# Advice on renegotiating mortgage or handing in keys ?



## Shay2011 (2 Oct 2011)

Im a 31 year old guy working in a semi state organisation. Like most people my salary has been cut since 2008.

I purchased a two bed appartment in June 2008 for 290K which is only worth about 140K now. My Interest rate is 5.45 % with "Haven".

Im really struggling to make payments the mortgage is over 50% of my income and along with all the bills I have very little left over to live.

 I really cant go on making these payments as it is an excessive burden especially since it is likely that I will receive a 10% pay cut in the new year. Im just wondering what options are available to me.

 Is handing the keys back an option ? and is it likey that "Haven" will seek the full outstanding arrears. Is there any way that I could renegotiate my interest rate to say 3.5 % as this would make a significan difference? I know they will recommend interest only but this is not really a viable option to me as this would be only about 240 less than Im paying at the moment. 

Also could I argue that the Haven was negligent giving me this mortgage in the first place as it was a 95% mortgage and it was over 40% of my income back in 2008 which has risen to over 50%?

Any feedback would be greatly received.


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## PaddyBloggit (2 Oct 2011)

Did you not do a search?

AAM is full of threads covering what you are asking:

e.g.

http://www.askaboutmoney.com/showthread.php?t=160856&

http://www.askaboutmoney.com/showthread.php?t=101743

Also, a read of key posts might be worth your while:

http://www.askaboutmoney.com/showthread.php?t=4690


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## hastalavista (2 Oct 2011)

Can you clarify the 240 please as I have run some numbers based on a 275k loan at 5.45% over 25 years and the principal element is closer to 430 a month 
Payment....Interest...Principal..Balance
..........................................275,000.00 
1,672.94...1,248.96...431.58...274,568.42  First payment

Please post some further numbers [ Loans. loan amounts , term, interest rates etc] and lets see what we can do.

The other question is why you went with Haven as in a good job and a 95% mtg I would have thought mainstream lenders would have been available.

How is your credit rating?

Forget about the negligent notion, focus on what you can control such as bills etc.

[line removed  based on following post]


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## wbbs (2 Oct 2011)

I thought all lenders in the Irish market had to abide by the MARP procedures, actually as EBS is using the MARP and Haven is just a branch of them then surely it should apply as well.


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## ClubMan (3 Oct 2011)

Shay2011 said:


> Is handing the keys back an option ?


Almost certainly not.


> Also could I argue that the Haven was negligent giving me this mortgage in the first place as it was a 95% mortgage and it was over 40% of my income back in 2008 which has risen to over 50%?


Did that not give *you *pause for thought that it might not be such a good idea to take on such an onerous debt?


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## Luternau (4 Oct 2011)

ClubMan said:


> Did that not give *you *pause for thought that it might not be such a good idea to take on such an onerous debt?



Perhaps the OP does not need to hear comments like this at this time?
It very easy to be wise after the fact. I would guess the OP did not see armegodon coming? And if the Govt, Mandarins in Dept of Finance & Economists etc did not see it, it's reasonable to assume the OP could not have nor should be expected to see it.

It's also reasonable to assume the OP could have expected increases in salary to finance his payments rather than decreases along with increasing interest rates and austerity measures. 

That said he is not going to get anywhere on the negligent action of banks in giving the mortgage. But perhaps it's time that the pain of these crippling mortgages was shared 50/50 with the other party to the transaction, who also took a risk that has not worked out as intended.


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## ClubMan (4 Oct 2011)

Shay2011 said:


> Im a 31 year old guy working in a semi state organisation. Like most people my salary has been cut since 2008.


Might be worth posting in the Money Makeover forum with details of your overall financial situation so that people can get a better idea of what sorts of suggestions might be useful to you.


> I purchased a two bed appartment in June 2008 for 290K which is only worth about 140K now. My Interest rate is 5.45 % with "Haven".


What is the term of the loan?


> Im really struggling to make payments the mortgage is over 50% of my income and along with all the bills I have very little left over to live.


As mentioned above more specific details might help - e.g. your net income, mortgage (and related) repayments, other debts/repayments, regular bills and other expenditure etc.


> I really cant go on making these payments as it is an excessive burden especially since it is likely that I will receive a 10% pay cut in the new year. Im just wondering what options are available to me.


If you are finding it difficult to meet your mortgage repayments then you should (a) review your overall financial situation and (b) approach the lender explaining the situation and looking for options on restructuring the loan to make it viable long term (assuming that's possible).


> Is handing the keys back an option ? and is it likey that "Haven" will seek the full outstanding arrears.


By how much are you in arrears and how many repayments have you missed (in part or full)?


> I know they will recommend interest only but this is not really a viable option to me as this would be only about 240 less than Im paying at the moment.


How come? You are not long into your mortgage so repayments should still be largely interest and not capital.


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## onq (4 Oct 2011)

Shay2011 said:


> I know they will recommend interest only but this is not really a viable option to me as this would be only about 240 less than Im paying at the moment.



_Only_ €240?
That's still €60 a week!

Remember that you're starting your career, not ending it.
I would say persevere and get a second income stream going.


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## Shay2011 (5 Oct 2011)

Thanks everyone for your replies. They were greatly received. Halavista my Loan amount was originally 275,500 over 40 years but I cut it to 35 years. Over 40 years my total repayment amount was €1411.59 with interest amount equal to €1251.00 so only 160 was clearing my principal. I got a mortgage credit of €208 so amount to pay was €1,203 for the first year. Presently my total repayment is around €1,456 with interest amount equal to €1,216 and around 240 clearing pricipal. I get a mortgage credit of €170 so the amount I pay is €1,286. If I were to pay interest only the amount I would have to pay would be €1,216-€170 = €1,046 a saving of €240 Euros. 
I went for Haven as I only had about €15k Deposit and they were the only lender willing to give me a 95% mortgage. I was extremely naive at the time and didnt really understand the magnitude of the debt I was taking on. I suppose I couldnt forsee the severity of the slump. 
My Credit rating is ok and I have cut my costs as much as I can.
I prepared a present income and Expenditure statement and there is no further room for reducing my costs.

Club man the term of my loan is a five year fixed at 5.45% so I have a little under 2 years left and then I will placed on the variable rate which currently stands at around 4.90 %.

Here is a breakdown of my costs :

Salary               2,451

Mortgage pmt    1,286

Household Ins         34

Management Chg  104

Travel                   150

Food                     250

Chorus NTL            65

Airtricity                55

Mobile                   30

Waste Charges      25

TV Licence           13

ACCA Membership  7

Disposable Income  €432

I am not in arrears with my mortgage but as you can see I have very little income remaining after bills and with the possiblity of a 10% pay cut on the horizon this would wipe out my income completely so I believe I can no longer afford to make these payments.  Is is possible to renegotiate a lower interest rate with my bank ???? as I feel that interest only is not really an option because I will still struggle to make these payments and I will not be clearing any of the principal which is soul destroying given the amount I will be paying. 
Thanks again for all feedback. Greatly appreciated.

Shay


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## hastalavista (6 Oct 2011)

Thanks for clarifying the term etc.

If on interest only, with 432 left out of 2451 each month, even with a 10% cut on the way, I appreciate the prudence in your thinking but you wont get a rate reduction based on these numbers.

I would wait till the pay cut arises and then approach the bank to go to interest only


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## ClubMan (6 Oct 2011)

Are the mortgage repayments net of mortgage interest relief/_TRS_?

http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html

Is that the "mortgage credit" that you refer to above?

€432 disposable p.m. after all mandatory stuff has been paid for doesn't look tight to me personally.


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## Lilybear (6 Oct 2011)

I hate to rain on anyone as I understand that although the budget says your left with 432 that most months it wont work out to that with little 5euros theres and 10euros here..it just vanishes.

but to be honest I have listed the exact same outgoings as OP and I live on € 30 disposable income a week. the bank may not and probably wont negotiate and even if they do... after the interest only or the payment break your income will have dropped so you'll be in a worse state...


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## ClubMan (6 Oct 2011)

Lilybear said:


> I hate to rain on anyone as I understand that although the budget says your left with 432 that most months it wont work out to that with little 5euros theres and 10euros here..it just vanishes.


If money is "just vanishing" then what you really need to do is keep a detailed spending diary of all income and expenditure for a few weeks/months to find out where it is actually going.

I used this site for that purpose a while back when, for specific reasons, I had to precisely itemise and summarise my expenditure.

https://www.spendingprofile.com/index.php


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## Bronte (7 Oct 2011)

You cannot get out of this.  No matter how hard you are sufferin.  Your permanent job is holding you.  What you need to do is maybe get a second job and try and over pay the mortgage or maybe make more cutbacks in your spendin.  Or get a lodger in to help with the mortgage.  How big is your property, do you live there alone?


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