Pepper bought our UB mortgage a few years back and we have now been offered a settlement discount of 15% on the outstanding balance of €100k. The house is worth about €600k and we have been paying most of the full monthly DDs - 10 last year, for example. The loan has reached the end of its term but we continued the monthly payments and intend to do so till the loan is repaid. My query is whether we have any chance of negotiating this discount downward assuming we can borrow the money from family and bank or credit union. And do we have a better chance of a better deal by using a broker/intermediary and if so, can you recommend anyone. Or is there any other way of better dealing with this that we haven't considered. We are not under too much pressure to meet the payments most of the time. Pepper did say that the offer may arise again if we can't take it up this time - would this likely be higher/lower the next time around. Any advice gratefully appreciated.
Pepper mortgage settlement offer
- Thread starter timtim
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CorkHome2022
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Its a good offer but who is going to loan you the 85k when your not meeting ALL the payments? If you can get the money now take the offer .
It doesn't sound like you will be able to get another loan with an impaired credit record and what appears to be some pressure in servicing the mortgage. If you can borrow from family, then go for it. Not sure on the negotiation side of it with Pepper though, sorry.
They have already offered you a discount so you have nothing to lose by making another lower offer in return. The worst they can say is no.
However, there is probably no point in making a lower offer if you can't raise the funds.
You are unlikely to get it from another lender for the following reasons:
- missed payments in the past mean your credit record is impaired
- your age, I'm assuming if you are at the end of your mortgage term that you are approaching or already retired? So affordability would be a problem
Your options are probably limited to a family loan or maybe a lifeloan provider like Spry Finance. However I would be cautious before asking family for that kind of money to clear the mortgage, it would just lead to problems
Brendan Burgess
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That is amazing.
Was this out of the blue?
I had not thought that they were offering discounts when there is plenty of equity.
I suppose from their point of view, it's costing them €15k which is a lot less than the legal costs and hassle would be.
Brendan
Brendan Burgess
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I had not thought of this. It's an interesting idea.
I am not sure that it's worth borrowing €85k to repay a €100k loan.
@timtim
What age are you?
What is the interest rate? If it's a cheap tracker, you may be better off staying where you are.
Spry has set up charges and an interest rate of 6.7% and early repayment charges.
I'd agree but it should be considered by the OP as an option. There is the setup fee and your own solictor so probably €3k in fees.
If pepper are charging 8% plus on €100k, then 6.7% at €88k (to absorb the costs) would still be a better deal. Obviously it gets better if they can negotiate down further.
The other big advantage is that there would be no more hassle. Letters seeking repayment, loan sold to another provider etc. As long as the OP understands how lifeloans work, then they can continue to pay off the balance with Spry and vary that amount as suits.
Even if the OP was only 60, they can borrow €€90k based on the value of the property.
First of all, thanks to all who replied. I will try to answer all the queries people have raised.
We’re in our mid-sixties.
Yes we did miss a good few UB payments but our Pepper record is pretty good. But no doubt our credit record is impaired.
We are not too intimidated by the contacts/letters (maybe we should be) as we were in business before and are probably a bit used to it. So that’s not the issue, it’s can we save money doing this.
We are outside the MARP process.
Our interest rate is about 4% and is not fixed.
Yes, the discount offer was totally out of the blue. Maybe they’re not optimistic about repossession in the face of our age and reasonable repayment record with them but honestly have no idea.
Thanks for the Spry suggestion which we hadn’t considered but I think we’d be unlikely to do this as we think we might manage without it but will see. Yes, we’re familiar with these types of loan.
We would probably try to borrow around 40k from a bank/institution and raise the balance from savings/family. We’ve not tried yet and have no track record with an institution that would give us optimism. The main reason for optimism would be the equity. However, legals might swallow a lot of the discount and interest will be higher. That’s the reason for asking if we were likely to get any more discount using a broker or by any other way. For example, pay half the balance off now with a deadline for the balance to be paid off in a specified time to qualify for the discount.
Is there any chance, based on Brendan’s amazement (that, in itself, is amazing, given all he’s seen over the years!) that their process might be deficient. For example, we gave no explicit consent to their continuing UB’s monthly Direct Debit though the loan documents may authorise that or the purchase process with UB.
Nobody has suggested using a broker or given any indication Pepper would give a greater discount, so maybe what we’ve been offered is the best we’ll get. We’ve no issue with haggling ourselves but want to take the best route and are not familiar enough with the situation.
We’re in our mid-sixties.
Yes we did miss a good few UB payments but our Pepper record is pretty good. But no doubt our credit record is impaired.
We are not too intimidated by the contacts/letters (maybe we should be) as we were in business before and are probably a bit used to it. So that’s not the issue, it’s can we save money doing this.
We are outside the MARP process.
Our interest rate is about 4% and is not fixed.
Yes, the discount offer was totally out of the blue. Maybe they’re not optimistic about repossession in the face of our age and reasonable repayment record with them but honestly have no idea.
Thanks for the Spry suggestion which we hadn’t considered but I think we’d be unlikely to do this as we think we might manage without it but will see. Yes, we’re familiar with these types of loan.
We would probably try to borrow around 40k from a bank/institution and raise the balance from savings/family. We’ve not tried yet and have no track record with an institution that would give us optimism. The main reason for optimism would be the equity. However, legals might swallow a lot of the discount and interest will be higher. That’s the reason for asking if we were likely to get any more discount using a broker or by any other way. For example, pay half the balance off now with a deadline for the balance to be paid off in a specified time to qualify for the discount.
Is there any chance, based on Brendan’s amazement (that, in itself, is amazing, given all he’s seen over the years!) that their process might be deficient. For example, we gave no explicit consent to their continuing UB’s monthly Direct Debit though the loan documents may authorise that or the purchase process with UB.
Nobody has suggested using a broker or given any indication Pepper would give a greater discount, so maybe what we’ve been offered is the best we’ll get. We’ve no issue with haggling ourselves but want to take the best route and are not familiar enough with the situation.
Unclear what you are getting at. Is it to question whether UB had the right to sell the loan or that Pepper, having bought it, had the right to seek payments from you through UB?
Both are permitted. It would seem you agree if you did not challenge after transfer and continued to pay. Seems late to question this now.
The focus should be on the offer, and whether you can get the finance to avail of it
IMO unless you can get a family member that can comfortably lend you all or almost all the money you may be best sticking with the current setup.
A personal loan from a bank for 40k would be over twice your rate and eat up a hugest chunk of the benefit for paying off early.
Surely that's unlikely to be doable with an impaired credit record?
Dr Strangelove
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Could you not trade down and be rid of the hassle offer or no offer?
€500k buys a house suitable for a couple nearly everywhere.
Brendan Burgess
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I think you may be overestimating the hassle.
He is making 10 repayments a year. He has not told us how much they are but it's likely that he is paying down a fair bit of capital.
Pepper are not going to take legal action. They may make phone calls and might even issue legal proceedings. But the OP has been through this and probably can handle the hassle easily.
Brendan
Thanks again for the replies and to answer them:
Brendan is right - Pepper hassle isn't a huge issue - few calls (we do reply to these) and letters and slightly veiled threats of proceedings if payments not met etc. We think the chances of legal action are very remote so not really worried - again maybe we should be.
We're not questioning the process or the debt due - just trying to find a possible explanation for the offer out of the blue. Pepper just continued the UB direct debit - we gave no consent or signed anything. We're not contesting their right to seek payment but it seems odd. They notified us of taking over the loan for sure several times but we signed no new DD or any other Pepper paperwork.
The optimism on getting about €40,000 of a loan is solely on the basis of the equity but that might be entirely misplaced.
Monthly payments are about €1700.
We prefer to stay put (family and friends nearby) if we can but it might come to moving if Pepper sought repossession and we thought there was any chance it might happen.
As I've said, may not be worth doing at a 15% discount but if it was more, say 25%, we'd probably manage it somehow. The question is, is that likely using a broker or any other way, say in two steps, for example, as proposed above. We'll definitely try haggling but we're looking for the best approach and to see if we're missing anything.
Brendan is right - Pepper hassle isn't a huge issue - few calls (we do reply to these) and letters and slightly veiled threats of proceedings if payments not met etc. We think the chances of legal action are very remote so not really worried - again maybe we should be.
We're not questioning the process or the debt due - just trying to find a possible explanation for the offer out of the blue. Pepper just continued the UB direct debit - we gave no consent or signed anything. We're not contesting their right to seek payment but it seems odd. They notified us of taking over the loan for sure several times but we signed no new DD or any other Pepper paperwork.
The optimism on getting about €40,000 of a loan is solely on the basis of the equity but that might be entirely misplaced.
Monthly payments are about €1700.
We prefer to stay put (family and friends nearby) if we can but it might come to moving if Pepper sought repossession and we thought there was any chance it might happen.
As I've said, may not be worth doing at a 15% discount but if it was more, say 25%, we'd probably manage it somehow. The question is, is that likely using a broker or any other way, say in two steps, for example, as proposed above. We'll definitely try haggling but we're looking for the best approach and to see if we're missing anything.
Brendan Burgess
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If your balance is €100,000
And you repay €1,700 for 10 months a year
That is the equivalent of €1,400
And the interest rate is 4%
Then you will have repaid the loan in full in 7 years
Total repayments of €115k
If you borrow €90k (to allow for legal costs) to pay €85k in settlement at 6.7%
You would pay more interest, but less capital. But your overall repayments would be the same.
And you repay €1,700 for 10 months a year
That is the equivalent of €1,400
And the interest rate is 4%
Then you will have repaid the loan in full in 7 years
Total repayments of €115k
If you borrow €90k (to allow for legal costs) to pay €85k in settlement at 6.7%
You would pay more interest, but less capital. But your overall repayments would be the same.
Brendan Burgess
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- 54,197
There is no chance it will happen if your figures are correct.
You are paying chunks of capital off you loan every month.
Pepper is unlikely to go to the expense and hassle of a court case.
And even if they do, the court would not grant them an order or at worst, after about 5 years, they would give an order with a stay for 2 years, by which time you will have paid off your mortgage.