# Low salary with large mortgage.  What will bank manager say?



## Wishes (11 Jan 2011)

After two years of unemployment I've finally managed to find work.  Since I lost my job Ive been on reduced mortgage repayments which have been paid from a small amount of savings I had.  My savings have now fully gone but thankfully I know I'll have a salary at the end of the month to meet some of my financial commitments.

I contacted my mortgage provider and updated them with my new position and told them that my new salary is very low and has no prospect in the foreseeable of a pay increase.  This seemed to worry the bank and now I have been called in for a meeting with the manager on Friday.

I'm quite concerned as I do not know what to expect.  Will they try and advise me to hand back my home?  The property is 100k of negative equity.


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## Brendan Burgess (11 Jan 2011)

Hi Wishes 

No, they won't ask you to surrender your home. 

Who is the lender? 
What size is your mortgage? 
What rate of interest are you paying? 

What agreement did you come to about reduced payments? Did you pay the full interest or just part of it? 

They should be reasonable with you. If you have made best efforts, they may write off the accumulated arrears, if there are any and extend the mortgage so that you can meet your repayments.

Brendan


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## Wishes (11 Jan 2011)

Thanks for your response Brendan.

The mortgage is for 320k on a 4.5% interest rate.

They came to an agreement that I pay full interest only for the two years that I was unemployed.  The two years are now up and they are looking to go back to normal payments again.  If this happens I will not be able to meet payments as my salary does not stand up to the requirements.

I am approximately 1,500 in arrears which they have demanded.  A family member has kindly offered to pay this for me.  This will now bring my account right up to date.


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## bluemac (11 Jan 2011)

That seems wrong to me it sounds like you have done everything the best way you possible could and to take a lower paid job is a very strong move on your part... well done..  surely this is exactly the situation that the 100k should be written down to bring wishes to a level he can afford to carry on at...  you should have to borrow/gift money to pay it off.


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## theod (11 Jan 2011)

Surely the 100 K negative equity is irrelevant to the situation. The amount borrowed is still 320K. Neg Eq doesn't affect one's ability to pay the mortgage. Even if the house doubled in value the amount owed and the ability to pay remains the same.


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## Greta (11 Jan 2011)

theod said:


> Surely the 100 K negative equity is irrelevant to the situation. The amount borrowed is still 320K. Neg Eq doesn't affect one's ability to pay the mortgage. Even if the house doubled in value the amount owed and the ability to pay remains the same.



Yes, but if the house doubled in value, the bank would be more interested in repossessing it, as it would recoup its money easily. While the house is in negative equity, it is much more to the bank's advantage to be getting at least interest payments from OP, as it won't get its money back if the house is repossessed and sold.


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## Brendan Burgess (11 Jan 2011)

Hi Wishes

I don't think you should take the money from your relative.  You might need it some other time for something more crucial. 

You have been unemployed for two years and managed to keep paying the interest on the loan. That is some achievement.

I think you should insist that you can't afford to go more than interest only. And you should insist that the arrears be capitalized. That means that your account will no longer be treated as being in arrears. 

In fact, I don't think it would be unreasonable for you to say that you would like to replenish the savings you used to keep up your repayments to have a rainy day fund. 

You should follow up the meeting with a letter to them outlining your case. 

They should give you time to get recover.

Brendan


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## spreadsheet (11 Jan 2011)

Brendan Burgess said:


> In fact, I don't think it would be unreasonable for you to say that you would like to replenish the savings you used to keep up your repayments to have a rainy day fund.



I agree with Brendan. Thats a good attitude to go in to the meeting with.

Anyway it's about time the banks started paying a bit more respect to Joe Citizen. After all they wouldn't be there if we didn't throw billions of our childrens money at them.

That rant asside, you have to be commended for keeping the interest paid. Well done for not giving up. I'd definately take Brendan's point on board for the meeting.


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## Wishes (14 Jan 2011)

I was to meet with the manager this morning but they rang and canceled.

I was told over the phone that they could not capitalize the arrears as it was not their policy to do so (non Irish bank) and the reasons for meeting me were merely for the payment of arrears and a deeper understanding of my situation.

I've been told by friends not to meet with them anyway as they will rail road me into a corner but to keep all contact with them in writing only.  Is this wise?


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## Bob_tg (14 Jan 2011)

Brendan Burgess said:


> I don't think you should take the money from your relative. You might need it some other time for something more crucial.


 
I agree 100% with this. Don't give family/friend borrowings to the bank.

Also, on the subject of the meeting, this is a tricky one. One could play hardball and ask THEM to visit you or enter only into correspondence.

On the other hand, if you are strong-willed, a face to face meeting might benefit you - if you hold your line. If you turn up to them, they will see that you are making an effort and they might be more likely to trust and build a relationship with you. If they find it difficult to communicate with you, they just might get their back up and start playing hardball even more. Of course, a lot depends on the personality on the other side of the table - but remember it will be a negotiation session and internally they will have a negotiation goal. 

Tough call, but if you can hold your line, consider meeting them.


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## Brendan Burgess (14 Jan 2011)

Hi Wishes

I think you should meet them but do not agree to anything at the meeting. Use it for exchanging information and discussing options. 

Given that they cancelled the meeting today, i would follow up with a letter to them setting out your case and what you want them to do. Although they told you over the phone that they would not write off arrears, ask them to do so anyway. Let them refuse you in writing. 

A lot of banks refuse to capitalize arrears, but they might not chase them either.

Brendan


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## Wishes (16 Jan 2011)

Again all your advise has been invaluable.  Following Brendan's great advise I followed up with a letter and hand delivered it to the bank on Friday afternoon; clearly stating step by step my situation.  

Just to make it clear, I've come from a very good salary to working at a fast food restaurant.  I'm not saying there's anything wrong with what I'm doing but am very concerned that the bank will feel it is more in their interest for me to hand back the keys rather than receive a couple of hundred Euro from me each month in a job that has no prospects; after all I signed up for a mortgage when I was on a six figure salary.

Do you think it would be out of line for me to make an offer of what I can afford each month and stick to it but have a written clause to say that if I ever earn more money that I will immediately inform the bank.  Is this a complete no-no?


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## horusd (16 Jan 2011)

I got in fairly serious hock a good few yrs back and couldn't meet the repayments on loans. I was worried sick and not mentally in a very good place to negotiate because I was so worried. When I contacted the bank they told me they couldn't do anything, and I must repay the agreed amounts. I struggled with that for a few months, and then having got lots of support, I wrote them a letter and told them what I could afford and I clearly set out my budget. I got a reply a few days later accepting the offer - despite their previous insistence that they COULDN'T budge. Needless to say, I was delighted and very relieved. I was also very glad that I pushed it and didn't accept their 1st( and 2nd!) answer. We, (the bank and I), both came to an arrangement where all the debt was paid off, and I wasn't totally stressed out with nothing to live on. As I earned more money, I put more off the debt. Strangely enough the bank didn't insist on this, but I did it anyway.It sounds like your doing your utmost to resolve the situation and that must count for something. You are also being pro-active and engaging with the problem, and this must stand to you too. I hope this outline of my past experience helps. Mine wasn't mortgage related, and so you probably face different issues, but I think once the bank were happy (ish) with my overall plan, they agreed to it. So negotiation is possible. I know it's very difficult situation,I wish you well and I hope it all works for you.


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## Greta (17 Jan 2011)

If your house is in negative equity, the bank will lose money if they repossess it. So so long as you are paying them at least the interest, and a tiny bit more, it should be in their interest not to try to repossess, as at least there is a hope that your situation will improve and you'll pay off your mortgage or that house prices will rise in the future and they can THEN repossess.

I hope your financial situation will improve before the house prices do


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## Wishes (22 Jan 2011)

Thanks horusd and Greta.

I met with the manager on Wednesday.  I put it to him again about capitalizing the arrears; I was declined and he said he would follow up his decline with a letter.  He has given me seven days to repay the arrears or my interest only reschedule plan will not be passed onto the credit control department for a decision.

I bought an investment apartment some years ago in the UK and have a relatively small mortgage on it.  The property is in full rental and pays for itself.  I explained to the manager I do not make any profit from this as the rental amount I receive pays the mortgage and no more.  The manager was displeased with this as he said he knew this area in the UK very well and believed that rentals were receiving double the amount that I was declaring to him.  I explained that I had the property with an auctioneer for months on end and they hadn't much success; that is until the rent asked for was halved.  His response to this was - I want to see a full copy of your rental agreement with your tenants signatures.  He also asked me had I approached the bank I have the investment property with and asked them for interest only payments.  I said I had but they declined as they felt the apartment was paying for itself.  He told me to ring them back and ask them to put this in writing and immediately furnish him with a copy of the said letter.

I explained that I have been in contact with mabs and am in the process of rescheduling personal debt.  He also wants to see a letter that mabs are helping me with this.

That pretty much summed up the meeting.


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## Peter54 (22 Jan 2011)

I'm presuming you have equity in your investment property.  Is there any chance you could sell?  As regards the managers comments re higher rental payments I find this amazing.  I know its all easier said then done but it seems all very one sided


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## Brendan Burgess (22 Jan 2011)

Hi Wishes

You hadn't mentioned the investment property before!  I had assumed that you had no other assets or income. You are in a position to discharge the arrears and meet the full repayments on your home if you sell the investment. 

In any event, it's a good idea to sell it as you can't afford the exposure to two properties. Under the circumstances, the lender is right not to capitalize the arrears. 

The bank has been decent in giving you a two year interest only period. You should have tried to sell the investment during that period so that you could return to meeting your original schedule. 

Under the circumstances, I think you should 
1) Inform the bank that you are going to put the UK property on the market.
2) Take the loan from your relative and pay off the arrears. 
3) Ask the bank to leave you on interest only until the property is sold. 

Brendan


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## Wishes (22 Jan 2011)

Hi Brendan,

Apologies for not making that clear in my opening post.  I have been trying to sell the property for two years now but have not found any buyers.  I have always being open to the bank about this property.  Any income that is taking in from the rental goes straight to paying that mortgage.  I am not making any profit.  

The banks grip is that I should be making more money than I presently am on the apartment and then pay the profit to them.  That is just not possible.  When I asked for a higher rate nobody was interested.

I take your points fully on board and will pay the arrears immediately.


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## Peter54 (27 Jan 2011)

OP, why would you issue your rental agreement to them??  Is that legal?


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## deeheg (27 Jan 2011)

HI wishes,

well I didnt loose my job but huge paycut, my bank has agreed for a lower payment so just an extra 100 ontop of interest only, which is just doable, you may be offered something like that, best of luck hope it goes ok


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## deeheg (27 Jan 2011)

sorry wishes, didnt read further down, if i was you, i would get an appointment with MABS a urgent one they will do the talking for you, they are brillant and got me my deal with the bank good luck


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## Wishes (1 Feb 2011)

Thanks Deeheg.

Latest so far; my mortgage provider are hell bent on finding out more information on the apartment in the UK.  They are insisting I sell it.  I have absolutely no problem in doing so if only I could find a buyer.  The institution that funded the investment property are flabbergasted and feel that this is a very bad idea as I will be left with a large shortfall.


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## Brendan Burgess (2 Feb 2011)

Hi Wishes

You said you had a "relatively small mortgage on the investment property". 

How much is the property worth?
How much is the mortgage? 
What is the rent? 

Brendan


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## Wishes (2 Feb 2011)

Hi Brendan, 

The property is worth approximately 100K.  The mortgage taken out was  150K.  The repayments are 500 per month and the rent brought in is 500.  

Some of the other investors that bought in the complex were lucky to sell but they sold at a loss.   

My figures here are in euro not sterling.  The mortgage was taken out with an Irish bank.


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## Brendan Burgess (3 Feb 2011)

I had assumed that when you said that the mortgage was relatively small, it was in relation to the value of the house. 

I think you should ask the lender on your home, to get their own valuation on the investment property. It seems crazy to sell it. 

Are you paying interest only on the investment?  You should be.


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## Bronte (3 Feb 2011)

Wishes said:


> . The manager was displeased with this as he said he knew this area in the UK very well and believed that rentals were receiving double the amount that I was declaring to him.  His response to this was - I want to see a full copy of your rental agreement with your tenants signatures. He also asked me had I approached the bank I have the investment property with and asked them for interest only payments. I said I had but they declined as they felt the apartment was paying for itself. He told me to ring them back and ask them to put this in writing and immediately furnish him with a copy of the said letter.
> 
> I explained that I have been in contact with mabs and am in the process of rescheduling personal debt. He also wants to see a letter that mabs are helping me with this.


 
That bank manager is very much less than helpful.  I would call him on this.  Firstly I'd want him to show me how you can achieve double the rent as he has such extensive knowledge of the very area your apartment is in.  Amazing coincidence that he would be such an expert on market rentals there.

Your apartment in the UK is in negative equity, you would sell at a loss and have even more problems.  Currently the UK property is not an issue as the rent is covering the mortgage there.  Your mortgage lender in the UK is correct.  Selling it or going interest only is of no help to you.  I'd love to see the bank manager show you hard figures (in writing) how the savings by going interest only in the UK are going to be of benefit to you.  What would that give you for goodness sake, 100 or 200 euro a month to do what, try and pay part of the mortgage on the Irish property.  Nonsense.   

I particularly don't like his attitude in practically calling you a liar in relation to your UK figures.  Very disrespectful of your distressed situation.  

I presume your Irish mortgage is on your home, the bank should either decide that they allow you to repay what you can afford or let you sell the house and let you repay the 100K in negative equity.  Personally I'd prefer the second option as then you would have a definite target to work towards, but I realise most people are attached to their homes and don't see it like this.  Without full facts and figures on all your financials it is very hard to give concrete advice.


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## Wishes (9 Apr 2011)

I thought I would update this thread for anyone that is going through a similar situation.

I had been in relatively small arrears with my mortgage when I began this thread but my arrears have gotten worse since then as my mortgage provider only made a decision on my case two weeks ago.

After a full investigation to prove to them I am living hand to mouth they decided to put me on part interest only payment for a couple more months and will review my case then.  

If I fail to meet payments and their criteria over the next couple of months they will issue legal proceedings against me.

I have to go back to mabs again and get them to lower my unsecured debt and also they have insisted the investment property must go.  They said if the property sale makes a profit they want immediate access to the surplus funds.  To be honest it will be a god send if the investment sells


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## Wishes (1 May 2011)

Thanks MrDerp.  Yes it looks like I am UK bound for the foreseeable.  I hope to have interviews lined up over there in the coming weeks.

My main residence mortgage provider has insisted I place the investment mortgage up for sale.  They got a valuer to value it and they said the apartment was worth a lot more than I initially said it was worth so I agreed to put it up for sale.

To cut a long story short the bank are now pressuring me by insisting if the apartment sells they want first access to the surplus cash to pay the arrears (which I 100% agree with) but they also want access to the full amount so I can pay off a large chunk of my mortgage.  I still have 15 years left on my mortgage.

Can I stop them getting access to the full amount?


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## Brendan Burgess (1 May 2011)

Hi Wishes

This is very unclear. Could you give us some actual numbers, although I appreciate some are guesses

Rough value of home: 
Amount outstanding on home mortgage: 

Rough value of investment property in UK
Amount outstanding on investment property in uk: 

Amount due to other creditors: 

According to an earlier post, the apartment is worth €100k. But you said that the mortgage taken out was €150k. How much is the mortgage now? 

If have money to spare after selling the apartment, you have a legal obligation to pay off the arrears, but no more.  Of course, you have a legal obligation to pay off your other creditors as well. 



> they also want access to the full amount so I can pay off a large chunk of my mortgage



This makes little sense. Are they suggesting that you should use the proceeds to pay off the mortgage on your home and not pay off the investment mortgage? The mortgage on the investment property must be paid off first. 

It is likely that the interest rate on your other creditors would be higher so arithmetically, it makes more sense, to pay them off first. However, you might reach an agreement with the bank.

It's a bit academic until you actually sell the property. Make sure that the proceeds of sale are not lodged to the bank where you have the mortgage so that you can retain control over the money. 

Brendan


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## Wishes (3 May 2011)

Hi Brendan,

This is all metaphorically speaking and I personally do not believe there will be a sale of the investment property unless I sell at a loss.

They want me to pay off the investment mortgage with the proposed sale proceeds and whatever surplus cash is left over they want me to pay the arrears and a chunk off my main residence mortgage before the full term is up.  The bank manager told me if I did not do this then they would not be in a position to help me any further.


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## Brendan Burgess (3 May 2011)

Hi Wishes

That makes a  bit more sense. 

You should get a statement from the auctioneer you are using to sell your investment to say what steps he has taken to sell it and what offers you have received. 

You use the expression "at a loss" which generally means selling it for less than you paid for it. This is no longer relevant. Will the proceeds exceed the current balance outstanding on the investment mortgage? That is all that matters. 

You are under no legal obligation to pay off anything other than the arrears. However, against that, the lender is not obliged to do any deal with you. They must follow the Mortgage Arrears Code but that does not oblige them to do a deal. 

I would think that it is reasonable to use any money left after paying off the arrears to pay off your other personal debt, which is more expensive. This is also a legal obligation whereas prepaying your mortgage is not a legal obligation.

But, as you say, it may be all a bit hypothetical. See what offer you get for the investment property before you negotiate further with the bank. 

Brendan


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## Greta (4 May 2011)

What deal is the bank offering you in return for paying off a chunk of your mortgage early? If there is no deal, you definitely should NOT pay it!


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## Wishes (4 May 2011)

Thanks Brendan and MrDerp.

Greta, the bank reschedueled my mortgage for another period of seven months.  They refused to put this offer in writing but told me to just pay the agreed verbal amount.  

The deal they came up with was to pay off a chunk of the mortgage and if I did that they would lenghten the rescheduel mortgage plan.  If I don't play ball they will not lenghten it but will put me back on normal payments and eventually go for repossession if I fail to pay.


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## Brendan Burgess (4 May 2011)

Hi Wishes

Don't worry about it until you have sold the investment property. There is no point in getting into a fight over something that might not arise.

Brendan


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## Wishes (22 Jun 2011)

Just an update on the this thread.  I am in receipt of a letter from my bank stating that they will seek a repossession order on my home within the coming weeks if I do not put the UK property on the market.  They also want to entwine the UK property into the original contract of my main residence stating that if the apartment were to sell at any giving time and there was a profit to be made from it that they would have first access to the funds.

Would you agree to such a clause being put into your home loan agreement?


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## Wishes (22 Jun 2011)

MrDerp said:


> It seems there's a concerted effort to push and/or trick people into putting their assets against any negative equity.



This is exactly what is going on here.  I am terrified to go against them as they will not do any deal with me.


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## partnership (23 Jun 2011)

Do not agree to them having your investment proerty on your home.  I thought Your principal residence cannot be touched for a period of 2 years as long as you are making efforts.  Yes try to sell the investment property but do not be rushed into anything.  You mentioned possibley moving to UK if so hand the banks the keys and let them try to sell the house.  At least you will have your property in the uk.


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## Wishes (24 Jun 2011)

Thanks Partnership. I spoke to them yesterday and told them I was not happy with the investment property being dragged into my loan agreement with them. They said if I was not seen to be complying it would go against me and they would no longer be in a position to negotiate with me further.


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## cremeegg (27 Jun 2011)

I have always thought that the conventional advice to people in difficulties with loans, that they should inform the bank of all their income/ outgoings and assets /liabilities was foolish.

If you cannot meet your obligations each month you should inform the bank of this, and in an honest fashion, but I see no reason why this OP should have told the bank about the UK property. ( he could have mentioned it here initally, but that is a different situation).

If the bank did not know of the UK property they could not pressurise him about it.

I had a somewhat similar situation some years ago, I wasn't making payments on a personal loan. I suggested that the bank give me a mortgage on an investment property (they were not previously aware of), the LTV would have been less than 50%, to pay off the personal loan.

The banks reaction was SELL IT and PAY US. They had no interest in whether this was the best option for me, their customer.

My advise is be very careful in giving the bank any specific information. You can tell them that you are unable to pay you dont have to prove that to them. 

Tell them the truth certainly but keep the details to yourself.


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## ontheedge (27 Jun 2011)

Im in a similar boat....which bank are you dealing with ...Ulster?


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## Wishes (28 Jun 2011)

Cremeegg, I couldn't agree more.  I like an idiot declared everything.  I thought by being 100% honest, it would prove I was making every effort under the sun to fix the problem.  By no means is it in my interest to be rid of the apartment.  It's in negative equity plus the bank I mortgaged it through will not allow it to be sold because they realise it will not achieve a good selling price.  If I go against my home mortgage provider's demands what will the outcome be for me?   

Ontheedge, is your investment property in Ireland or overseas?  What is your position at the moment?


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