Q&A Dominic Coyle

Can I rent home and retain my tracker?


I have a Permanent TSB mortgage and when it came time to choose my next repayment option I chose, thankfully, the tracker. Now my house is in negative equity. I am thinking of renting it as I would not clear the mortgage if I sold it. Will I be able to retain my tracker if I rent it out?

My broker will not answer my query!

Mr AW, Dublin

First up, I’d get a new broker. If an intermediary cannot provide advice on areas where they are professionally qualified, they are of little use. The cynic in me suggests that the advice you seek is not something that will necessarily generate income for the broker, reducing the sense of urgency it has for them.

The important information that you need is that there is no guarantee that you will be able to retain your tracker mortgage if you rent out the property.

The first thing you need to do is dig out your copy of the originally mortgage agreement. Most will state very specifically the terms under which the loan is given and it would be normal a mortgage given to an owner-occupier to state specifically that the terms apply only to the property’s use as a principal private owner-occupied residence – ie, as your home, and not as a rental property.

If you can’t find the agreement, you may have to ask Permanent TSB for a copy, though that will almost certainly raise their antennae to the fact that you are considering something which may affect it.

Having made the right move in securing a tracker mortgage, it would be a shame – and costly – to lose it now. Any action that sees the property put out to rent will see it treated by the lender – and by the Revenue in terms of capital gains tax – as an investment property.

Ultimately, if you decide to proceed along the rental path, you will first have to approach Permanent TSB anyway. As an institution burdened more than others with loss-making tracker mortgages, it will almost certainly look to move your mortgage to a fixed or variable rate.

However, that doesn’t mean you should simply concede now. You are in negative equity. If the bank puts you in a position where you have to sell, it is out of pocket as it will have to chase you for the balance.

You, on the other hand, could continue as you are – you say nothing about not being able to meet the mortgage payments – and the bank will be out of pocket every month. Allowing you to rent under a tracker at least does not worsen its position, or yours – and it stands a reasonable chance of the mortgage being paid off within its normal term.

Ultimately, you need to approach the bank and see how open it is to allowing you to rent while retaining the tracker mortgage. You’ll need that information before crystallising your decision anyway.

If it says no, you’ll have to decide whether to continue as you are now and wait for the negative equity to be worked through with repayments or market recovery, or bite the bullet and agree to higher monthly mortgage payments.

No one can force you out of a tracker, unless you breach the terms of the agreement.

Am I entitled
to Australian pension?
I am wondering if I am entitled to a state pension from Australia. I worked in Melbourne from October 1986 to January 1998 in the public sector. I am working in the private sector since my return to Ireland in march 1998. I will be 62 in December 2013.

Ms N H, email

While it is fairly commonly known these days that one can use social insurance payments in any European Union country to qualify for a contributory pension in Ireland, the situation with other countries in which Irish people have commonly worked is less familiar.

As it happens, Ireland has bilateral social security agreements with a range of non-EU countries, including Canada, the United States, New Zealand, Japan, the Republic of Korea, Quebec (which has a separate system from the rest of Canada) . . . and Australia.

These agreements are broadly similar and they generally provide that social insurance paid in Ireland and the other country can be combined to help people qualify for old age and retirement pensions.

However, it is also possible for people to qualify for payments in both countries. Either way, to ascertain your entitlements and most beneficial use of your social insurance payments, you should contact the Australian Department of Human Services and also the Department of Social Protection.

While you are only 62 now, there is no need to wait until you are on the cusp of retirement. You should contact each department sooner rather than later.

This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to dcoyle@irishtimes.com