# kbc buy to let sell or surrender



## julie48 (8 Feb 2014)

Hi first time here so hope I am doing this in the right forum.

 I have a buy to let property with the kbc and they have advised me this week that it is unsustainable and we have 3 options sell, surrender of pay full interest only of 791 p/m

 our home house is being paid in full as are all other debts c/c loans etc nothing has been negoitiated on those debts but we are only paying the rent towards the kbc mortgage which is 330 p/m.  Should I negoitiate c/c and pay full interest only??

 I have spoken to mabs and they have advised that if we sell/surrender the kbc will want all details of assets and liabilities confirmed with and affidavit.
 However they have advised us that we are in an unusual position as our home house mortgage is 80k and property worth 250k so we have a lot of equity.

 Mabs advised that if we sell/surrender it will then be an unsecured debt but kbc may go through the courts to get their money as we have a lot of equity.  kbc have just said that they will come up with a repayment plan for residual balance but am panicking that they will come after our home house.  rental property worth about 50k if am lucky and owe 170k also is vat liable

 Any help/advice greatly appreciated


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## Brendan Burgess (8 Feb 2014)

Hi Julie

You should provide information in this format to get a comprehensive answer.

Standard Format for mortgage arrears Case Studies

If you have a shortfall after sale or repossession, they will get a judgement and secure it on your family home.  So you have to take this very seriously indeed.


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## julie48 (9 Feb 2014)

hi Brendan thanks for that I will fill it out and post it


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## julie48 (9 Feb 2014)

thanks brendan


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## Bronte (10 Feb 2014)

julie48 said:


> kbc have just said that they will come up with a repayment plan for residual balance


 
Have they put that in writing?  

What VAT are you referring to, if you sell the investment property there is no VAT.


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## Joe_90 (10 Feb 2014)

Bronte said:


> What VAT are you referring to, if you sell the investment property there is no VAT.



Bronte,  did you ever hear of the waiver of exemption on short term lettings of residential properties?  I presume that is what the OP did and recovered the VAT on the purchase therefore needs to deal with the VAT on sale.

This is done by either taxing the sale or by way of a Capital Goods scheme adjustment if the sale is exempt.


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## julie48 (10 Feb 2014)

Hi Bronte

We claimed vat when we renovated the property so when the property is sold vats is to be paid back.

I am awaiting a letter from them at the moment outlinung our options but whether the part about the residual balance will be in it i dont know yet


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## julie48 (10 Feb 2014)

Hi Brendan 

Further info below

Monthly income - me €1852 am in full time empolyment
husband €932 carers made redundant in 2008
also recieve €309 domicillary care allowance 
child benefit €260
no supplements or trs entitlements
2 children 13 and 9 this year - no childcare costs
1 car owned by us - i use my dads car to get to work
Medical expenses €144
home - ptsb
owe 80k
value 200k
monthly payment €612 no arrears

investment property - kbc
owe 170k
value 40-50k
monthly interest only pmt €791
rent received €330
 arrears 6k - have had less than interest only for 18months

credit union shares 6k
loan €1300
payments €30 no arrears 1 year left

credit cards - €12000
payment €360 - no arrears

family loan - €8000
payment €120

hope this is all the info needed

Thanks

no other savings or investments
expected to inherit land in next 10years

home house of utmost importance


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## Bronte (11 Feb 2014)

Joe_90 said:


> Bronte, did you ever hear of the waiver of exemption on short term lettings of residential properties? I presume that is what the OP did and recovered the VAT on the purchase therefore needs to deal with the VAT on sale.
> 
> This is done by either taxing the sale or by way of a Capital Goods scheme adjustment if the sale is exempt.


 
No I never heard of this, is it for holiday home?  Is that what Julie is claiming she did?  She mentioned VAT on renovations.


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## Joe_90 (11 Feb 2014)

Off topic but under the old VAT code short term lettings were exempt from VAT, but you could waive your exemption and recover the VAT on the purchase of property.  A minority of people did this in relation to private residential accommodation.  The opportunity to waive the exemption was withdrawn a number of years ago but existing waivers still applied.

Obliviously VAT has to be charged on the rents and it also has an implication for a future sale.

Under the new VAT code "option to tax" residential lettings is not allowed.


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## julie48 (13 Feb 2014)

Why do I need to make 15 posts to start a new thread?


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## Joe_90 (13 Feb 2014)

To answer you most recent question its to stop spammers!

In relation to you original question there are 2 options sell or keep it and pay interest only.

You can't afford to pay interest only at the moment but if you took the CU savings and paid off the CU loan then use the balance to pay off the credit card would they do a deal for paying half off?  Could you stop the payment on the family loan?  If you had an extra €500 per month would that make ends meet?

BUT where does that leave you, you are paying interest at 5.5% on an asset worth €50k indefinitely. The rent is very low is there potential for it to increase or is that the level in the area?  

If you sell you get 50k and pay down the loan and are left with an unsecured loan of €120 accruing interest of €6,600 per annum.

Is the rental property in joint names?
Is the family in joint names?
Are there any prospects of employment for your husband.

I'm not sure if the bank are going to write any of the loan off due to the positive equity in the family home.


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## Commercial (14 Feb 2014)

KBC will look at who you are repaying. You are repaying €510 on unsecured debt of €21,300 from your personal resources. Yet you are putting no personal repayments towards their secured debt and you are only using the rent.
I would renegotiate with the cc company. Use your shares to clear the cu and ask your family for a break on your repayments.
This would avoid KBC selling the house and putting a judgment on your family home.

However, people all have different views on what they want to do. Some people don't mind a judgment, and would prefer to have surplus cashflow.


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## julie48 (14 Feb 2014)

Hi thanks for the replies.
 The home house and the buy to let are both in joint names. I know the bank wont tell you they will make a judgement but how likely would it be - they have only said that will work with us to make a repayment plan.  The rent isn't really low for the area they are starting to go up slightly but not by much.  I am wondering if we are just postponing the inevitable and would just be better off selling but then again it could take ages to sell and vat would still have to be paid back to the revenue on the sale proceeds.  If I re-negotiated c/c debts we could manage but would have nothing to fall back on in cases of emergency etc and only for my parents helping us out things would be a lot worse.
 Can anyone tell me how a judgement would work - would it be against the property or the person??  

 Thanks


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