Danske Bank mortgage holder in negative equity

I've never posted online in my life before so please a little patience...I've seen great advice here and am in desperate need of same. I bought my semi-detached house in 2003 in what was a lovely but large estate for €140,000. A house in the row behind me sold recently for €45,000. Unfortunately I do not see much prospect of house prices rising much beyond this as the estate has developed a reputation as one of the worst in town because of crime, drugs etc. So selling up is not an option. I am early retired on medical grounds for the last couple of years. My income per month is now €1200 out of which I've been paying my mortgage of €746. I have savings and have needed to dip into them lately as I am really struggling to pay all my bills. I am just about to come out of a 3 year fixed rate mortgage period with Danske bank. About a week ago I found out that Danske bank are no longer offering fixed rate mortgages so basically all that is open to me is a variable rate at the mercy of Danske bank for the remaining 11 years of my mortgage take it or leave it. Of course they told me I could switch provider...I am just so shocked that I was not given any notification that this might happen anywhere down the line. I know I am just one of thousands who will be struggling on a variable rate mortgage but I feel forcing me onto a variable rate is a similar situation to forcing people off a tracker mortgage. Is there any way in hell another mortgage provider would take me on? Any advice gratefully received.

Write to Danske Bank and request them to explain to you the "valid reason " why their variable mortgage rate is set at 4.95%. Danske bank, unlike other European banks, are not as exposed to the market as their counterparts ( due to the manner in which they fund themselves ). However they do get some funding from the ECB, where euribor rates are at an all time low. In Denmark, interest rates have been in negative territory for quite some time. ( for borrowers and savers alike, ie the bank will literally pay you a premium to take out a mortgage. ) It will be interesting reading to examine their reply.

Whatever about Danske's variable rate there is no right or entitlement to a fixed rate if the bank no longer offer them. When I worked in banking people often asked if they could opt for another fixed rate when the one they had was up, the answer we always trained to give as yes, if fixed rates are available at that time. It was always a possibility that there would not be fixed options available for whatever reason.

Thanks previous posters. Asphyxia - might as well put that in to my letter of complaint to Danske as recommended by Financial Services
Ombudsman Office. I think writing letters is about all I can do.. Interesting Montbretia...do you know of any examples where this (fixed rates not being offered) has happened before? I might be able to research a bit.. Just checking prices of handful of houses that have sold in my estate. While they sold for €45000-€55000 houses are currently being advertised at €75000. Would I therefore be able to get my house valued at €75000? I'm grasping at straws with the negative equity part of my problem. Again thanks for any advice.

Hi Mindful,

The fixed rate mortgage you had was for 3 years, now that the 3 years is up your mortgage will change. It seems that Danske bank will not offer you a new fixed rate mortgage, so you will automatically go on their variable rate, unless you can get some better deal.

Despite all the negative publicity about variable rate mortgages, they are usually cheaper than fixed rate mortgages. What rate was your fixed rate for the last 3 years.

You mention paying bills from savings. Would it be an option to use some of your savings to reduce the amount of your mortgage, this would bring down your monthly payments. It might also reduce the overall cost.

If you post more information about the size of your mortgage you may get more advice on here.

good luck with it

Yes cremeegg I think I will have to pay some of mortgage off with savings I will just have no choice. I have €78000 left to pay over 11 years. I was on fixed rate of 4.15% variable will be 4.95%...

cremeegg said:

Hi Mindful,

Despite all the negative publicity about variable rate mortgages, they are usually cheaper than fixed rate mortgages. What rate was your fixed rate for the last 3 years

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Not when it comes to Danske Bank, who are blatantly gouging every last cent from mortgagors trapped with their variable mortgage rate. If these mortgagors have ever defaulted on a payment on their mortgage or their mortgage is in negative equity, then they are stuck with Danske Bank.

Mindfull said:

Yes cremeegg I think I will have to pay some of mortgage off with savings I will just have no choice. I have €78000 left to pay over 11 years. I was on fixed rate of 4.15% variable will be 4.95%...

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Going from a fixed at 4.15 % to a variable at 4.95% is not pleasant.

While you should keep some savings for a rainy day, using savings to reduce a mortgage at 4.95% is a very good idea.

If there are houses in your estate being offered at €75,000 you may be able to approach another bank to give you a mortgage. If you could reduce the mortgage amount to say €70,000 from your savings and get a 25 year mortgage you would pay about €420 per month.

You haven't said what age you are, or how much savings you have.

I am 48 with savings of €40000. My monthly income is fairly certain but has been subject to reviews so I still need some of this as backup.

Your monthly mortgage repayments are high. I think you might be able to get a loan with one of the other banks at a lower rate, assuming you have a good history repaying your existing mortgage. This would reduce your monthly repayments. You would probably have to use some of your savings to reduce the balance.

I suggest that you contact all the main lenders and perhaps one or two brokers, until you meet some one who will work with you to get a new mortgage.

cremeegg said:

If there are houses in your estate being offered at €75,000 you may be able to approach another bank to give you a mortgage.

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Extremely unlikely. The Residential Property Database is the 1st port of call now for banks when assessing the value of any house in an estate. Recent sales are unlikely to reflect a 75K value. Also in order to re-mortgage you will only get a new mortgage for maximum 80% of the current actual value of the property (i.e. c 36k).

If houses are currently being advertised at €75 I suspect that this is a reasonable estimate of what they are worth. If the house was bought in 2003 for €140,000 I would expect that it could sell for half that now, even if the estate has a bad reputation.

Of course it depends what price the properties currently on sale actually fetch.

Was thinking that myself if got remortgage of €36-€38000 would be height of it...

Mindfull said:

Was thinking that myself if got remortgage of €36-€38000 would be height of it...

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Has anyone ever engaged in mediation arranged by financial services ombudsman bureau?