracker mortgage in exchange for a write down of principal*

I have a simple question.. 

Are AIB writing down mortgages for people who surrender their tracker rate and change to a fixed/variable rate? My house is in about €100k of negative equity and arrears of just over €10k.


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## peteb (15 Aug 2014)

You'd be mad to? How do you think going from less than 1% to 5% is going to make your life easier?!!


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## Brendan Burgess (15 Aug 2014)

Hi madlad

No, they are not doing it. 

The CCMA does allow them offer people a solution which involves loss of the tracker, if that is the only sustainable solution. 

The problem for AIB is that if they offered it generally, then it would be self-selecting. People who were thinking of selling up or paying off their mortgage, would take advantage of this offer. Those who intend to stay in their home long term, would not. 

Brendan


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## madlad (15 Aug 2014)

Thanks for the response. 

Does the CCMA allow for a switch from a  tracker rate to a variable rate if the borrower is aware of the  consequences and signs a contract to declare that they acknowledge this?

My  mortgage balance is now stands at €253k and the house is only worth €170K. I have been informed that the tracker rate is worth about  €105K to me over the remainder of the mortgage.

Would it not make  sense for the bank to write down this mortgage by say €60k? This would  greatly reduce the negative equity and at the same time save the bank  €50k. I would be able to move on arrears free and everybody would  benefit.

The arrears are from a period three years ago and my mortgage is performing for the past year. I have been receiving solicitors letters informing me that the bank are seeking position of the house.


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## Brendan Burgess (15 Aug 2014)

Looking at your figures, I would suggest that you apply for a Personal Insolvency Arrangement or bankruptcy. 

There isn't much point in AIB doing a deal with you, if you still have €100k in unsecured creditors.  How much are your repayments on your mortgage? How much are your repayments on your other loans? 

You should talk to the Irish Mortgage Holders Group who are paid by AIB to advise their customers.


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## madlad (16 Aug 2014)

It really isn't an option for me to go down the personal insolvency or bankruptcy route as I want to keep my house.

I  am meeting full repayments on all my loans and mortgage. Although I am  making reduced payments on the CC. The only arrears I have are on the  tracker mortgage (Just over €10K). Having said this at the end of the  month I am left with very little disposable income. It is though going  but I am willing to proceed. 

My thinking about a write down (say  €50-€60K) for switching from a tracker rate is that in say 5-10yrs I would  have no negative equity as compared to maybe 20yrs by staying on a tracker rate and getting no write down.

I know this maybe wishful  thinking on my part but when you examine the proposal it is viable to  both parties and its another tracker off the banks books.


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## madlad (17 Aug 2014)

I was informed by a friend of mine that deals of this nature of being done and that the customer is sworn to secrecy by signing a contract. 

I don't know what to believe or what way to approach it.


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