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Approaching Bank re: Write Down in exchange for forfeiting Tracker Mortgage

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  • 26-07-2013 11:36am
    #1
    dialemma
    Registered Users Posts: 48 ✭


    We currently hold a mortgage on a property which is in negative equity. We would now like to begin assessing our options with a view to trading up, however in the current climate and with financial pressures we are not in a position to do so immediately. We hold a Tracker Mortgage on our current property with Bank of Scotland (Ireland) - no longer trading in Ireland. Our current balance is 230,000 with an interest rate of 1.25%, monthly repayments are approximately 950.00

    The property is worth approximately 150,000.00

    I would be interested in ascertaining from Bank of Scotland (Ireland) if they are open to offering us a % write down of debt in exchange for us moving from our Tracker to a Variable Rate. Could you offer any advice on this e.g. how should we approach the bank and what % write down if they were to negotiate would be worth our consideration.

    We have never missed a payment and are not in arrears, currently we pay slightly more each month than the required repayment.

    Has anybody any positive experiences in relation to approaching their banks for a write down in exchange for forfeiting their Tracker.

    Any advice appreciated
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    #2
    murphaph
    Registered Users Posts: 19,020 ✭✭✭✭murphaph


    Tread carefully. The discount would need to be very substantial to be worth giving up your tracker. There are several threads on askaboutmoney.com about this subject. If you are thinking of moving, you should not let the bank know this obviously as they know the tracker will be gone off there books then anyway. It would be a disaster to forfeit such a cheap tracker and then get "stuck" in the same house anyway because you can't get a mortgage on something else you want to move to.


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    #3
    dialemma
    Registered Users Posts: 48 ✭dialemma


    Thank-you Murphaph, will check askaboutmoney.com and also plan to talk to financial adviser. Good point re: showing our hand in terms of moving etc. As we would no likely loose our Tracker if we were letting the property vs. living in it and likewise if we sell then the bank are quids in either way.


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    #4
    homer911
    Registered Users Posts: 5,119 ✭✭✭homer911


    The banks are not actually stupid and any offer in relation to the tracker and a discount will be linked to how long you are staying in the property - its basic maths - I would expect any bank that makes an offer in this space to make it conditional on you staying in the property for a specified minimum period. This is a tricky area and why the banks have not really gone down this route. Of course, the longer the current situation with trackers continues, the smaller any discount will be as loans get nearer and nearer to maturity, and the likelihood of an early redemption increases as people opt to trade up or down


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