# Advice please on 2 Rental properties.



## Coolaboy (3 Nov 2013)

Hi All. I have two rental properties with morgages of 80k and 100k in both my wife and my own name. We are now struggling to meet the mortgage re payments. We have no mortgage on our own family home (worth 150k)which is also in both our names. The question is that if we default on the repayments on the rentals can the banks come after our family home.Thanks.


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## emeralds (3 Nov 2013)

Are the rentals secured on the family home?


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## Coolaboy (3 Nov 2013)

Thanks for coming back to me Emeralds. I will find out tomorrow. Will I contact my solicitor who drew up the contracts or go straight to the bank to find out?


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## mercman (3 Nov 2013)

I would say it might be best to request the details from your solicitor. The outstanding mortgages might be best to be refinanced on the properties. You haven't given enough details on the rental income for each property or their location, so it's pretty difficult to offer a constructive opinion on the best route forward.


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## Indebadbooks (6 Nov 2013)

Hi guys,

First time poster so here I go.

Ive a home mortgage with NIB - Owe 108,000. Value 180000
Rental property with BOS -        Owe 195,000. Value 120000

Can fully afford nib mortgage repayments 450pm
BOS repayments are 850pm - Im only able to afford to pay the rental income - 500 pm.
Did SFS with BOS - Conclusion was giving me six months at 500 pm

My query is if they make me sell can they make me also sell my home to cover shortfall. Both mortgages are in my sole name. I don't want to sell my home house if at all possible.

Reason for not being able to fully service my rental property mortgage is new maintenance payments as ive had a split up.

Any replies would be hugely appreciated, thanks


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## mercman (6 Nov 2013)

OP, my first reaction to what I read, is that the rental property must be in a fairly crappy area as the rental income remains at 500 per month. Is this the market rent or is the property under let ?

I feel that if you could sort this out, you will avoid damaging your credit rating. Nobody said that owning property was going to be easy so you're on the correct side with your PPR been paid.


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## Indebadbooks (6 Nov 2013)

mercman said:


> OP, my first reaction to what I read, is that the rental property must be in a fairly crappy area as the rental income remains at 500 per month. Is this the market rent or is the property under let ?
> 
> I feel that if you could sort this out, you will avoid damaging your credit rating. Nobody said that owning property was going to be easy so you're on the correct side with your PPR been paid.


 
Thanks for your reply mercman,

Yes this is the market rent for the area, and to be honest the area is ok, just a quiet midland town.

If im forced to sell the rental property I lose my ability to pay anything at all to bos, so that s the nub of my problem - can they force me to sell my home (im the sole occupier of my home as well)?


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## TommyB (6 Nov 2013)

If you can't afford your investment properties then you should sell and agree to a sale of your house. You can then rent a property yourself.

I can't see why the bank would write off 150K+ of debt for your bad investment and let you keep 150K of equity in a house. That's not how the investing game works.


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## MOULTON (6 Nov 2013)

TommyB

Greedy irresponsible lending by the bank, they deserve to take a hit


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## Luternau (6 Nov 2013)

You really should start a new thread as it's not really fair to hijack someone elses thread for your own question!


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## TommyB (6 Nov 2013)

MOULTON said:


> TommyB
> 
> Greedy irresponsible lending by the bank, they deserve to take a hit


? The banks already took the hit. They went bust and the state bought them. Shareholders wiped out.


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## Bronte (7 Nov 2013)

Coolaboy said:


> Hi All. I have two rental properties with morgages of 80k and 100k in both my wife and my own name. We have no mortgage on our own family home (worth 150k).


 
Yes, if you default on the rentals the bank can come after the family home, they will in all likelyhood put a judgment mortgage on it and then a well charging order. It will be sold to pay down the other debts. And it doesn't matter if the properties are all cross secured or not. You owe the money and you have an asset. 

What is the value of the rental properties? Is the rent not able to cover the mortgage? Don't do anything rash unless you get proper legal advice.


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## Bronte (7 Nov 2013)

Indebadbooks said:


> If im forced to sell the rental property I lose my ability to pay anything at all to bos, so that s the nub of my problem - can they force me to sell my home (im the sole occupier of my home as well)?


 
Before the bank forces you to sell the family home how about you putting an offer to them. 

Sell the investment, leaving NE of 75K, add this to your home loan of 108K, bringing it to about 185K. Can you service a mortgage of 185K if you didn't have maintenance, and can you go back to court and get the maintenance order changed downward to reflect your new situation?

I'm presuming there may be children here, as it's normally the case with maintenance and that the kids visit you on occasion and that you therefore need somewhere for them for those visits. 

Alternatively sell everything and you'll have little or no debt, but you'd have to rent.


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## Indebadbooks (7 Nov 2013)

Bronte said:


> Before the bank forces you to sell the family home how about you putting an offer to them.
> 
> Sell the investment, leaving NE of 75K, add this to your home loan of 108K, bringing it to about 185K. Can you service a mortgage of 185K if you didn't have maintenance, and can you go back to court and get the maintenance order changed downward to reflect your new situation?
> 
> ...


 

Firstly Bronte, thanks very much for your advice, it's really appreciated.

To answer your question, yes i could service a mortgage of €185k (doubt NIB would agree to it though and id be hoping to stay with them as ive a tracker+ 0.5% above the ecb rate (home mortgage). Also yes there are 3 kids involved. As regards the maintenance arrangements, i never went to court but am paying €900pm as is the going rate (per solicitor) for someone in my situation. Id certainly have to go to court to get the payments reduced.

Im presuming bos(rental prop.) can force me to sell the home? Also is there any evidence of them striking deals, ie sell rental house, give cash payment (say €40k and bos writeoff other €35k, ive a possibility of parents stumping up the money), but only if bos dont pursue home house, otherwise what would be the point.

Keeping my home is my only priority.

Any advice is huge to me at this stage as im at my wits end and under real pressure,

Thank you


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## Dr.Debt (7 Nov 2013)

The main thing is to keep up payments on your home. This will leave you in a strong position.In direct contradiction to other posters above, I would strongly advise you against giving up your home for sale.

As long as you are paying over the rent on the rental property, that should keep BOS at bay in the short term. In the long term they may seek to repossess the rental property and obtain a judgment against you for the shortfall.If this happens they may then seek to take out a judgment mortgage on your home.

If BOS gets a judgment mortgage on your home, they have 12 years in which to enforce it. If they wish to enforce it they will need to get a high court order to have the house sold. Taking a case to the high court is a very costly matter for a bank and their chances of success in this case are very slim. Most likely they will wait in the wings hoping that you will eventually sell the house and they will get their money then.

Having said all that, repossession of family homes is a very topical subject at the moment. The Troika et al are putting increasing pressure on, to have family homes repossessed when the circumstances merit it. Currently there are very few repossessions of family homes. Any repossessions to date have usually involved cases where the mortgage hasn't been paid for years / months on end. We are likely to see more home repossessions in the future but I think common sense will prevail and the courts will look favorably on any householder who is making a half decent effort with repayments.

If you have a lump sum available to you, then its very possible that BOS will do a deal with you on the shortfall of the rental property. In my view there is no need to do anything now but if the heat comes on, its a very good option for you.


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## RainyDay (8 Nov 2013)

emeralds said:


> Are the rentals secured on the family home?



Does it really matter?


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## Bronte (8 Nov 2013)

Indebadbooks said:


> To answer your question, yes i could service a mortgage of €185k
> 
> As regards the maintenance arrangements, i never went to court but am paying €900pm as is the going rate (per solicitor) for someone in my situation. Id certainly have to go to court to get the payments reduced.
> 
> Any advice is huge to me at this stage as im at my wits end and under real pressure,


 
Ok, a lot more detail now. You really need to be very calm and collected on what you do. Don't be stressed. You need to deal with this and end the stress. 

My advice is not to sell your home. You are correct, NIB will not allow you to increase your mortgage, at least they are very unlikely to do so. But you should ask them. 

BOS, I recommend you agree with them that you sell the house, in an orderly sale, and that you will pay the NE over the remaining term and at the same rate of interest you are currently paying. 

Whatever you do, do not advice them of the potential offer of 40K in return for a write off of 35K. Leave that for now. Keep it in your back pocket until you know what BOS's bottom line is. A great way of forcing banks to actually deal with you is to pay them zero for a while. (There is another issue in relation to this 40K from your parents, if they were on here I might advise them not to loan you the money, depending on the circumstances, let's not discuss this on this thread)

You didn't ask about maintenance, but it is relevant, and everything is always relevant, people cannot leave out bits of their financial arrangements if they expect to get proper advice. I'm not at all sure 900€ a month is correct in a situation where you have a lot of debt. I understand you want to do the right thing by your kids and ex, that's demonstrated by the fact you're paying maintenance and have not needed to go to court. But your ex also has to understand your predicament. If you continue you will also lose your home and a place where your kids can come visit. The reality is a judge will only take your excess income after all bills and reasonable living expenses have been accounted for (at least I assume that is what happens).

Any possibility of extra income in your home, with a lodger, you can take in 10K tax free.  It could be somebody who wants a Mon to Fri digs, very convenient letting that can be.


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## Indebadbooks (8 Nov 2013)

Thanks so much guys for the advice.

I'm beginning to see the wood from the trees here.

As regards lodgers its very difficult and im trying but my home is in the country and there isn't any real rental market (is close to the ex and kids though).

Il keep the possible €40k on the back burner for now an see what bos do.

What are the estimated costs for bos to force a sale of my home, ie im trying to ascertain the likelihood of them doing that (say if there is a shortfall of €75k). There are plenty of people telling me they cant touch my home as nib have first call on it and as im paying them back in full then why would they allow it to be sold.

I don't want to stop paying bos the rental income as im not ready to play Russian roulette yet with them and I want to appear as reasonable as possible.

By the way both mortgages are not due to be repaid until 2039 if that makes any difference.

Thanks Bronte and Dr Debt fro your replies, ye are restoring my faith in humanity (lol)


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