# Is there an agreed cost of living figure for mortgage restructures?



## LDFerguson (15 Mar 2013)

I've heard a lot of discussion recently about mortgages being "affordable" or "not affordable" in the context of possible restructuring solutions. In such negotiations, is there an agreed "minimum cost of living" figure that could be used to determine what is or is not affordable? 

In other words, if I'm claiming that my mortgage is unaffordable because I don't have enough left over to pay it once I pay €10,000 per month living expenses, the bank would quite rightly tell me where to stick my proposal. 

So is there a figure that would be commonly acceptable as a minimum amount for basic existence - food, utilities etc.? It would be a useful benchmark to use as a starting point for figuring out whether a mortgage is sustainable or not. 

I know the banks tend to use figures around €1,250 per month net per adult + €250 per child for the purposes of new mortgage applications. (A single person should have at least €1,250 per month left over after paying all loans.) But I suspect the figures used for restructuring purposes would be somewhat lower.

Any thoughts?


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## SlinkyL (15 Mar 2013)

Hi there,

I spoke to AIB this week. The figure that they gave me for family of 5 after mortgage repayment where there is one income and no childcare costs is 2800e monthly. Very high IMO. HTH


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## Brendan Burgess (15 Mar 2013)

Hi Liam

As of now, there are no such figures.

But the Personal Insolvency Service will be issuing guidance on this for Personal Insolvency Arrangements.


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## Michael3 (16 Mar 2013)

This is quite good as a general guideline http://www.budgeting.ie/ - splits cost of living into rural/urban/number of children etc


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## Malenka (17 Mar 2013)

I would like to know that too. In my case the bank is convinced I can pay the full mortgage amount which is more than 50% of my salary. How can they come up with such a figure? Even interest only is more than 1/3 of my salary.


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## corktim (18 Mar 2013)

Im in the same boat. Have a BTL and the bank says i can afford to pay €1300pm out of my own pocket to cover full payments. I don't earn huge money and they are not taking my other debt into account. As far as they are concerned every penny i have should be going to them!


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## wbbs (18 Mar 2013)

A percentage of salary doesn't really work for restructuring calculations, that is the guideline for new mortgages but isn't as straight forward when looking for reduced payments of some sort.  There is a big difference between someone for example on 2k a month having to pay 50% of their salary and say someone on 6k per month.  You could argue that the person on 6k would still have 3k to live on which in most people's world is more than enough.

Banks will always want other unsecured debt renegotiated first as the mortgage must be the priority debt, after that they will accept reasonable living expenses, what is reasonable?  For example basic sky package acceptable, top of the range package would probably not be.  Same with phone costs etc, anything more than approx 20pm is looked at for mobiles, home broadband same average around 40pm.  They will want to know that you have shopped around for best prices on insurances, utilities etc.   

Luxuries like standing orders to nail bar for weekly manicure are a no no (and yes I have seen this on a bank statement!).   Have a look at the MABS site and their budgeting tools etc.


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## tvman (19 Mar 2013)

LDFerguson said:


> I've heard a lot of discussion recently about mortgages being "affordable" or "not affordable" in the context of possible restructuring solutions.  In such negotiations, is there an agreed "minimum cost of living" figure that could be used to determine what is or is not affordable?
> 
> In other words, if I'm claiming that my mortgage is unaffordable because I don't have enough left over to pay it once I pay €10,000 per month living expenses, the bank would quite rightly tell me where to stick my proposal.
> 
> ...



I thought someone posted mortgage criteria here recently which we're along the lines of €1k net per adult & €250 per child? €2500 seems very high


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## wbbs (19 Mar 2013)

But the mortgage criteria when you are getting a mortgage is very different from the amount of living expenses allowed when you are looking for restructuring.  Same rules don't apply, one is fairly generous, other is cut to the bone type spending.


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## LDFerguson (19 Mar 2013)

tvman said:


> I thought someone posted mortgage criteria here recently which we're along the lines of €1k net per adult & €250 per child? €2500 seems very high


 
Sorry - you're right - perils of posting on St. Patrick's Weekend.  AIB criteria would be €1,300 for a single person, €2,050 for a couple and €250 per child. I've edited my post.  

That said, as wbbs points out, these criteria apply to a mortgage application and would be expected to be far more generous than criteria used in a restructure.


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## cremeegg (21 Mar 2013)

There is an excellent easy to use calculator on misc.ie which seems to be endorsed by Mabs.

Seems to me that this would be a great tool in any discussions with banks.


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## Delboy (21 Mar 2013)

http://www.independent.ie/business/...econd-car-to-get-bank-debt-deal-29144616.html

€896 per wk for a family of 4 (1 teen + 1 pre teen), based on a €,1500 mortgage per month.
So that's roughly €560 per week after mortgage. On the high side based on my own family's finances, but not really surprised when I see how the figure is arrived at:
"The new guidelines draw heavily on intensive research carried out by the Vincentian Partnership for Social Justice."


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## manninp2 (21 Mar 2013)

The Minimum Income Standard Calculator website run by the Vincentians and MABS is up.

http://www.misc.ie

It's giving the minimum expenditure per adult in urban area at €209pw or €906pm


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## mark71 (21 Mar 2013)

I need to see my boss for a pay rise going by that.


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