# Will other lenders offer discounts for early repayments of trackers?



## Brendan Burgess (3 Feb 2017)

*Will other lenders follow Tanager? 
*
It's possible that non-bank lenders may, but do many of them have cheap trackers.  

The Irish Nationwide customers were all non-trackers. 

What about Danske? Did they sell their book? 

In any event, if you have a cheap tracker, you should not overpay it, in case such a great deal is offered. 

Brendan


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## Daddy Ireland (3 Feb 2017)

Think I read somewhere that Danske sold their Irish residential loan book to Cerberus and that it is managed by Pepper.


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## Gordon Gekko (3 Feb 2017)

It would be very interesting if Danske offered a similar discount. They have a number of mortgages out there at 0.5%.

Is it the case that these Tanager ones are distressed? It could be a bonanza for some people who plan to run their mortgage to its end date.


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## Daddy Ireland (3 Feb 2017)

Just checked there with my brother.   His annual statement is on Danske headed paper and mentions Pepper.    So in his case it is doubtful if still receiving Danske headed paper that Cerberus took over the entire loan book just perhaps the distressed book.


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## dereko1969 (3 Feb 2017)

Seems it's only for those previously distressed mortgages that were sold to Tanager, my wife's tracker was moved to Pepper, hopefully they'll come up with something similar.


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## Gordon Gekko (3 Feb 2017)

My understanding is that Pepper do two things:

- Lend in their own right

- Administer loans on behalf of parties such as Danske. 

For the latter, I would have thought there may still be hope of a deal if someone buys the underlying debt.


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## ronaldo (3 Feb 2017)

I've a Danske mortgage. Pepper have been administering it for quite a while. I believe some of the Danske book were sold to Cerberus last year but it's not clear if ALL were sold. The news articles state:

_Danske Bank has confirmed for the first time a €250m deal finalised earlier this month to offload hundreds of residential mortgages and other personal loans to an American private equity firm._​
Now, obviously, the €250m will be a heavily discounted price but I imagine Danske have signficantly more residential mortgages and other personal loans.

It could be that they sold the distressed mortgages. It could also be that they sold the longer-term trackers, choosing to see out the term for those with <10 years left to run. I don't think the detail is public but we may hear something from Cerberus in the coming year.


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## MrEarl (3 Feb 2017)

Daddy Ireland said:


> Just checked there with my brother.   His annual statement is on Danske headed paper and mentions Pepper.    So in his case it is doubtful if still receiving Danske headed paper that Cerberus took over the entire loan book just perhaps the distressed book.





ronaldo said:


> I've a Danske mortgage. Pepper have been administering it for quite a while. I believe some of the Danske book were sold to Cerberus last year but it's not clear if ALL were sold. The news articles state:
> 
> _Danske Bank has confirmed for the first time a €250m deal finalised earlier this month to offload hundreds of residential mortgages and other personal loans to an American private equity firm._​
> Now, obviously, the €250m will be a heavily discounted price but I imagine Danske have signficantly more residential mortgages and other personal loans.
> ...




Hello,

I have a Danske Bank Tracker and I am up to date.

My understanding based on a combination of a recent discussion with a member of Pepper staff and information from various other sources, is that Danske continue to be the counterparty on the majority of their Irish homeloan book, including the majority of those on Trackers.

Danske sold on a sizeable percentage of their "challenged" homeloans and these are the loans that Ronaldo is referring to above.  I do not know at what discount this loan book was sold, but wold speculate that it was a sizeable discount to it's face value.

My belief is that Danske has aspirations of selling on the remainder of it's performing homeloan book over the next 12 months to allow it completelty disconnect from Ireland (except for a small number of large corporate clients) and see's the likes of PTSB, KBC or possibly even BoI as potential suitors.  I guess you could throw additional names into that hat, such as Dilosk (trading as ICS) .... but, I believe that Danske want to sell all performing loans in one transaction to one counterparty and also would rather sell these performing loans on to lender that is open for ongoing business (in the belief that they can negotiate a better price if they are selling a book of good customers to a lender who wants to do further business with good customers etc.). 

My conclusion is that those with Danske Trackers and are up to date are highly unlikely to ever get the opportunity to negotiate a deal at a notable discount, for early repayment.  However, the flip side of that coin is that they will continue to enjoy the benefits of their Tracker and may be fortunite enough to be sold on to a new a active lender, hence opening the gates to potentially getting a top up loan etc. (subject to a differernt rate on the new loan etc.)


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## Brendan Burgess (3 Feb 2017)

MrEarl said:


> My conclusion is that those with Danske Trackers and are up to date are highly unlikely to ever get the opportunity to negotiate a deal at a notable discount, for early repayment.



I would agree that it's unlikely.  But I think it's more likely today, that it was yesterday. 

I would not be overpaying such a mortgage, just in case, they sell it to a vulture fund who then wants to make a quick profit.

Brendan


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## JanusGold (4 Feb 2017)

@MrEarl When you say "My belief is..." is this based on how you think the market is moving or do you have more knowledge/inside knowledge of the market than most?


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## Cruzer123 (5 Feb 2017)

I have a circa 850k mortgage on a 25y Interest only at .5 over ECB with Danske/Pepper. Currently paying €330pm ( so low I don't know the exact amount) and have been for years since the rate fell.

Needless to say I can't understand how the can continue this arrangement and I'm watching developments closely.


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## Brendan Burgess (5 Feb 2017)

Hi Cruzer 

You are in a great place.  Paying €4,000 a year for your accommodation. 

Danske is probably paying Pepper around 0.7% a year to administer the loan on their behalf. 

Their cost of funds is probably around 0.5%.

You would want a very good discount to repay this early.  I am guessing around the 30% mark. 

Would you be in a position to refinance it if you got a discount of 40%?  It's unlikely you will get such a deal, but I would recommend the following steps to be in a position to avail of it, if it's every offered:

1) Do not make any overpayments 
2) Do not take out other borrowings, e.g. for an investment property as it would reduce your ability to remortgage 
3) Make sure your ICB record is clean. 
4) Put any savings you have into easily accessible investments.  For example, don't lock them up in state savings. You need to have enough savings to reduce the LTV to 80% and ideally less as lenders are wary of giving mortgages to people who received a write-off. 
5) Be careful about changing employers.  If you change employers today, and Danske offers a deal tomorrow, you would not be able to get a mortgage as you would be on probation.


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## Brendan Burgess (5 Feb 2017)

Cruzer123 said:


> I have a circa 850k mortgage on a 25y Interest only at .5 over ECB with Danske/Pepper.



The Danske Pepper connection is interesting. 

As far as I know, Danske still owns the mortgage. Pepper is the administrator. 
Pepper is one of the best bets for someone who wants to refinance an existing loan from other vulture funds, as they will lend to people who are near-prime e.g. a small arrears problem in the past. 

So it's not inconceivable that Danske and Pepper could do a deal.  Pepper offers you a mortgage at around 5% to repay a heavily discounted Danske Tracker. 

Of course, it would be much better if AIB gave you a normal mortgage, but they might be slow to do so.

Brendan


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## Cruzer123 (5 Feb 2017)

Agree with all that Brendan. €4K pa is cheap considering they're renting for €2.5k pm. It's a McMansion in an upmarket suburb, having said all that I have lost my shirt big time, paid €1.4M and it's worth €800k now on a good day.

I have made offers to Danske over the years and they brushed me off.

Right now I'm saving to buy a smaller place when the children have flown in 15 years time or so.


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## Brendan Burgess (5 Feb 2017)

Hi Cruzer 

The value today is pretty much irrelevant as you have no intention of selling it for about 25 years.  (It would be relevant if you get the opportunity to refinance it at a discount.) 
You are accommodating your family in an upmarket suburb for €4k a year.
As you are in negative equity, it's critical that you build up savings of around €160k in case a deal is ever put on the table. I would go so far as to say, you should prioritise this over making voluntary pension contributions. 

Brendan


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## Cruzer123 (5 Feb 2017)

Good advice.

I have that level of saving currently. What to do now, sit tight and wait?


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## Cruzer123 (14 Nov 2018)

Had a conversation a few months back with Pepper and they weren't up for any deals related to early settlement/writedown. Oddly a friend whos underperforming Danske loan was sold to Proteus and they're getting a substantial write-down.
As usual, those who pay get penalised!

On another note, I have a few UB trackers at 1.0% over ECB (they were on Interest Only for a year or so but now on capital & interest) anyone knows if UB are offering write-downs for early repayment?


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## Brendan Burgess (14 Nov 2018)

Cruzer123 said:


> a friend whos underperforming Danske loan was sold to Proteus and they're getting a substantial write-down.



Hi Cruzer

I presume that is in exchange for a voluntary sale of the house? 

Brendan


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## Ravima (14 Nov 2018)

UB offer ZERO discount!


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## Cruzer123 (14 Nov 2018)

Brendan Burgess said:


> Hi Cruzer
> 
> I presume that is in exchange for a voluntary sale of the house?
> 
> Brendan



Don't think so Brendan, big discount to pay off the loan early. They've no intention of moving.


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## RedOnion (14 Nov 2018)

Cruzer123 said:


> underperforming Danske loan was sold to Proteus


How underperforming?
These were largely performing loans (although very low rates)


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## Cruzer123 (14 Nov 2018)

Havent a clue tbh, I'd say they played the game being in a similar business themselves.


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## Cruzer123 (14 Nov 2018)

RedOnion said:


> How underperforming?
> These were largely performing loans (although very low rates)



Mine was the lowest rate and ended up with Pepper, wonder what the selection criteria was?


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## RedOnion (14 Nov 2018)

Cruzer123 said:


> Mine was the lowest rate and ended up with Pepper, wonder what the selection criteria was?


Ah, they all ended up with Pepper legally, but with different beneficial owners. You should have received a letter saying what the name of the underlying fund is I think.


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## Brendan Burgess (15 Nov 2018)

Sorry, that is what I meant.  The early repayment of the loan. In most cases that is achieved by selling the house, but your friends were in the rare position of being able to refinance it elsewhere.

Brendan


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