# families with mortgage difficulties



## Brendan Burgess (9 Dec 2009)

Update from PapercutI have been on to the Revenue Helpline 1800314414, & was informed that this definitely only applies to people who find themselves in negative equity. 

 If you took out your mortgage in 2005, then your mortgage interest relief will stop after seven years, unless you find yourself in negative equity, in which case you can apply for it to be extended.

  They are not sure of what the exact process will be as yet, but obviously each case will be assessed on an individual basis. 		
 


*Mortgage Interest Relief                 
* Qualifying loans taken out before 1 July 2011 will continue to get relief for 7 years. Transitional measures will be provided for qualifying loans taken out between 1 July 2011 and end 2013.

Those whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017.

 Abolition of the relief entirely by end 2017.

*Mortgage Interest subsidy to be reviewed in new year


*


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## roro123 (9 Dec 2009)

How can they police negative equity claims. Surely the value of a house is impossible to gauge in a dead market.


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## csirl (9 Dec 2009)

Can someone clarify the mortgage interest rate thing a bit more?

*Those whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017.*

Does this mean that if your mortgage interest rate is due to expire in e.g. 2012, it will now be extended to 2017? Or does it mean that if your 7 years are not yet up, you'll be allowed claim until they are up?


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## Brendan Burgess (9 Dec 2009)

roro123 said:


> How can they police negative equity claims. Surely the value of a house is impossible to gauge in a dead market.



Hi roro

It applies to all loans,not just negative equity. 

I thought the Minister mentioned negative equity in his speech, but it does not appear in the written version.

Brendan


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## techman (9 Dec 2009)

I have the same question as csirl.

If your mortgage trs was due to end in 2011 (7 year rule), is this now extended to 2017?


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## Papercut (9 Dec 2009)

Yes this is confusing me also - when listening to the original speech I took it to mean that anyone presently getting mortgage interest relief would have it extended to 2017, but then in the analysis programmes it was mentioned that anyone who had taken out a mortgage in the past five years would have the relief extended to 2017, which confused me more. Did they mean if year 1 was 2005 that they would have it extended, or did they mean if you took your mortgage out in 2004 it would be extended. Where did the five year cut-off come into things to begin with?

But Brendan's post above seems to imply what I originally thought/heard:
''_Those whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017_.''   

Or does it


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## Brendan Burgess (9 Dec 2009)

That is not my analysis. That is the extract from the Budget Summary, so I imagine that the analysis programmes got it wrong.


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## Papercut (9 Dec 2009)

Brendan said:


> That is not my analyis. That is the extract from the Budget Summary....


I realise that Brendan, thanks.


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## blue_steel (9 Dec 2009)

_"Those whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until the end of 2017."_

The _"or after"_ would seem to indicate to me that ANYONE currently getting interest relief will now to get it until 2017 regardless of what year there are currently in at the moment?


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## Chris (9 Dec 2009)

Here is a the quote from the RTE website:
"In the Supplementary Budget I refocused mortgage interest relief on those who bought their homes at the peak of the market. As a support to homeowners who now find themselves in negative equity I am providing that where entitlement to the relief would expire in 2010 or after, they will now continue to receive it up to the end of 2017."

I find this hard to believe. This would mean someone who took out a mortgage in 2003 and either remortgaged along the way or only paid interest for the last 7 years would now be getting extra tax relief, i.e. rewarding mistakes. I very much doubt that anyone who bought a house 7 years ago and made normal payments would now find themselves in negative equity.


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## Eithneangela (9 Dec 2009)

Chris - you're kidding!  All houses bought in our estate have dropped in price by more than 1/3.  For example, somebody who purchased a standard 3-bed semi in 2006 for €300,000 and got what was offered (i.e. 100% mortgage) is now sitting in a house currently selling for €159,000.  I'm sure this is very typical of a huge number of houses throughout Celtic Tiger land.


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## jack2009 (9 Dec 2009)

roro123 said:


> How can they police negative equity claims. Surely the value of a house is impossible to gauge in a dead market.


 
I always believed that something is worth what somebody is willing to pay!  The market is partly dead because people are not selling or not willing to drop prices enough!


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## Strathspey (10 Dec 2009)

csirl said:


> Can someone clarify the mortgage interest rate thing a bit more?
> 
> *Those whose entitlement to relief would, in the absence of this change, expire in 2010 or after, will continue to qualify for relief at the applicable rate up until end 2017.*
> 
> Does this mean that if your mortgage interest rate is due to expire in e.g. 2012, it will now be extended to 2017? Or does it mean that if your 7 years are not yet up, you'll be allowed claim until they are up?


 
Could somebody clarify the above, please?


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## Latrade (10 Dec 2009)

I just don't see the logic in this. I'm not complaining, but what does negative equity have to do with anything? 

The only time negative equity is an issue is if you're planning to move house, in which case you'd lose the entitlement to the relief anyway (don't you?). 

I can see that the relief is extended in light of the fact that interest rates will go up next year, I think this pretty much confirms it. It also seems to confirm that the we'll expect some tough times with interest over the next few years. I just don't get why it's being hung on negative equity.


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## DerKaiser (10 Dec 2009)

Latrade said:


> I just don't see the logic in this. I'm not complaining, but what does negative equity have to do with anything?
> 
> The only time negative equity is an issue is if you're planning to move house, in which case you'd lose the entitlement to the relief anyway (don't you?).
> 
> I can see that the relief is extended in light of the fact that interest rates will go up next year, I think this pretty much confirms it. It also seems to confirm that the we'll expect some tough times with interest over the next few years. I just don't get why it's being hung on negative equity.


 
You're correct.

Negative equity is only an issue if you move from being a homeowner to a non-homeowner.

If our aim is not to throw people out on the street then it's their ability to service their debt we need to look at.

I suggested before here that reducing total debt by incentivising people to trade down would be of universal benefit. The thread just petered out because people were not getting their head round the idea that it's total debt versus income is the problem for people as opposed to negative equity.


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## sandrat (10 Dec 2009)

OK so we took ou our mortgage in 2005, does that mean that our trs is extended to 2017?


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## Papercut (10 Dec 2009)

I have been on to the Revenue Helpline 1800314414, & was informed that this definitely only applies to people who find themselves in negative equity. 

  If you took out your mortgage in 2005, then your mortgage interest relief will stop after seven years, unless you find yourself in negative equity, in which case you can apply for it to be extended.

  They are not sure of what the exact process will be as yet, but obviously each case will be assessed on an individual basis.


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## sandrat (10 Dec 2009)

Well neighbours have sold their houses at less than what was paid for them so does that count? I think our house is worth about 10-15k less than what our mortgage is for (we took out a 92% mortgage). But our tax relief isn't due to end until 2011 meaning we might have regained the value currently lost. The minister said for those who find themselves now in negative equity so will be interested to see the details. This is kind of like the "where's my nama?" people have been searching for.


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## corkgal (10 Dec 2009)

I wonder if its worth remorgaging the house, putting the money on deposit and retaining our TRS? Probably


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## Newbie! (10 Dec 2009)

sandrat said:


> Well neighbours have sold their houses at less than what was paid for them so does that count? I think our house is worth about 10-15k less than what our mortgage is for (we took out a 92% mortgage). But our tax relief isn't due to end until 2011 meaning we might have regained the value currently lost. The minister said for those who find themselves now in negative equity so will be interested to see the details. This is kind of like the "where's my nama?" people have been searching for.



I am completely confused by this. Im an owner-occupier and would definitely be in negative equity but as I live there does that matter? Took the mortgage out in 2006.


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## canicemcavoy (10 Dec 2009)

Papercut said:


> but obviously each case will be assessed on an individual basis.


 
Wonderful - so after cutting public sector workers' wages, we'll be paying a new bunch of them to try to figure out if Mr X and Mrs Y's house are now worth less than they paid for them. Even though whether they're in negative equity or not makes no difference to whether or not they can afford their mortgage.

You couldn't make it up, but I guess that Brian was forced to throw a sop to Parlon.


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## NorfBank (10 Dec 2009)

The  only reason I can see for including the negative equity  condition is as follows:

If people are struggling with their mortgage repayments and are not in negative equity at least they can try to sell and trade down / rent to put themselves in a better position

People in negative equity are stuck where they are so will be eligible for the extended relief presumably after passing a means test.


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## Latrade (10 Dec 2009)

NorfBank said:


> The only reason I can see for including the negative equity condition is as follows:
> 
> If people are struggling with their mortgage repayments and are not in negative equity at least they can try to sell and trade down / rent to put themselves in a better position
> 
> People in negative equity are stuck where they are so will be eligible for the extended relief presumably after passing a means test.


 
Ok, I can see some sense in that, it seems to be punishing those who didn't buy at the top of the market, whether through luck, circumstance or foresight though. 

As I remember, the last estimate of house prices has the figures around those or approaching those of 2001 (stand to be corrected). This would tend to mean that practically everyone who qualifies for the tax relief would be eligable for the extension to me.


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## NorfBank (10 Dec 2009)

Eligible for the extension maybe (depending on how much of the mortgage they have paid off in the intervening years) but will have to pass a means test too.


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## corkgal (10 Dec 2009)

Paying a big deposit and paying off your mortgage = no extra relief
Getting 100% mortgage and paying minimal/ interest only = extra relief
Thats fair


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## Newbie! (10 Dec 2009)

canicemcavoy said:


> Wonderful - so after cutting public sector workers' wages, we'll be paying a new bunch of them to try to figure out if Mr X and Mrs Y's house are now worth less than they paid for them. Even though whether they're in negative equity or not makes no difference to whether or not they can afford their mortgage.



So they are going to decide on a case-by-case basis whether your home is in negative equity? Seems ludicrous...


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## NorfBank (10 Dec 2009)

No, they are going to assess whether you qualify for the extended tax relief on a case by case basis.

You need to be in negative equity to be assessed.


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## canicemcavoy (10 Dec 2009)

corkgal said:


> Paying a big deposit and paying off your mortgage = no extra relief
> Getting 100% mortgage and paying minimal/ interest only = extra relief
> Thats fair


 
Well, that's par for the course. We reward financial illiteracy and recklessness in this country. There's absolutely no point in doing the right thing - saving a decent deposit, then waiting to buy property at a sensible. Get a 100% mortgage. No, wait, a 110% one.  Interest-only while you're at it. With your parents guaranteeing it (sure, their "equity" is doing nothing locked away). Ignore anyone who claims that property won't linearly increase forever - they're just hysterical.

Then when the proverbial invariably hits the fan, complain that it's everyone's fault except yourself, and get the people who were responsible to bail you out.

Like rubbers from the doctor, it's the Irish solution to an Irish problem.


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## canicemcavoy (10 Dec 2009)

NorfBank said:


> You need to be in negative equity to be assessed.


 
Yes, and the point is - how do you know you're in negative equity? Presumably someone has to give you the current value of your house so you can know, and the public service has to agree with this valuation. Who does it?


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## Chris (10 Dec 2009)

Eithneangela said:


> Chris - you're kidding!  All houses bought in our estate have dropped in price by more than 1/3.  For example, somebody who purchased a standard 3-bed semi in 2006 for €300,000 and got what was offered (i.e. 100% mortgage) is now sitting in a house currently selling for €159,000.  I'm sure this is very typical of a huge number of houses throughout Celtic Tiger land.



It's not 2006 talking about, 2006 was the peak of the market. The statement said that anyone in negative equity who's TRS runs out in 2010. That includes someone who bought in 2003. Average house prices are now at October 2003 prices, so unless you didn't reduce capital or remortgaged, there is no reason you should find yourself in negative equity.


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## Bisar (11 Dec 2009)

Supposing you're on a low margin LTV tracker. If you declare your house to now be in negative equity for purposes of extending the mortgage interest relief period is there a possibility that the banks/lenders will use this to try and move you to a higher rate product?


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## pinkyBear (11 Dec 2009)

> We reward financial illiteracy and recklessness in this country


Hi there, I actually take real offence to this. We bought our house in 05, second time buyers - paid alot of money (too much)  for it (and stamp duty 33K) but we needed to move from our first home.. As such we are in serious negative equity, and we are currently on a fixed rate of 4.84. Not only are we worried  because we are with BOSI (as their variable rate the last time I checked was 7%). The interest relief gives us breating space as we could be introuble without it.

We were not in a position that could buy a house when prices were reasonable, early 2000's as some people were. so why does that make me a financial illiterate and reckless...


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## Papercut (11 Dec 2009)

Chris said:


> The statement said that anyone in negative equity who's TRS runs out in 2010. That includes someone who bought in 2003. Average house prices are now at October 2003 prices, so unless you didn't reduce capital or remortgaged, there is no reason you should find yourself in negative equity.


Mortgage Interest Relief for someone who bought in 2003 expires at the end of 2009, so would not be eligible for the extension anyway - regardless of whether they are in negative equity or not.


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## mosstown (11 Dec 2009)

and what happens if you have no mortgage at all.  we own a brand new nearly finished house in Ireland fully paid for that we plan to live in at some stage so i definitely have no negative equity.


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## Splash (11 Dec 2009)

I wonder if this will actually be applied or reneged on in the end? It's so confusing, and who is going to police this? If you bought during 'the boom years', and managed to save some extra cash each month, or used your SSIA fund; you may have paid a lump sum off your mortgage, or smaller extra amounts than your monthly repayments. You were deemed sensible right? 

But you may now not be in 'negative equity' as a result. You won't get this extented relief until 2012, while others didn't make extra payments to pay down their mortgage debt but spent it elsewhere do get it. BTW, I am not talking about people who couldn't afford to pay any extra off their mortgages each month after day to day living expenses.


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## corkgal (11 Dec 2009)

I read the budget.gov.ie information and there is no mention of being in negative equity.


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## Papercut (11 Dec 2009)

mosstown said:


> and what happens if you have no mortgage at all.  we own a brand new nearly finished house in Ireland fully paid for that we plan to live in at some stage so i definitely have no negative equity.


If you have no mortgage you would not be paying any interest, therefore you would not be entitled to mortgage interest relief.


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## within29 (18 Dec 2009)

Papercut said:


> Mortgage Interest Relief for someone who bought in 2003 expires at the end of 2009, so would not be eligible for the extension anyway - regardless of whether they are in negative equity or not.



What if someone took out their mortgage in 2003 & remortgaged at a later date do they qualify, if so that doesn't seem fair


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## bond-007 (18 Dec 2009)

If you remortgage TRS is available for 7 years from taking out the new mortgage. I would therefore say that the provisions would also apply to them.


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## within29 (18 Dec 2009)

Madness


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## bond-007 (18 Dec 2009)

I see this as a measure to placate those against NAMA and the banks' bailout.


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## spreadsheet (14 Jan 2010)

Does anyone know if there has been any further developments with this Budget 2010 announcement?


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## Papercut (14 Jan 2010)

The only development I'm aware of is that the extension will apply to everyone & not just people who are in negative equity (which is what I was originally told by Revenue), which seems fairer & makes more sense.

Presumably the Finance Bill will make things a lot clearer when published.


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## GreenQueen (14 Jan 2010)

Papercut said:


> The only development I'm aware of is that the extension will apply to everyone & not just people who are in negative equity (which is what I was originally told by Revenue), which seems fairer & makes more sense.
> 
> Presumably the Finance Bill will make things a lot clearer when published.



Not very helpful if your entitlement ran out on the 1st of Jan 2010!


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## Rusty Cogs (4 Feb 2010)

So to clarify, if you bought your house in 2003 your tax relief expires on Dec 31st 2009 and no further relief is granted under any circumstances. If bought in 2004 or later and your relief will run 7 (tax) years and then a further relief up to 2017 as per the Finance bill.

That right ?


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## Papercut (4 Feb 2010)

Rusty Cogs said:


> So to clarify, if you bought your house in 2003 your tax relief expires on Dec 31st 2009 and no further relief is granted under any circumstances. If bought in 2004 or later and your relief will run 7 (tax) years and then a further relief up to 2017 as per the Finance bill.
> 
> That right ?


Yes, that's it!

http://www.citizensinformation.ie/c...a-home/buying-a-home/mortgage_interest_relief


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## Rusty Cogs (5 Feb 2010)

Just to confirm my misfortune, I take it if you traded up in the interveening years (2006) and bought a new apartment, thus carrying on your TRS until Dec 31st 2009, you still get nothing out of this ? Good thing I like my neighbours.


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## WaterSprite (5 Feb 2010)

Rusty Cogs said:


> Just to confirm my misfortune, I take it if you traded up in the interveening years (2006) and bought a new apartment, thus carrying on your TRS until Dec 31st 2009, you still get nothing out of this ? Good thing I like my neighbours.



No, I think you still get TRS on the 2006 mortgage for 7 years from the date you first took it out.  You just don't get FTB rates of TRS after the first 7 years from the first mortgage.  So, from year 8 (dating from first mortgage), you get 15% on up to €3,000 (single person allowance) up to 2012.


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## deeheg (5 Feb 2010)

Do you know what i think, that was last years Budget god knows what will happen next year extra and maybe not worry so much and wait, we get too many sleepless nights worrying ..


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## Rusty Cogs (5 Feb 2010)

WaterSprite said:


> No, I think you still get TRS on the 2006 mortgage for 7 years from the date you first took it out. You just don't get FTB rates of TRS after the first 7 years from the first mortgage. So, from year 8 (dating from first mortgage), you get 15% on up to €3,000 (single person allowance) up to 2012.


 
Interesting !

From the Finance Bill "...the ceiling of qualifying interest for all these qualifying loans will be €6,000 in respect of married or widowed persons and €3,000 for others (irrespective of whether the borrower is a first time buyer or not a first time buyer)"

So for the new apt. I bought in 2006 (traded up from my first purchase in 2003) I get a €3,000 max relief in 2010 (tax year 8 from 2003) ?

How do I know if I've got a 'qualifying loan' with 'qualifying interest' and how do I calculate how much of the €3,000 I'm entitled to relief of ?

(thanks for the answers thus far all)


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