# shortfall on buy to let property



## Golden1951 (1 May 2014)

i have two properties one which is mortgaged and was a buy to let property with a mortgage of 165,000 it is beng sold under the voluntary sale with the building society, i have had an offer 120,000 leaving a shortfall of about 45,000
i have another property which is our family home and is mortgage free the bank said they will put a charge on this property for the 45,000 shortfall is there any way i can stop them doing this.   I have been thinking of doing a permanant house swap for a property abroad, could i do this and avoid the charge being put on this property  any advice


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## Brendan Burgess (1 May 2014)

Why would you want to do it? 

You owe the lender €45k, so you should pay it to them.

If you can't pay it, then they have a right to get a judgement and lodge it against your home. 

Brendan


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## Golden1951 (1 May 2014)

no you have misunderstood my question, we know we have to pay this money back to the bank and we have no problems about that, but we find it very unfair that the bank want to put a charge on our family home, it is not our fault that house prices have dropped considerably and that we are no longer able to work due to health reasons, what we wanted to know was can they stop us from swapping our house (which is mortgage free) and then making some arrangement to pay off the shortfall


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## Brendan Burgess (1 May 2014)

Hi 

Not sure why fault comes into it. It's not the bank's fault that the value of your investment dropped. You made an investment, it didn't turn out well, you must pay.

If you are going to pay the money back, then why are you concerned that they are putting a judgement against your home?  

Not sure what you mean by "swapping our house" 

Brendan


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## Golden1951 (2 May 2014)

swapping houses means exactly what it says we swap our house for a house abroad loads of people doing it, they take our house and we take there of course the property has to be of the same  value but if we have a charge on our house then we cant do it.  keep up with the times loads of people are doing this.


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## Dr.Debt (2 May 2014)

Most likely the bank will get a judgment against you in the court for the negative equity shortfall and the judgment will be registered as a judgment mortgage against your home.

If you don't want this to happen the swap will need to happen before the judgment mortgage is put in place. Also, its possible that you can get your home out of your ownership by gifting it to a daughter or son ?

Even if you manage to swap the house before the judgment mortgage is put in place, its possible that the bank will seek to place a charge on the foreign property although this would be a difficult task for the bank.

In the end of the day, you still owe the money to the bank and from your own account it seems that you don't have sufficient income at the moment to pay it back. Allowing the bank to place a judgment mortgage on the property and allowing you to continue to reside there seems like a fair arrangement to me.


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## 44brendan (2 May 2014)

If you are prepared to do a deal with the Bank for the shortfall, they will not be in a position to take a judgement against you. obviously this will be based on you being prepared to pay the shortfall over a reasonable time-frame. They may request a charge on your house and you could consider this based on the flexibility they are prepared to offer you in return (i.e. interest rate/term on residual amount). House swap idea seems a little extreme if you are doing this to avoid a judgement being put on the property. There is no reason for the Bank to seek a judgement unless you refuse to deal with them on the shortfall!


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## Bronte (2 May 2014)

Golden1951 said:


> it is not our fault that house prices have dropped considerably


 
I do not understand this kind of thinking.  

You owe the money, you know you owe the money, you don't have a problem with that you state, so what if they put a JM on your home, what difference will it make to you?


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## Brendan Burgess (2 May 2014)

Golden1951 said:


> swapping houses means exactly what it says we swap our house for a house abroad loads of people doing it, they take our house and we take there of course the property has to be of the same  value but if we have a charge on our house then we cant do it.  keep up with the times loads of people are doing this.



I have heard of people talking about it, but I have never seen it done in practice, but as you say I must be behind the times. 

Brendan


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## twofor1 (2 May 2014)

Golden1951 said:


> swapping houses means exactly what it says we swap our house for a house abroad loads of people doing it, they take our house and we take there of course the property has to be of the same value but if we have a charge on our house then we cant do it. keep up with the times loads of people are doing this.




Whats the  difference between swapping and you buying their house and them buying your house ?

I enquired about this some years ago when stamp duty was a lot higher. 

I had a small three bed semi and needed a bigger house with a reasonable garden. 

An elderly couple on a nearby road had a big 4 bed semi with a garage and good size gardens and wanted to trade down to an easier to manage home.

They wanted to swop, with me paying an additional amount, as their house was more valuable.

The legal advice I got at the time was you cannot simply swop, I would have to sell my house to them, and they would have to sell their house to me and we would both incur the usual legal fees, stamp duty etc.


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## Setanta12 (2 May 2014)

Golden1951 said:


> keep up with the times loads of people are doing this.



Keep up with the times; only people charge-free are doing this (and they're the ones paying their way)


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## Setanta12 (2 May 2014)

twofor1 said:


> Whats the  difference between swapping and you buying their house and them buying your house ?
> 
> I enquired about this some years ago when stamp duty was a lot higher.
> 
> ...



Oops, IIRC this was allowed in recent years (came through in one of the Budgets)


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## Golden1951 (2 May 2014)

does anyone know if after doing a voluntary sale does it take for the bank to put a charge on your house due to the shortfall


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## PaddyBloggit (2 May 2014)

Bank won't release deeds if they are owed money on the property.


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## Golden1951 (3 May 2014)

Brendan Burgess
you seem to have a good understanding of the charge/Judgement system on shortfall of money after voluntary sale, do you know how long it takes after the sale has gone through for the bank to contact with the amount owing and how they go about getting this back ie do they always go for charge on another property and how do these charges work and how long does it take to get a charge put on, do they have to apply to the courts for this to be done,


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## Golden1951 (6 Sep 2014)

Hi all 

well we have finally sold our house as in previous threads sold through voluntary sale, we have a huge loss on this property and we now owe the bank 55,000 euro, the sale completed yesterday and the people moved in, we now await to hear from the bank as to how they will progress with trying to get the money, as previously stated we are both on 188 euro per week social welfare and dont know how they will expect us to pay anything off this but i know we will have to pay something.  The bank got 111,000 euro from the sale and we got nothing, we are hoping that they might write some of the debt off but after the way BOI have been during the sale process we are not very hopeful, they in no way tried to help us and if anything they showed a total disregard to us selling taking since April for the sale to go through, any advice on how to progress, do we await to hear from BOI and what is the general opinion on this,any help appreciated


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## dub_nerd (6 Sep 2014)

Have you considered insolvency or bankrupty now that your debt is unsecured? I don't know how your current house would be treated in such an arrangement, but I'm sure someone here would know.


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## rodger (13 Sep 2014)

Brendan, 

I'm a bit surprised by the comment:
"It's not the bank's fault that the value of your investment dropped. You made an investment, it didn't turn out well, you must pay."

The bank made mistakes and got bailed out by the taxpayer. Shouldn't the bank pass on some of that "free money" ? 
Is there no effort by any bank at debt-forgiveness?

Is the only option by the borrower to go insolvent ?


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## dub_nerd (14 Sep 2014)

rodger said:


> The bank made mistakes and got bailed out by the taxpayer. Shouldn't the bank pass on some of that "free money" ?
> Is there no effort by any bank at debt-forgiveness?
> 
> Is the only option by the borrower to go insolvent ?



Why are you conflating "the taxpayer" and "the borrower"? I'm a taxpayer -- am I to get my free money too? In fact, on balance of probability, I've paid a lot more tax than the OP. So do I get extra "free money" _pro rata_?


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## Jim2007 (14 Sep 2014)

rodger said:


> I'm a bit surprised by the comment:
> "It's not the bank's fault that the value of your investment dropped. You made an investment, it didn't turn out well, you must pay."



There is nothing surprising about this!  The value of investments go up and down and you as the investor take the risk that it may not work out and you end up loosing money rather than making money.  People invest in stuff everyday: property, equities, forestry, farming etc. and if the state had to cover everyone's losses it would go bust in 12 months.



rodger said:


> The bank made mistakes and got bailed out by the taxpayer. Shouldn't the bank pass on some of that "free money" ?
> Is there no effort by any bank at debt-forgiveness?



There is no free money and there was no bailout - that is just the press talking!  The banks went bust and the shareholders (the real bankers if you will) lost their investment and people who worked for the banks lost their jobs.  The state then took over the banks and had to pump money into them to plug the hole and so that money is gone!  There is no money sitting around in the banks that can be used to write off debts.  Every single debt write off the banks decide to make will have to be financed by the bank's owners, in other words you the taxpayer.  So if the bank was to write off the OP's debt, that is another 55K you the Irish tax payer will have to pay. 



rodger said:


> Is the only option by the borrower to go insolvent ?



Yes of course, the OP has a debt free property which they could sell.  They could then pay off their debt and use the rest of the proceeds to down size, move into rented accommodation or possibly even qualify for social housing.  But what the OP wants is for you the taxpayer to carry the can for their investing mistakes.  Which is why most people who did not get involved in property investing, but worked hard to pay down the mortgage on their home are not willing to pay additional taxes to cover this kind of thing.  And hence the reason politicians are moving on it.


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