# PTSB mortgage / buy out with pension?



## Strat (29 Mar 2011)

Yesterday we received a telephone notice from PTSB that our house would  be heading down the line of court proceedings. 

We were in our own  business from 2006 to 2009 - construction related  and it went under -  resulting in my husband having a €100k guarantee on  his back. 

We are  both are in employment now, but obviously still have debts resulting  from non payment of salaries for about 10 months.

We are trying our best  to pay "something" off the interest only (now at  2,900 p/m), but obviously we still need to live  (frugally) as well. 

We have a pension fund worth 250K which will be  worth (est) 600K on  maturity in 17 years / 8 years before mortgage will be paid off.  

We would really love to be   able to off set our mortgage against this  pension fund (no longer   contributing / set up new PRSA) but it seems  that you have to be   terminally ill to move your pension or release it.  

Why is there not a  policy for releasing it and allowing you to live and continue to work in Ireland and contribute to life. It seems unbelievable that you can  take early release if you are dying?

We would really appreciate any view/direction on this, or if you have any other options, we are in a situation that is dire. 

My husband is talking emigration now, and this will have a knock on  effect as he heads up a new company in Ireland, but if he leaves, 6  people will be unemployed.

We are running out of ideas, any help or  guidance would be appreciated. 
thanks in advance


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## Sunny (29 Mar 2011)

Only suggestion I have is talk to your TD's. The idea of allowing people access their pension schemes to deal with current debt was embraced by FG before the election.


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## Brendan Burgess (29 Mar 2011)

What annoys me is the way Sunny always takes the words out of my mouth! 

It's crazy that people may be losing their homes but keeping their pensions. 



> Fine Gael, now the largest party, said it would create a five-year  window to allow homeowners to pay two-thirds of the mortgage if that is  all they can afford.
> 
> They would also allow people in debt to dip  into their pension fund to pay off some of the mortgage and give more  relief for people who bought at the height of the boom.



Read more: http://www.irishexaminer.com/breaki...in-mortgage-arrears-495444.html#ixzz1Hzve0CDX
​

Brendan


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## Brendan Burgess (29 Mar 2011)

A few points



> yesterday we received a telephone notice from PTSB that our house would   be heading down the line of court proceedings.



Have you formally asked them to restructure your loan? There is a Code of Practice on Mortgage Arrears to which they must adhere. 

"in 17 years /  8 years before mrtgage will be paid off."

I don't think that your mortgage will be paid off in 25 years. 

The balance outstanding is around €700,000 and if you are not able to pay the interest-only, then you are not reducing your balance. 

How much is your property worth? Did you mean that the €2,900 is interest only or is that a capital and interest payment? 

Your pension fund is €250k before tax. If you are allowed access to it, there would have to be a tax deduction of around 40%, so there is only €150k net. That is one of the arguments for insulating it from a person's debts. If your liabilities well exceed your assets, the state might prefer you to sell your home and go bankrupt while preserving your pension pot for 25 years' time.


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## Strat (29 Mar 2011)

pension matures in 17 years. mortgage finishes (or supposed to) 7 years after that. mortgage is at 580K inc arrears - payment of 2,900 is interest only....Think i will approach local TD. but just wanted a few options shown to me, and then ask him for all - maybe he will be able to do one.
house is valued around the same as mortgage but we will not get another mortgage because of debt o/s on our own old company now in liquidation.
we have been in touch with the bank, and in fact we have driven it, as they were so slow to contact us.  I don't think they are in  a position to push for court as we paid up all arrears last june 2010. we have made other payments since then but not full payments. I thought you had to be 12 months in arrears / no contact or attempts with the banks in that period.  I feel very bullied - esp since the woman on the phone suggested we "surrender" our property. thanks all for your help, really appreciate it, feel so stupid!!!


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## Strat (29 Mar 2011)

we are on int only until july 2013 meant to mention that.


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## Brendan Burgess (29 Mar 2011)

Read the Code of Conduct on Mortgage Arrears. 

Make a note of all your phone conversations. 

Don't be in the least bit ashamed or intimidated. If she suggested that you "surrender" your house then she is in breach of the Code at this early stage. 

Write to them and make a formal complaint. Explain your situation in writing. They will reply in writing.

Brendan


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## angela59 (30 Mar 2011)

I find it hard to understand how on the one hand Fine Gael will enable individuals to dip into their pension fund to pay off some of the mortgage and on the other hand take 40% tax of this pension - who in their right mind would do that - surely they will do something to reduce that tax if people are allowed to dip into their pension pot to pay down the mortgage given that the taxpayer is bailing out the banks.

Angela59


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## johnnygman (31 Mar 2011)

angela59 said:


> I find it hard to understand how on the one hand Fine Gael will enable individuals to dip into their pension fund to pay off some of the mortgage and on the other hand take 40% tax of this pension - who in their right mind would do that - surely they will do something to reduce that tax if people are allowed to dip into their pension pot to pay down the mortgage given that the taxpayer is bailing out the banks.
> 
> Angela59


 
But the income that was channelled into into this pension was most likely done so to avoid paying income tax and of course to plan for retirement, this would have benefited from higher rate tax relief. You can't have it both ways as in getting around paying income tax on your earnings by using the pension route and then few years down the road wanting/needed to encash the penion and avoiding paying income tax on said pension. There would be no tax base if this kind of thing was allowed no matter what the circumstances, also private pensions would be wiped out long before retirement if access is allowed to them prior to retirement age. I can't see how this would work without radical reform of pension planning and new rules throughout for tax relief and clawback of such being introduced..


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## Strat (31 Mar 2011)

I wonder if the banks would accept an instruction to take the pension funds at maturity, and back off bullying us?  the mrtgage at 580K(ish) and the pension worth 600K (ish) surely then we could set up a deal for the interest only, I know we are not managing to pay that at the moment, but perhaps since they are "guaranteed" the pension fund, they could reduce the int %  on the interest of the loan. We still have 25 years left, or 17 if they look at us assisgning our pension.  the fact that really bothers me,  is that the banks aren't interested in doing this, does this mean that our pension is not worth this "predicted value"???


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## johnnygman (1 Apr 2011)

_Just on the pension point, Im assuming your using figures from a DC scheme and the estimates for final fund are just that - an estimate,  hard to say if it will be borne out in time and given average fund performance figures over last number of years these would not inpsire confidence. Again it all depends on what your husband is invested in,and long time to go yet. You should be reviewing that in any case and ensuring that funds are well invested/appropriately regardless of mortgage difficulties... Good luck with situation, hope you get something sorted out..,_


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## Sunny (1 Apr 2011)

Strat said:


> I wonder if the banks would accept an instruction to take the pension funds at maturity, and back off bullying us? the mrtgage at 580K(ish) and the pension worth 600K (ish) surely then we could set up a deal for the interest only, I know we are not managing to pay that at the moment, but perhaps since they are "guaranteed" the pension fund, they could reduce the int % on the interest of the loan. We still have 25 years left, or 17 if they look at us assisgning our pension. the fact that really bothers me, is that the banks aren't interested in doing this, does this mean that our pension is not worth this "predicted value"???



Doesn't matter about the bank. As far as I know, the legislation doesn't allow you to use your pension as collateral or pledge it against debt.


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## Strat (1 Apr 2011)

we got a letter from tsb today to  say we could sign here... and drop our keys into any tsb bank, just sign and leave the keys, and they thanked us for "agreeing to surrender the house", i think there needs to be random drug tests on these staff, it was signed by someone in debt recovery, not our assigned contact  - who is now gone, and we have not been advised of this by the bank either, she rang my husband when she was 'let go' - so this debt recovery team seems to be running the show now, really need to get some solid impartial financial advice..... any recomendations of firms that will help for a fee? thanks again for your help


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## Bronte (4 Apr 2011)

It's a very good thing that pension funds cannot be used to pay down debt.  When one is 65 and in need of a decent retirement one will be very glad of it particularly at that age when one is unable to work etc.

No pension fund in the world is guaranteed, it could be worth zero at maturity unlikely but stranger things have happened (Enron, worldcome and Waterford wedgewood).  The only pensions that are guaranted are those of civil servants.  

Strat can you do the money makeover.  It looks to me like the best thing is to lose the house and get this over and done with.  You owe 580 and another 100K both of which you cannot pay.


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## Strat (4 Apr 2011)

was trying to find it, can someone add the link here

got call from manager of ptsb apologising to us, and it going to see what options are open to us. thanks for your help


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## ajapale (17 Apr 2011)

Similar question posed today.


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