# Tracker with PTSB (ECB+max 1.10%), am I mad chancing to get a better deal?



## fiona2014 (31 Jul 2014)

hello
I am new to this forum, so apologies if not doing this right.

My situation:
Tracker with Permanent TSB (ECB+max 1.10%) taken out in 2006.
Apartment worth 160-170k max, negative equity 100k.

I am living in the UK 3 years now and I am considering bankruptcy.

Apartment is rented out at 950E a month, repayments are 930E at the moment.

What chances do I have to get a deal (aka debt write off) from the bank? I am struggling with the other expenses of keeping the apartment: management fees, up keeping, furniture etc... Have been given free money from family till now, but would like to stop that if I can.

Is it worth going to the bank for a deal? Can I go back to my nice Tracker once I go ahead and start process and give them my Standard Financial Statement?

Thank you for your help and opinions, I hope I am on the right post.
Fiona


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## Brendan Burgess (1 Aug 2014)

You should complete this to get a comprehensive answer 

Information required for mortgage arrears and negative equity questions

You should also read this thread to understand how profitable your investment really is

Should I sell my home in negative equity or rent it out? 

In summary, you are getting €12,000 in rent. 
You are paying interest of €3,000 
So you are making a profit of €9,000 a year before other costs. 

If property prices don't change, you will have paid off your negative equity in around 10 years and you will then have a very profitable investment and an asset.  If prices rise, you will reach this situation earlier. 

If you are going bankrupt for other reasons, i.e. other debts, then fair enough. But you should not be going bankrupt over this profitable investment.   


> Have been given free money from family till now, but would like to stop that if I can.


Within a decade, you will have a profitable investment and an asset and may be in a position to repay this money.




> What chances do I have to get a deal (aka debt write off) from the bank?



Very little indeed.  As you are based in the UK, ptsb should be happy enough to allow you to sell this and should write off the shortfall given the real threat of UK bankruptcy. But the attitude of the banks when threatened with bankruptcy is: OK, fire ahead. 

So ask them, but expect to be refused. 
Then ask them if you can sell the property.  The bankruptcy will be much more straightforward if the Official Receiver has to deal only with unsecured debts which is what the mortgage shortfall would become.


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## fiona2014 (1 Aug 2014)

Thanks a lot Brendan, I was hoping for your reply.
Where are you getting that 3k of interest figure? I don't have an updated Interest Certificate from PTSB, but in 2010 it was around 6k...I know ECB rates interest went down since then, but I don't reckon is as little as that.
You made some really useful comment and also *I didn't mention the fact that apartments like mine are actually on the rental market at 1150/1200E per month*.
The contract is up in a couple of months and I am planning in putting rent up.
I have copied the Case Study and will post it back later, but for now let me just thank you for your reply.
Fiona


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## mcaul (13 Sep 2014)

does the bank know you are renting the apartment out? 

If not, they may claim it is an investment property and could change you away from the tracker.

Also, if the market rent is €1200 a month then the value is a lot higher than 160k-170k as at €1200 a month even allow for costs, that would be a return of almost 8% which is amazing.

If the negative equity is your only reason for bankruptcy, and the income is covering the mortgage, I think you need to rethink and get sound advice on it.

As Brendan has said, you are currently paying about 3k in interest.

ECB is currently 0.1%, you are 1.1% above this, giving an interest rate of 1.20%

You say neg equity of approx 100k on a 160k valuation, so mortgage balance is about 260k. 1.2% of 260K = €3210. Everything above this (until rates rise) goes against the principal - about 8.5k a year. 

If you get €1100 rent - that's over 10k a year off the principal. 

If prices rise at 4% a year you'll be out of negative equity in about 5 years!


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