# Good salary but struggling with 2 unsustainable mortgages in negative equity



## kclon (25 Feb 2013)

*Hi,*

*Am hoping to get some help and advice here on what to do next....first time poster but have been reviewing the boards for a while now.  Appreciate any input and advice.  We are struggling to pay our 2 mortgages and just getting deeper into debt.*

*Personal and income details*
Income self: 4,853 net a month
Pension : Feed into a work pension - no choice. would stop this if I could at the moment.
Income history: stable role at present
Income partner/spouse:0 
Income history: Self employed but making a loss and has not taken a salary for over a year. Also has some business debts still owing.
number of children: 2
Amount of Mortgage Interest Supplement received: 0
*Home loan*
Lender: Ulster Bank
Amount outstanding: 457,000
Value of home: 230,000
Interest rate: Just come off Fixed onto a SVR of 5.6
Monthly repayment : 2196
Amount in arrears : 0 at present but feel thi is going to change very soon.

Been in discussion with UB and been in the Marp process since Arpril 2012 . Have been on interest only since then for the investment property. Had a meeting with them last week to see if we could get a better rate but advised no. Our SVR that we have just moved onto has increased our montly payment by over 200 a month. Advised the bank it made no sense in putting us on Interest only on one and upping our rate on the other negating 25% of what they have give us in terms of temporary reducution.Advised we ring up on about the marp process again. Planning to do this FRiday.

*Investment property - *2 bed duplex apartment bought it in 2000 and lived in it till 2006
Lender: Ulster bank
Amount outstanding: 278,126.61
Value of home: 160,000
Interest rate: 4.85
Monthly repayment 1737.40 but we are paying 892 a month on interest only
Amount in arrears :Approx 11,000 at present due to interest only for the last year Paying Interest only for 1 year, have not defaulted on a payment yet but its a month or 2 away as we come off interest only in april if we cannot strike another deal
Monthly rent received : 900 - Hoping to put it up by 50 in June. We initially got 1500 rent for this before things went badly wrong and rents dropped.

*Other loans and creditors - *delete those which don't apply to you
Overdraft: 0 
Credit Card: 6,600 currently using this to supplement salary to pay for items such as oil and other bills
Credit Union 
House improvement loan :563 a month 7 months left on this
Family : 1000
Arrears: ESB,Property tax, 2nd home tax,management company fees for the apartment

*Other savings and investments *
Have savings of 3000 in the credit union. Have spent 7000 last year of savings in last 2 years just to pay bills.
*How important is retaining the family home to you? *Which of the following best describes your situation?

I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it. 



*Any other relevant information*
Other outgoings add up to approx 1800 per month. I have reduced a lot of bills, looked around for better deals on insurance, never go out or have not had a holiday since our honeymoon 6 years ago, have no life assurance, husband sold his van to pay off some of his company debts. My son has serious allergies so we need a lot of meds and special medicated milk on the DPS which in itself is 144 a month plus approx of 100 euro in doctors visits a month. It just seems like we will never get out of this and not sure what the next step is. Am embarrassed to think that on a salary of 90K, we are seriously struggling and if and when interest rates go up we will drown further...not sure where to go with this one.



*What is your preferred realistic outcome? *

*Unless I double my salary, i will never be in a position to pay both and be able to live at the same time..dont see a way out at the moment.*


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## Brendan Burgess (26 Feb 2013)

Some small points first:

Check the UB rate. Are you sure you are being charged 5.6%? According to this, the rate is 4.5% and this can be further reduced if you have a uFirst account.  (Are you confusing the rates on both loans? The investment property should be higher than the home loan?)



> Credit Card: 6,600 currently using this to supplement salary to pay for items such as oil and other bills


Don't use your CC to pay your mortgage, which is what you are effectively doing here.  If you can't meet your mortgage repayment, so be it.  It would probably be a good idea to tear up the Credit Cards. 

The interest on your home loan should be €20,000 a year at UB's published rate. Just pay this for the moment. 

The interest on the investment should be €1,100 per month. With rent of €900, you should be able to meet this. 

You are doing your best, and you can do no more. You have to simply tell UB that you are going to pay interest only on both and that you cannot pay anymore. 

They may call you a few times, but they should have higher priorities to deal with. 

You could offer them an alternative of applying for a Personal Insolvency Arrangement.  The investment property would be sold and the mortgage would be written down to a level you could afford.  I doubt if they would go for that, but it might make them stop annoying you.


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## kclon (26 Feb 2013)

Brendan, thank you so much for the fast reply...
Sorry that was a typo...its 4.6%, just been changed to this . I opened a Ufirst account and applied 3 times for various options that you can use a Ufirst account for but was turned down each time due to the LTV rate being too high.Yes you are right I am using my CC to pay for day to day living and effectively my mortgage. I will take your advice and advise them of interest only on both...if they say no, is my only other option to look at a PIA?


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## demoivre (26 Feb 2013)

You owe the CU €3941 and have €3k in savings there. Tell them you want to offset the savings against the loan ( make the request  under Section 32 (5)  of the Credit Union Act, 1997 ) and then in less than 2 months you will have it cleared and have €563 extra per month.


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## kclon (26 Feb 2013)

its a BOI loan but perhaps could take the money ot of the Cu for that. thanks demoivre, i'll look into that.


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## Bronte (27 Feb 2013)

How much of your salary is subsidsing the self employed partner?  How much is going to pay off business debts and how much are they?  Are they company debts or personally guaranteed debt?


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## kclon (7 Mar 2013)

sorry Bronte only getting back to you now...mother ended up in ICU...so frantic week.  ok back to this....I have stopped subsidising his business debts as we have used our savings, sold his van plus I was paying off his credit card when I could but I just cant do it anymore as I am also not getting any income from his business.
I may be a bit stupid but I think as a sole trader they are personally guranteed, would thta be right?


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## Bronte (7 Mar 2013)

error


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## Bronte (7 Mar 2013)

Bronte said:


> *Personal and income details*
> Salary 90K
> Income self: 4,853 net a month
> number of children: 2
> ...


 
______________________

*Outgoings*

2196 + 563 + 1800 + 144 + 100 = 4803 (plus subsidising the investment) on a salary of 4853. 

Only place to get money from is the 1800, can you itemise this as best you can. 

*Investment flat*

Your rent is nearly equal to your interest only mortgage, but long term unless the property prices recoup it makes no sense. Plus you're building up big trouble here in relation to the household charge, NPPR and no doubt tax too. It should not be underestimated how much trouble these can cause down the line (I recently had a relation selling who had to pay 6K for NPPR). 

Option 1 continue to pay the interest only
Option 2 - get Ulster bank to agree you sell it and they write off the shortfall = so far no bank is apparently writing off the short falls
Option 3 - get Ulster bank to agree you sell it and you will continue to pay out of your excess income the NE of 118

My advice is ideally 2 failing that 3. With a sick child and everything else you cannot manage this too it seems to me.

*Home*

You can afford this and indeed are paying capital and interest. So my advice here is to continue with this. The NE doesn't matter as it's your home. It is better that you pay this then subsidise the investment. Not sure what way the banks are thinking for people like you but luckily it's the same bank for both properties so that should help concentrate their minds.

Brendan suggested you move to interest only on this. That's also an option. 

*Loan of 4K*

This is a high montly outgoing of 563. Surely this can be renegotiated as it would free up a lot income? I don't think that you should use your CU savings at the moment to pay this off as I think with a sick child you should keep some savings.  In addition you should use your savings to pay large unexpected bills (you mentioned ESB) rather than using the credit card.

*Credit Card*

Ideally should be cut up. You must try and live within your means. It should be doable on your salary. 

*Sold Trader debts*

As your husband is not a company, then he is fully liable. But he has zero income and minus assets. So for him I suggest he pays nobody anything. Others might disagree, but I don't see how he can.


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## kclon (7 Mar 2013)

Thanks again for the input and advice.....I have just been so lost as what to what and my situation is just getting worse and worse.
Basic Outgoings are:

Electricity157.64
Oil 150
Phone/broadband 47.17
Sky25
Bins50
Mobiles89
Childcare357
Food500
DPS144
Doctors100
Mortgage Protection56.75
House Insurance60.91
Mgt Fees for apartment123
Petrol100

So this is 1960 without paying a second mortgage or any other sundries such as car tax, insurance, buses, tolls, property tax, etc or any other unexpected cost.

In regards to the card...yes I will be cutting this up.

I am waiting on a call back from UB. i will ask first for interest only on both properties for a while so I can gather my thoughts and see what options I have. if they refuse will see what they say about me selling the apartment.


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## kclon (7 Apr 2013)

Ok, had a 3 hour call with UB last week on the situation. They offered me a negative amortization mortgage for 6 months so what was supposed to be 1742 (Curently paying 893 on Mortage Interest) and now offer is 563 with this new deal so only an extra 200 euro. Orginially they offered me interest only on both but said he had to check and he called me back and took the offer back. This new deal is only for 6 months. Its not a lot of help at all but suppose its something. Should I take this or go back and fight for more?


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## Bronte (15 Apr 2013)

kclon said:


> Orginially they offered me interest only on both but said he had to check and he called me back and took the offer back.


 
That's brillant the guys in debt recovery don't know what they are doing.  

Of course you should fight for more if you can.  Don't see in any case why another ignoring the problem for 6 months helps.


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## kclon (4 Sep 2013)

ok, so I didnt get very far in fighting for more on this and I took the deal for 6 months.  This is now almost up, circumstances have not changed and I will be due to come off this next month.

I cannot face doing this every 6 months, I am so stressed trying to keep everything together and living off the credit card to keep people off my back...I know I know thats not good. But the basic sums are that I have a take home pay of 5000 plus rental income of 900 but I have mortgages of just over 4K and a loan of just under 600 a month, credit card debt of 8 plus bills coming out my ears.
What should I do....try and fight this with the bank for a longer term deal or talk to someone to see what I should be asking for as I really am not sure and would love some advice and guidance


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## Protocol (5 Sep 2013)

kclon said:


> Thanks again for the input and advice.....I have just been so lost as what to what and my situation is just getting worse and worse.
> Basic Outgoings are:
> 
> Electricity157.64
> ...



This isn't much help but here are my monthly costs for me + wife + child in a 4-bed det house.

Elec = 50-55 pm
Oil = approx 900pa
Telecom/broadband = 45-50pm
Mobile (me) = 25pm
Bins = maybe 15pm [waste = 10, compost = 5, recycling = 5, but not all put out each month]
Mortgage protection = 100pa = 8.33 pm
House ins = 30pm


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## Trustmeh (5 Sep 2013)

kclon said:


> *Investment property - *2 bed duplex apartment bought it in 2000 and lived in it till 2006
> Lender: Ulster bank
> Amount outstanding: 278,126.61
> Value of home: 160,000
> ...



You mention that you were on approx. 11,000 in arrears due to interest only. Do you mean you didn't pay the agreed interest only amount with the bank every month? The 892?  If you did pay it, them there is no arrears. You say you have not defaulted, that would mean you did pay it. Arrears is when you are not paying the full amount of agreed monthly payment. If agreed is interest only, then you arent in any arrears.

The bank seems to me to be dealing with you just fine. I get a sense you think they are being unfair, but you are presenting them a mixed problem. They are not there to subsidize your partners struggling business.


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## Trustmeh (5 Sep 2013)

Reading back again you really are not too bad off. Try and get the interest only (on both properties) for another 6 months, and then the home improvement loan will be cleared, that extra money will make a big difference.


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## millieforbes (5 Sep 2013)

I think a big part of the problem is the lack of income from your husband. Is it time to take a hard look at his business abd consider if he can afford to take no income while the family struggles? You are paying 357 childcare per month, this could be a straight saving if your husband looked after his son


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