# "Tanager offering 40% discount to BoSI tracker holders who refinance"



## Brendan Burgess (3 Feb 2017)

It seems that some former Bank of Scotland borrowers are getting offers from Tanager, who bought the loans, of discounts of 40% if they move to another lender. 

*Homeowners could see €160k written off mortgage as vulture fund offers huge discount*
_
One offer letter seen by this newspaper outlined to a person with tracker mortgage that was originally taken for with €400,000 that Tanager is prepared to write off €160,000 of the mortgage if the homeowner buys it out.


It was sent by Lapithus, an associate of Tanager-owner Apollo.

The letter states that "in response to current market conditions, we understand that some of our customers may wish to refinance with another lender, as they may want to move or borrow additional money and that we are unable to assist them".


"We have undertaken a review of our mortgage loans and we are delighted to confirm to you that, to facilitate such an arrangement, we would be in a position to offer you a discount on your loan should you wish to refinance with another lender or otherwise repay your mortgage early."

The deal means that if the homeowner can get a new mortgage, they would have to borrow €240,000. The house is currently worth €380,000._


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## Brendan Burgess (3 Feb 2017)

Value of home: €380,000
Mortgage: €400k
Settlement figure: €240k

This looks like a great deal:



The only way it could go wrong is if ECB rates don't change, but the new lender pushes up the variable rate anyway.
But the opposite is more likely. When the Mortgage Rates bill is passed into law, Irish rates should come down. So the monthly repayments will be even lower. So the deal will be even more attractive.

An increase of 1% in ECB rates will cost the tracker holder €4,000 extra a year, but switcher only €2,400 extra a year.

They get immediate flexibility.  If they want to move houses, they are in positive equity and they also have plenty of equity as a deposit.

If you have spare cash or extra income, paying down a non-tracker mortgage is a great investment. You don't get the same "return" by paying down a cheap tracker early.

Brendan


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## Brendan Burgess (3 Feb 2017)

If he can't refinance, should he consider selling the house to avail of this deal?

Their repayments at the moment are €1,400 a year. 
If they try to rent an equivalent house, the rent would probably be around €2,000 a month. 


If they stay as they are, their mortgage will look something like this:



Because it's such a cheap tracker, most of the monthly repayment is capital. So, after ten years, they will owe only €245k anyway. 

So they should definitely keep the house and tracker. 

After ten years, they have a house worth €380k +/- any change in value in the meantime. 
A cheap tracker of €245k. 

*They should only consider selling the house*
They want to move house anyway, now or within the next few years 
They can rent a similar house 
They expect difficulty in meeting their mortgage repayments and are in danger of repossession


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## Brendan Burgess (3 Feb 2017)

Factors to consider when assessing whether to refinance or not: 

The above analysis is based on: 
Existing tracker rate 0.5% 
Can refinance at 3.5% 
Term remaining 25 years 
A 40% discount

As these will vary for each case, this is how they will affect your decision: 

A higher existing tracker rate makes the deal more attractive. The cheaper the tracker, the bigger the discount needs to be. 
If the refinance rate is higher, it will be less attractive. If you can only refinance with Pepper at 5%, it will be less attractive. 
The shorter the remaining term on your existing mortgage, the more attractive the deal. If you have only 10 years left, and are offered a 40% deal, it's likely to be very attractive. 
If you have an interest only mortgage with 30 years left, the 40% is still worth it, but less so.


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## Superstitious (3 Feb 2017)

Hi Brendan,
I have had a mortgage with BOSI now managed by pepper. It's a tracker and I have a never missed a payment.
Will this offer do you think be extended to people like me? 
Thanks


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## Brendan Burgess (3 Feb 2017)

I just heard Michael Dowling from the Irish Brokers Association telling borrowers who are offered such deals to be careful.

He said that a tracker is very valuable. Someone paying 1% on €200k over 25 years will pay €26,000 in interest over the term of the loan.
A person paying 3.3% will pay €94,000 or €68,000 more.

I began shouting at the radio, but Sean O'Rourke must have heard me. He told him that he was not allowing for the capital write off of €80k!

For the record, here are the figures for the actual deal:



They will save €166 per month, every month for 25 years!

Brendan


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## Gordon Gekko (3 Feb 2017)

Mother of God


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## adox (3 Feb 2017)

Superstitious said:


> Hi Brendan,
> I have had a mortgage with BOSI now managed by pepper. It's a tracker and I have a never missed a payment.
> Will this offer do you think be extended to people like me?
> Thanks



I would be doubtful unless circumstances have recently changed. I too have a BOSI mortgage managed by Pepper and sent a letter last year asking if I were to pay off the mortgage, could we enter a discusssion on a possible settlement figure?
It took quite a few weeks to receive a reply but the answer was a resounding no. There would be no discount on the capital owed. 

I will say that my tracker isn't particularly low, as far as trackers go. I got it when I switched my mortgage to Halifax when they were still here and it's no more than 1.5% above ECB rate. Currently paying 1.4%.  Perhaps there is enough in those figures for them still make a return, I'm not sure. 

Anyway, no harm in asking the question. They can only say no.


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## Brendan Burgess (6 Feb 2017)

Were all BoSI loans sold to Tanager or was it only the non-performing ones which were sold? 

Brendan


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## diver (6 Feb 2017)

Brendan Burgess said:


> Were all BoSI loans sold to Tanager or was it only the non-performing ones which were sold?
> 
> Brendan



Brendan, about 2,000 mainly distressed BoSI loans were sold to Tanager. Pepper manage the rest of BoSI's loans, the performing ones, I guess.


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## Brendan Burgess (7 Feb 2017)

Thanks Diver 

And does BoSI still own them? 

Brendan


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## Capricorn 1 (7 Feb 2017)

Yes Brendan, BOSI still owns them.  On my last statement it said ' please note that while the Bank's service provider - Pepper - has changed, your liability under the Mortgage Account is owed to the bank (BoSI).  Mine is an interest only, low tracker at 1% with about 8 years left to run.  I have never missed a payment.  These loans were previously managed by Certus and have only been managed by Pepper in the last one or two years.


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## Brendan Burgess (7 Feb 2017)

Thanks. With 8 years left to run, they would be unlikely to offer any discount at all. 

Brendan


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## cremeegg (15 Feb 2017)

Brendan Burgess said:


> I began shouting at the radio, but Sean O'Rourke must have heard me.



Fair play to Sean O Rourke, I must give him a listen, its usually only Pat Kenny that can hear me shouting at the radio.


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