Advice needed re finances please.

coin said:
Take a hit and sell investment property 1. It can be hard to deal with NE but selling this would be a good option. Try and drop it to beat the market around the area with similar propertys. With the cash you can clear Credit card and Credit Union debts. Also have some emergency cash left behind and less exposure to property debt. Keep investment property 2 as there is a good tracker rate on it and your making profit. It will also give your spouse time to find a new job and less stress.
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What cash are you on about?

If you sell a house in NE there is the opposite of cash and most banks will not allow you to sell for less than what you owe unless you pay the difference.
 
Exactly. If I could sell 1 property with high interest rate and in arrears - I should be fine as I am making enough money from my 2nd investment prop. for expenses etc.

Just another thought - if I were to sell 1 property and add on the remaining negative equity on the 2nd investment, will BOS allow us to do that?
 
emma09 said:
Actually it is.. never thought of the cost per annum... ok these are rough figures, I have at the moment with me.
3 Life Insurances 2854 Health Insurances1801 Home Insurance65totals530

I need 3 life insurances for 3 mortgages.. Health insurance very important.. as we have used it in the past and I would like the security of it with 2 young kids.

1 home insurace... is for 1 rental property.. as we were advised to have it 2 years ago, when we first rented out.. so, we renewed it again, coz. again "just in case we need it"...

Having said all that.. I have to say.. I never thought it costed us so much.. all payments go by Direct Debit different dates each month, and I am too busy thinking of having enough funds on each day that I never realised how much were we paying each year...

I can see.. it needs serious looking into!!!!
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Legally you just need basic mortgage protection on your home. You are not obliged to have any form of life insurance on the investment properties.

On the health insurance you could save by changing your family policy to a corporate policy. See here

Home insurance - shop around, you may make savings.

Sorting these out could free up several thousand euros per year.
 
Thanks Norfolk. We got our 3 life insurances from a broker and only got them changed last year as we got better rate.
I thought we legally needed to have each one of them?
In any case, I would rather keep the insurances - the way our luck is at the moment, one of us could get in trouble and all the dreams and plans we have for our babies.... anyway.. that's another days talk!!!


I suppose, my main worry is 1 investment property - I am not getting enough rent to pay off the mortgage. Bank is refusing to put me on Interest Only - or reduced payment. If it was only few thousand euros in negative equity - I would have begged or borrowed from somewhere to finish that loan off.. it would make it so much easier to manage the rest of the finances.

Its funny, that was the plan all along. We were always interested in ONLY keeping our 1st home as investment as we had emotional ties with it... the 2nd property was only to help us get a "better bigger" place! We were just too lazy / careless that we didnt do anything about it when we bought our residential home ..... we went away for few weeks .. and it seems there was a meltdown in economy in just couple of months really.....
 
"the way our luck is at the moment, one of us could get in trouble and all the dreams and plans we have for our babies.... "

What are the dreams and plans ?
 
In simple words.. dreams and plans that most parents have for their kids.. better future... we both come from "humble" backgrounds and worked very hard to try to achieve "good things" in life... wanting to give best to our kids... and give them good start in their lives, which both of us didn't have... this is not the place to go into details... its very upsetting for both of us.. but we still try to give as much as we can to our kids even if it means denying ourselves of simple pleasures... like going for a "night out"...
 
emma09 said:
Thanks Norfolk. We got our 3 life insurances from a broker and only got them changed last year as we got better rate.
I thought we legally needed to have each one of them?
In any case, I would rather keep the insurances - the way our luck is at the moment, one of us could get in trouble and all the dreams and plans we have for our babies.... anyway.. that's another days talk!!!


I suppose, my main worry is 1 investment property - I am not getting enough rent to pay off the mortgage.
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Ok, sorry to harp on about this but I think you are paying about eur 2k too much in life insurance premiums that could go a reasonable amount towards making up the shortfall between the rent and the mortgage payments on the investment property.

I don't think the life assurance policies you have to provide for your children if you die should be the same as the policies you have to cover non payment of your investment mortgages. This is not a question of doing away with the insurance and not being covered or leaving no safety net for your children, its about understanding the cover you have and making sure it does what you think it does.

do the policies definitely not pay out anything on the loss of your husband's job? when do they pay out? purely on serious illness or death? or are they some kind of endowment policies?
 
No, we wont get anything for my husband being out of work as when we changed, he was already unemployed, and I didnt include Income Protection for myself as it would have added another 50 euros to it. At the moment my job is quite secure, even though have taken a pay-cut of approx 20%

I think I mentioned this earlier in the post -

Life Policies
Approx 60euros each for 2 investment property -
For residential its 160Euros
Total 220 Euros each month

Health Insurance -
VHI for 3 - 120 + 70 Euros with Quinn for my husband
Total 190 Euros each month

Home Insurance
1 Rental Property
Total 65 Euros

475 in total of all policies

Not 500-600, as I originally mentioned but still quite a lot?
 
How come you only have Home Insurance for 1 property (and it seems high at €780 / year)?
What happens with the other houses and the insurance on them, if you are in an apt do you have maintenance fees that cover the buildings insurance? Do you have your own contents insurance though?
And even if the other houses are rented out you should have rebuild insurance and possibly contents insurance if your own goods / furniture are worth something in it.
I don't understand the Life Policies you have, we pay €30 for a couple but that just covers the mortgage.
Can you not get something similar to cover the 3 mortgages and then 1 separate one for your lives if you want it for your kids, at the moment have you insured your lives 3 times?
 
1 home insurance - becuase its a home rented out - its to cover structural damage etc.. not contents

The other 2 are apartments so covered through block insurances and yes, we pay management fees. Contents not too important to us for rental apartment.. only basic furniture / appliances. Dont want to add another insurance cost to our residential apartment.. so no insurance for us.

I am not sure how the life policies work? I think its a case that if one of us were to get seriously ill, we will get money from 3 different policies? I think.. so, the money can go towards paying mortgage.

Whats the difference between mortgage only protection and life protection?
 
have a look at itsyourmoney.ie - they have explanations and comparisions of costs for differnt types of insurance.

If you're not smokers you might be able to get the cover your needs for 120 - 150 per month. rather than what you are paying which seems to be either 60 + 160 = 220 or 60* 2 + 160 = 280
 
Ok guys... help me out here. Back to the Rental Property. Just checked the figures.
Mortgage outstanding 260K. Can sell it for around 120K
Balance 140K
At the moment fully payment around 1400per month
Rent Only 800, so I need to add another 600 to make-up the payment.

If I can approach bank and ask them to give me some incentive... something to work on to pay them back 140K? If a payment plan for next 20 - 25 years to pay 140K with approx 600 instalments?

Do you think it will work?

I will save on Management fees each year / property tax each year.. save on insurance etc???
Any ideas / suggestions?
 
emma09 said:
Ok guys... help me out here. Back to the Rental Property. Just checked the figures.
Mortgage outstanding 260K. Can sell it for around 120K
Balance 140K
At the moment fully payment around 1400per month
Rent Only 800, so I need to add another 600 to make-up the payment.

If I can approach bank and ask them to give me some incentive... something to work on to pay them back 140K? If a payment plan for next 20 - 25 years to pay 140K with approx 600 instalments?

Do you think it will work?

I will save on Management fees each year / property tax each year.. save on insurance etc???
Any ideas / suggestions?
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But if you propose to continue paying €600 a mth on the neg equity, same amount as you are paying now to meet the mortgage then are you not better off keeping the property and paying the mortgage, as at least at the end of that you will own the property and have an asset.
I'm not sure how the above plan would benefit you? Except to save mgmt fees since the mgmt fee covers the building insurance, you don't have contents ins since it's rented out and property tax is only €200 a year.
If you take the hit now of €140k negative equity it is quite a lot, holding on to the property might be the better option. That's just my initial view reading your above proposal.
Of course it assumes you will be able to keep it rented out, not knowing the location it's hard to give an opinion on that.
 
I know its very difficult decision.

With my rough figures Per annum
1000 - Management Fees
200 - Property Tax
1000 - Revenue Tax ( havent paid them at all since renting it out 3 years ago - my rough guess.. could be more!)
100 - Life Insurance
200 - Misc expenses / repairs /maintenance etc

In Total 2500 per annum for next 20 years = 50,000
If I go with current payment from my pocket of 600 euros for next 20 yrs its 144,000
So, in total 144,000 + 50,000
that's nearly 200,000.

This is assuming interest rates won't rise for long period (which we know they will).

Will I get 200K after 20years to cover all the cost? and is it worth it to worry for next 20years about paying all these expenses... with revenue and Property management fees being the major expenses... when I already have so many other bills to pay?

I know its still 600 per month.. which is a lot.. ? still confused?
 
I dont think €600 a month will pay €140,000 over 25 years, could be wrong but thought I read somewhere €530 per €100k. If my memory is right thats going to cost you €742 = €222,600.00. Thats at a mortgage rate.??

I would get a moratorium of 3 months on your 3 mortgages and put all three on interest only for a furter 6 to 9 months. The bank will not wish to comply with this but do it anyway. Remember to write to them outlining your plan.

Use this year to clear unsecured debt. At the end of the year, or earlier if possible, return your home to full repayment. Keep the rentals on interest only for the foreseeable future.

Hopefully during this time employment can be found for your husband that will increase your income enough to make some over payments, I would direct these to your home not your rentals.

Move to living debt free other than your property borrowings, stop thinking of your cc as your safety net and build up 2k savings as safety, that will allow you to get free of the cc trap for ever.

Good luck
 
Thanks for that. If its going to cost me over 200K, I dont see the point in giving the keys back to the bank and still be in debt for next 20-25 years.

Yes, I think, interest only is the solution.
I have applied for interest only on residential mortgage and will try continue paying minimum 800 towards the investment property as interest only is still going to be over 1200 euros as I am on a high int. rate.

I agree, if I could build up 2-3K savings and continue paying small amounts towards my cr card - it would make things so much easy if they were to STOP charging me interest and late fees. MBNA are the worst ! I will try to clear at least 1 cr card in the next 12 months and lets see what happens from there.

Another Question?

I know both our credit rating is gone very bad.. in the last 6-8months - between not paying Cr Card on time plus 1 missed mortgage payment. How long will it stay on our record? I am still being optimistic and say if my husband finds some work ( he is thinking of going to UK) how likely are we to get credit again? (NO - i dont mean more credit cards.. just bigger home.. as we are living in a tiny apartment at the outskirts of the city! and its quite hard with two lively children)

We never missed a payment or incurred late charges for anything before all this mess. Always, had very good credit history and that's why ended with Cr Cards with high limits.... will it be taken into account that it was only a temporary "glitch" in our financial circumstances?

Do you think our name will be back in "good books" again within 3-5 years? It will be probably 3-5 years before we are able to completely finish off our unsecured debts anyway...
 
As far as I am aware, your bad credit rating will remain for five years, after any of the debts which you didn't pay on time, have been cleared in full.
 
I wouldnt be overly worried about your credit rating as at the rate things are going there will be no one left in the country including the country that will have a decent credit rating.
 
Yes, credit rating is the last thing on my mind too... Somedays, I give up!

It causes a lot of strain on your relationship - lot of people dont realise how much all this stress takes out of you.

It seems, I just about manage to sort out one problem.. and we get another letter looking for something else. Now, we have probs. with our Tenants plus we got another letter to pay property managment or else.. COURTS!!

I keep on dreaming for Euromillions.. but never have enough money to play!
 
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