Owner-Occupier Tracker

Zulu

Hi folks, hoping some one might have some rough ideas for me.
My wife & I are currently living in her house. She has a owner/occupier tracker mortgage which is about 7 years old at this stage. The house is lovely, but I don't think it will suit our circumstances in the near future.

The house thankfully isn't in -ve equity (yet, at best guess), but we would prefer not to sell. We are confident that we could rent to cover the current mortgage payments, however, then we'd be in breach of the owner/occupier tracker...

Is the owner/occupier condition for the entire length of the mortgage? or just for a period at the start? (I appreciate that the documentation she has will tell me this, but I don't have it to hand at the moment)

What was the standard (if there was one)?

Thanks.

Rabidlamb

More than likely it's for the full term of the mortgage.
I've read of many cases where people "forget" to tell their bank & even with them registering as a NPPR, changing insurance policy, declaring rental income to Revenue etc. no flags seem to have been raised back at the bank.

Your honesty in this matter will cost you your <2% interest rate & leave you at >3% with the possibility of being gouged in the future.
In the unlikely event of you being found out the only penalty would most likely be the repayment of interest.

Please note that I cannot advise you to follow this path as it would be illegal.

Zulu

Thanks Rabidlamb, I appreciate your candour.
It's a tough call. She bought before we met as a single person. We're now expecting a family & space is already limited.

It's very unfortunate that to "do the right thing" in this case is handing back a tracker mortgage; taking on a much higher interest rate.

Ultimately changing our situation from "just getting by" to "under pressure" with a child on the way seems like a madness. Hardly encouraging.

Zamboni

Full disclosure ftw.
It will catch up on you if you don't.
I have heard of cases where, once notified in advance, the banks don't seem to have an issue with it.
But you'd be best to get the green light in writing from them.

Zulu

Of course they don't have a problem with you changing from Tracker to Variable!?!

Zamboni

Zulu wrote: »

Of course they don't have a problem with you changing from Tracker to Variable!?!

I meant they may let you keep the tracker.
Anecdotal evidence only though...

Zulu

Zamboni wrote: »

I meant they may let you keep the tracker.
Anecdotal evidence only though...

paddymacfisto

I'm in similar situation. On a tracker but now want to move out of house and rent it. I contacted MABS about doing this. The advice they gave me was to keep everything above board, regsiter with PRTB, pay NPPR tax, and declare the income to Revenue. Their advice about the bank was to let them know prior to renting it out, and if they try to push you off the tracker you can maintain that without the tracker you won't be able to cover an investment rate mortgage and that you'll be in "pre-arrears". In this case you are covered by MARP which states that the bank cannot force you to change from your tracker.

Have a look at the MARP website and check it out. As far as I know this is only applicable where you own 1 single property and it was your PPR.

It's very interesting that it applies to "pre-arrears".

The Code also covers borrowers in pre-arrears. It defines pre-arrears as follows: "A pre-arrears case arises where the borrower contacts the lender to inform them that he/she is in danger of going into financial difficulties and/or is concerned about going into mortgage arrears".

For MARP cases, the lender must not require the borrower to change from an existing tracker mortgage to another mortgage type, as part of any alternative arrangement offered to the borrower.

Not sure how easy it would be to avail of this but I think once the bank know you've informed yourself, and they're getting payments on the loan they might allow you to keep the tracker. Once you're covered by MARP it seems you may have a leg to stand on. I'm in the process of contacting FLAC about my own particular circumstances, so I'll follow up with any advice I get from them.

Pkiernan

Rabidlamb wrote: »

Please note that I cannot advise you to follow this path as it would be illegal.

What is ILLEGAL about it pray tell?

What would be the criminal penalties for this please?



Here's a hint - it is not illegal.

Henry Ford III

Pkiernan wrote: »

What is ILLEGAL about it pray tell?

What would be the criminal penalties for this please?



Here's a hint - it is not illegal.

Possible breach of contract? If the tracker loan was offered for a principal private residence only, then there may be an issue.

Pkiernan

Henry Ford III wrote: »

Possible breach of contract? If the tracker loan was offered for a principal private residence only, then there may be an issue.

Breach of contract is not an illegal act by itself.
Its legal significance is that it provides a cause of action for a (civil, rather than criminal) lawsuit by the other party against the breaching party.

In this case, the bank would suffer no damages (as long as mortgage is paid).

In any event, there is nothing illegal in not telling the bank that you are renting out your property.
Are the bank police going to come around and arrest you, and throw you in bank jail?

Henry Ford III

Pkiernan wrote: »

Breach of contract is not an illegal act by itself.
Its legal significance is that it provides a cause of action for a (civil, rather than criminal) lawsuit by the other party against the breaching party.

In this case, the bank would suffer no damages (as long as mortgage is paid).

In any event, there is nothing illegal in not telling the bank that you are renting out your property.
Are the bank police going to come around and arrest you, and throw you in bank jail?

Civil/criminal distinction isn't very important is it?

Bank should be getting the variable (profit making) rate on the property in the circumstances, and not the loss making tracker.

Breach of contract (not informing lender) is potentially actionable.