# Has anyone approached Certus (BOSI) about a write down for giving up their tracker?



## TRS30 (6 Jun 2011)

Hi all

Has anyone approached Certus (BOS) about a write down for giving up their tracker?

I current have two tracker with them, 200K on + 0.7%- €730pm (C&I) and 230K on +1.5%- €535pm (IO) 

Do you think they would entertain 300K in full payment? 

If so do you think I could borrow 300K on 100K salaries, 30K saving and no other debt? BOI are doing 3.2% so would be circa €1,150 (C&I) over 30 years. 

Thanks


----------



## Sunny (7 Jun 2011)

Very doubtful. You are on a hundred grand a year and have significant savings. You are still able to pay the mortgages. No harm trying though.


----------



## TRS30 (7 Jun 2011)

Sunny said:


> Very doubtful. You are on a hundred grand a year and have significant savings. You are still able to pay the mortgages. No harm trying though.


 
Very doubtful they would entertain the idea or that we would be able to borrow the 300K ?


----------



## Sunny (7 Jun 2011)

That they would entertain the idea. Why should they write down debt that you are well able to pay. People are overestimating how desperate the banks are to get rid of trackers. They won't do it at any cost.


----------



## HostBidder (7 Jun 2011)

TRS30 said:


> ...I current have two tracker with them, 200K on + 0.7%- €730pm (C&I) and 230K on +1.5%- €535pm (IO) ...


Sorry for going off topic, but do you know why there is a such a difference in the rates you are being charged above ECB, i.e. +0.7% V's +1.5%?

Unfortunately I don't know the answer to your question but if I was in your shoes I would ask BOS on the basis that they would most likely reduce their mortgages to Irish customers and they don't exactly love trackers.


----------



## TRS30 (7 Jun 2011)

Sunny said:


> That they would entertain the idea. Why should they write down debt that you are well able to pay. People are overestimating how desperate the banks are to get rid of trackers. They won't do it at any cost.



I have heard that BOS want to get out of Ireland by winding down their loan book here.



> Sorry for going off topic, but do you know why there is a such a difference in the rates you are being charged above ECB, i.e. +0.7% V's +1.5%?
> 
> Unfortunately I don't know the answer to your question but if I was in your shoes I would ask BOS on the basis that they would most likely reduce their mortgages to Irish customers and they don't exactly love trackers.



One rate is on PPR and the other is a RIP.


----------



## Downwiththat (16 Feb 2012)

Hi there,

Am curious as to how you got on with this? We have some money on deposit becoming unlocked in May and were thinking of paying off some of the 180k outstanding on a 2.5% ppr mortgage, did you enquire as to any deal for a lump sum payment?

Thanks in advance and apologies for dragging up an old thread, mods please delete if required. 



TRS30 said:


> Hi all
> 
> Has anyone approached Certus (BOS) about a write down for giving up their tracker?
> 
> ...


----------



## Brendan Burgess (16 Feb 2012)

Hi 

I think it might have been discussed elsewhere on AAM. 

If you approach them, they will ask you to make an offer. People ask for a 20% additional write off and BoSI refuse it and ask for a more reasonable offer. 

Brendan


----------



## TRS30 (16 Feb 2012)

Downwiththat said:


> Hi there,
> 
> Am curious as to how you got on with this? We have some money on deposit becoming unlocked in May and were thinking of paying off some of the 180k outstanding on a 2.5% ppr mortgage, did you enquire as to any deal for a lump sum payment?
> 
> Thanks in advance and apologies for dragging up an old thread, mods please delete if required.


 
I didn't talk to them in the end. I have not had a chance to sit down and really crunch the numbers on giving up the trackers and going onto a SV. 

I hope to look at it again later in the year when wedding is over and things are a bit more settled.


----------



## ajapale (23 Jan 2013)

Similar question asked today.


----------



## Deano (5 Feb 2013)

ajapale said:


> Similar question asked today.



It's over a year since this has been discussed. I wonder if anything has changed? Apart from the obvious - that the interest rate has reduced by 0.5%


----------



## TRS30 (5 Feb 2013)

Deano said:


> It's over a year since this has been discussed. I wonder if anything has changed? Apart from the obvious - that the interest rate has reduced by 0.5%



I am in the process of drafting a letter to them. I will update on any response I get from them.


----------



## panda36 (5 Feb 2013)

Hi TRS30,

Great idea with the letter, please make sure that you will be clear with all what you are interested in and if you have any offer for them, put that on it. Certus, can not make decisions for BOS clients as they are not a bank, however, once you will write to them, they will send you standard financial statement form with thier cover letter to review your income & expenses. After they got that from you, they will complete an internal form on your behalf with decline recommendation as per my understanding BOS (since they left) let certus manage thier books with repaying current loans, mortgages etc. If, you are in arrears, they might offer you a forbearance for few months. If, you want sell your house/s and get write off on the shortfall, you need to cover 60% of the outstanding balance. Anyway, write to them and be aware that they are not in position to make a decision for you, however they keep BOS (thier client) happy, if you know what I mean.


----------



## Gerry Canning (5 Feb 2013)

Certus are mostly interested in managing the {problem} accounts.Suugest get your query to BOS.
You need to number crunch the {cost} to them for the remaining term. Then crunch the {profit} to you . Then send a letter to them, tell them your figures  and make them  an offer. PS . Make sure their response is from someone with authority , not just a generic/junior response.


----------



## TRS30 (6 Feb 2013)

panda36 said:


> Hi TRS30,
> 
> Great idea with the letter, please make sure that you will be clear with all what you are interested in and if you have any offer for them, put that on it. Certus, can not make decisions for BOS clients as they are not a bank, however, once you will write to them, they will send you standard financial statement form with thier cover letter to review your income & expenses. After they got that from you, they will complete an internal form on your behalf with decline recommendation as per my understanding BOS (since they left) let certus manage thier books with repaying current loans, mortgages etc. If, you are in arrears, they might offer you a forbearance for few months. If, you want sell your house/s and get write off on the shortfall, you need to cover 60% of the outstanding balance. Anyway, write to them and be aware that they are not in position to make a decision for you, however they keep BOS (thier client) happy, if you know what I mean.



I have drafted a letter to send to Certus however this has made me think again. 

I am not in arrears and have no intention of filling out forms with income & expenses etc. They are lossing money on my trackers so want to see what they are willing to do to get me to give these up. 

Thanks for the input and figures re short fall etc. 



salmon9077 said:


> Certus are mostly interested in managing the {problem} accounts.Suugest get your query to BOS.
> You need to number crunch the {cost} to them for the remaining term. Then crunch the {profit} to you . Then send a letter to them, tell them your figures  and make them  an offer. PS . Make sure their response is from someone with authority , not just a generic/junior response.



Another interesting point. 

Any idea how to go about these calculations. I am reasonable with numbers however not sure how to go about calculating the cost to them and profit to me.

Any input would be appreciated. Also what department in BOS would be best to write to?


----------



## riya99 (8 Feb 2013)

I would also be interested in how to calculate an offer. I have an interest only loan of €100k on tracker rate 1.75% due for repayment in 3.5 years and would repay earlier if the figure was right.


----------



## cremeegg (11 Feb 2013)

TRS30. I am in a very similar position to yourself. I owe BOSI just over €400k on ECB +0.75%. Like you I have been thinking about this without taking any action for too long.

My view on the numbers is, take BOSI cost of capital 4% at a guess (does anyone have any better suggestions), subtract the rate you are paying (ave 1.9% I calculate) Cost to them 2.1% of €435k is €9,135 per annum, the NPV of this at 5% is depends on how many years remain. For 20 years I calculate €113k.

That is the loss to them on the €430k over 20 years is worth €113k today. €430k - €113k is €317k. There would be no loss no gain for them to accept this figure, for an offer to be accepted you might have to leave them some "profit". I have no idea if they would accept an offer at this level. Or maybe they are desperate to get cash in and would accept a lower offer.

But don't forget if you just continue paying each month, this is the value to you of the cheap mortgage rate you have, don't give it away.

Please let me know how you get on. Feel free to pm me.


----------



## cremeegg (11 Feb 2013)

Riya99.

Cost to BOSI 4% - 1.75% is 2.25% on €100,000 = €2,250 per year. I am guesstimating the 4% cost of capital to BOSI but I suggest the other elements are correct.

Total discount

Year 1 ..                              ....€2,250
year 2 €2,250 discounted at 5%   €2,137
year 3 €2,250 discounted at 10% €2,030
year 3.5 €1,125 discounted at 12% €990

Total discount required for BOSI to break even €7,407.

On further reflection, the cost of capital figure to use should be your cost not BOSI's. Where are you getting the money to repay the loan and what will it cost you, to borrow or in lost deposit interest.

I have not considered any tax implications.


----------



## TRS30 (12 Feb 2013)

cremeegg said:


> TRS30. I am in a very similar position to yourself. I owe BOSI just over €400k on ECB +0.75%. Like you I have been thinking about this without taking any action for too long.
> 
> My view on the numbers is, take BOSI cost of capital 4% at a guess (does anyone have any better suggestions), subtract the rate you are paying (ave 1.9% I calculate) Cost to them 2.1% of €435k is €9,135 per annum, the NPV of this at 5% is depends on how many years remain. For 20 years I calculate €113k.
> 
> ...



Cremeegg; Thanks for the reply. 

I assume when the loan was taken out with BOSI will impact on the cost of capital? Both my loans were taken out in April 2008. 

200K is ECB +0.75% and 230K is ECB +1.25% so that will alter the figures as well.


----------



## Kine (12 Feb 2013)

Cremeegg,

Interesting posts - would you be bale to do a line by line breakdown for how it was calculated (brain not firing on all cylinders today). Where do you get the 5 / 10 / 12% discount rates etc?

K


----------



## cremeegg (12 Feb 2013)

From BOSIs point of view having loans out to customers at 1.75% or whatever while the money is costing them 4% or whatever means that they are losing money on the deal each year. €2,250 per annum is my estimate. I don't know what the actual cost to BOSI is,( I doubt their own board actually knows) but the €2,250 should not be far off.

Generally banks finance themselves from month to month so the cost to them of your loan varies, it does not matter when you took out the loan. This is a very stupid way for banks to do business as any first year accountancy student could tell them and is the root cause of the crisis, but thats a different discussion.

So if you pay off your loan early the bank saves €2,250 each year, you should expect them to share this saving with you.

The second, separate, question is where will you get the money to pay off the loan, and what will that cost you, i.e. your cost of capital. If you have the money on deposit at 3% then it will cost you €1,250 a year to pay off the loan, so your discount would need to be more than this PER ANNUM.

To work this through with simple figures. 

Mortgage 100,000 1 full year left at 2%. Interest cost €2,000

Cash on deposit €100,000 earning 3% interest. Income €3,000

Take the money from the deposit and repay the mortgage. You lose €1,000

BOSI would need to accept an offer of less than €99,000 to settle the loan before you are interested.

Multiply the discount required by each year left on the loan.

This ignores tax. Dirt on deposit interest and tax relief on loan payments if applicable both tend to reduce the amount of discount needed.

In summary €2,000 per €100,000 loan balance per year remaining seems like a good rule of thumb for a discount.

BOSI wants out of Ireland they may be willing to accept less. All the best to anyone trying this and please let us know how it goes.


----------



## TRS30 (13 Feb 2013)

cremeegg said:


> From BOSIs point of view having loans out to customers at 1.75% or whatever while the money is costing them 4% or whatever means that they are losing money on the deal each year. €2,250 per annum is my estimate. I don't know what the actual cost to BOSI is,( I doubt their own board actually knows) but the €2,250 should not be far off.
> 
> Generally banks finance themselves from month to month so the cost to them of your loan varies, it does not matter when you took out the loan. This is a very stupid way for banks to do business as any first year accountancy student could tell them and is the root cause of the crisis, but thats a different discussion.
> 
> ...



Thanks again for a very informative post. 

So if I owe €430K over 25 years then a discount of €215K or 50% would a reasonable starting point?


----------



## cremeegg (13 Feb 2013)

Not exactly

The saving to the bank at approx 2% on €430,000 is €8,600 per annum. Yes I think that is a good starting point. If the loan period is relatively short you could just multiply by the number of years.

However multiplying this by a long period of years such as 25 is not reasonable. A €8,600 saving to the bank this year is not the same as €8,600 in 25 years time. 

An NPV calculation using a rate of 5% converts the €215,000 to €121,208 in todays money. You can do this for yourself in excel easily enough.


----------



## riya99 (13 Feb 2013)

Thank you Cremeegg - money is on deposit but the figures make it look worthwhile. I shall give it some more thought.


----------



## orka (13 Feb 2013)

cremeegg, your calculations don't take account of the reducing balance on TRS30's loan - they would only be correct for interest-only loans like riya99's.  TRS30's balance now is 435,000 but in the final year of a 20 year mortgage, the amount outstanding will only be 25K-30K and the 'cost to bank' of the tracker interest would be only a few hundred euros, not 8,600.

I think a cleaner way to look at it is to look at the cost of repaying at the tracker rate vs. the cost of repaying at the bank's cost of borrowing.  Essentially, the bank is repaying a loan to another bank over 20 years at 4% but only receiving income from a loan being repaid over 20 years at 1.9% - so they have to make up the shortfall. 

435K over 20 years at 1.9% would cost €2,180 per month and 435K over 20 years at 4% would cost €2,620 per month.  So every month for 20 years, the bank has to top up the €2,180 they get from TRS30 by €440 of their own money so that they can repay the interbank loan.  

€440 * 240 months = €105,600 which has a 5% NPV of about 67K.


----------



## TRS30 (14 Feb 2013)

orka said:


> cremeegg, your calculations don't take account of the reducing balance on TRS30's loan - they would only be correct for interest-only loans like riya99's.  TRS30's balance now is 435,000 but in the final year of a 20 year mortgage, the amount outstanding will only be 25K-30K and the 'cost to bank' of the tracker interest would be only a few hundred euros, not 8,600.
> 
> I think a cleaner way to look at it is to look at the cost of repaying at the tracker rate vs. the cost of repaying at the bank's cost of borrowing.  Essentially, the bank is repaying a loan to another bank over 20 years at 4% but only receiving income from a loan being repaid over 20 years at 1.9% - so they have to make up the shortfall.
> 
> ...



Another interesting point. 

I should have mentioned that €200K is interest & capital and €230K is interest only for the full term of the loan.

So I would have to do a combination of the two calculations.


----------



## cremeegg (14 Feb 2013)

Just to say that I accept Orka's point about the capital and interest mortgage. I had been looking at IO

I wonder what the chances of BOSI agreeing a discount in this region are.

The big picture here is that this type of tracker is worth a lot, don't pay it off unless you get a substantial inducement.


----------



## TRS30 (19 Apr 2013)

Update*********

Wrote to BOSI about three weeks ago with an offer of €250K to redeem my mortgages with them. Got a letter back from them yesterday. They rejected the offer and said the full amount was owed.  No major issue with that, it's their right to reject my offer however what annoyed me was they went on to say that if there was any arrears that they would charge the full amount of interest on this and if I didn't keep up full repayments my houses was at risk etc etc. 

Having never missed a payment in over 5 years with them though this was unnecessary and even threatening. 

Am thinking of my reply and might include my own threat of going to the UK to go bankrupt.....

Have had a good relationship with them up to now however their letter has really annoyed me.


----------



## Brendan Burgess (19 Apr 2013)

HI TRS




> however what annoyed me was they went on to say that if there was any  arrears that they would charge the full amount of interest on this and  if I didn't keep up full repayments my houses was at risk etc etc.




You might find that it is a requirement of the Code and they have no choice but to say it.


----------



## TRS30 (19 Apr 2013)

Brendan Burgess said:


> HI TRS
> 
> 
> 
> ...



Brendan; it could well be and I may be reading too much into it. Will take the weekend to relax and then read the letter again with a clear head next week.


----------



## MrEarl (19 Apr 2013)

Brendan Burgess said:


> HI TRS
> 
> You might find that it is a requirement of the Code and they have no choice but to say it.



Yes, I think Mr. Burgess is correct on this.

All too often, we read things like "Your home is at risk .....".

I'm not going to go reading through the CCMA (Consumer Code on Mortgage Arrears) and CPC (Consumer Protection Code), but if TRS is particularly concerned by the content of the letter, he/ she would be wise to first check the codes before having a go at the Bank.

I find it amazing, not just with BoS but with all of the lenders, that they continue to refuse to do deals to get people out of the Tracker Loans ....

Regards

Mr. Earl.


----------



## slingblade (21 Apr 2013)

Hi TRS30,
             Did BOSI come back with a counter offer and have you just dropped this?

Would be interested in finding out as I have 390k with another 30 years to run and ecb +.75.

No rush to pay it off but if they made it worth my while then they could get 1 tracker off their books.


----------



## Commercial (22 Apr 2013)

Hi al,
BOSI will not do a deal on private homes no matter what the interest rate is and how much money they are losing. They will most definitely not do a deal if you are not in arrears and comfortable financially! This is from my experience of dealing with them and Certus on a daily basis.
They are scared of doing deals on private homes due to the fact that they are owned by Lloyds who have 10 times the amount of home mortgages in the UK than they have here and if they start to "do deals" on home mortgages here it would potentially bring down the whole bank in the UK as all the UK borrowers would look for deals as well.
Deals are being done on commercial BOS loans, which I work on, and very few are being done and only in exceptional cases on residential mortgages.
The majority of the wording on their letters about arrears and the risk to your home is from a template and you will get this in all replies.

Hope this helps.


----------



## TRS30 (22 Apr 2013)

Commercial said:


> Hi al,
> BOSI will not do a deal on private homes no matter what the interest rate is and how much money they are losing. They will most definitely not do a deal if you are not in arrears and comfortable financially! This is from my experience of dealing with them and Certus on a daily basis.
> They are scared of doing deals on private homes due to the fact that they are owned by Lloyds who have 10 times the amount of home mortgages in the UK than they have here and if they start to "do deals" on home mortgages here it would potentially bring down the whole bank in the UK as all the UK borrowers would look for deals as well.
> Deals are being done on commercial BOS loans, which I work on, and very few are being done and only in exceptional cases on residential mortgages.
> ...



Thanks for the reply, this is good information to have!

Is the above in relation to Lloyds fact or just your opinion? Is this the only reason and they are losing money on cheap trackers or they are not so are two reasons?

Also do you what they are doing if you sell your home and have a shortfall?


----------



## MaxRuby (22 Apr 2013)

Hello:   *Commercial*  could you please PM me as I'm looking for some professional help with BOI on a BTL property?  Thank you.


----------



## TRS30 (22 Apr 2013)

slingblade said:


> Hi TRS30,
> Did BOSI come back with a counter offer and have you just dropped this?
> 
> Would be interested in finding out as I have 390k with another 30 years to run and ecb +.75.
> ...



Sorry missed your question earlier. 

There "counter offer" was pay the loans in full or we will charge you full interest on the arrears!


----------



## Commercial (22 Apr 2013)

Hi TRS. This is fact. Not my opinion. 
I am unsure of your second question.
As regards the shortfall, it all depends on your financial circumstances, but there are certain ways to deal with this.

Hi MaxRuby. I am unable to PM you


----------



## MaxRuby (22 Apr 2013)

Commercial - is there another way that I could contact you please?


----------



## TRS30 (22 Apr 2013)

Commercial said:


> Hi TRS. This is fact. Not my opinion.
> I am unsure of your second question.
> As regards the shortfall, it all depends on your financial circumstances, but there are certain ways to deal with this.
> 
> Hi MaxRuby. I am unable to PM you



Thanks again.

I appreciate there are different ways of dealing with shortfalls however I was wondering if you knew what there general approach is? Are they converting it to unsecure debt via a long term loan? If so at what rate as I believe they don't have any other rates other than the one your mortgage is on.


----------



## Commercial (23 Apr 2013)

MaxRuby kfbclaire@gmail.com can get me


----------



## GSF (28 Jun 2013)

Hi Commercial,

Do you know what BOSI's approach is to moving people off trackers if they are no longer resident in a property they originally bought as an owner occupied property but through changed circumstances are now renting out? 

Are they ok to retain on tracker as longer as loan is being repaid on time?


----------

