# Is my mortgage unsustainable?



## Phillipa (10 Aug 2013)

Personal and income details
Net (i.e. after tax) Income self: €2047 private sector 
Income history: Made redundant in 2006 and re-employed in 2010. 
Net income partner/spouse: N/A
Income history: Steady till 2006, on social welfare till 2010, steady again since 2010
number of children: 1
Amount of child benefit received : €130
Amount of Mortgage Interest Supplement received: Nil
Home loan: 205k
Lender: KBC Bank
Amount outstanding: 225k (180k mortgage plus the arrears)
Value of home: 125k
Interest rate: Annuity mortgage, not sure of interest rates but quite high. 
Monthly repayment: €1092 
Amount in arrears: 45k

Summary of discussions and agreements with the bank: In MARP since 2010, up till now I have been paying full amount of mortgage each month with a few payments missing as I just cannot afford the full amount. 

Other loans and creditors - delete those which don't apply to you
Credit Union: Loan of €9700 against shares of €3100
Family : €3000 

Other savings and investments: None


How important is retaining the family home to you?
I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.


Any other relevant information

What is your preferred realistic outcome? To reduce the monthly payments but to somehow clear down the arrears as there is interest of 180 per month on those. Have a meeting with the bank in 2 weeks time to discuss a restructure but not sure what to ask them for. Am I financially better asking to capitalise arrears, is there a way to wipe out the interest portion of the arrears? Is adding on another 10 years to the mortgage possible? I really just want to be able to have some sort of life again after 3 years of living on basics of everything and borrowing every month just to keep up repayments.


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## Phillipa (12 Aug 2013)

I'm not sure if I filled out the case study correctly, my apologies if I have not. Are there any financial institutions that would offer free or cheap advice on this as I really would like to have something to bring to the table at the meeting with the bank.


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## daftpunk (12 Aug 2013)

Hi Phillipa,

you should get some really good advice here. 

The bank will ask you to fill out your financial income/outgoings etc and decide what the best option for you will be.

You might get options such as a split mortgage or a voluntary sale.

The bank will lose a lot with a voluntary sale i.m.o., with approx. 100,000 left for a personal loan, which you might not be able to repay.You could then have this written down/off completely.

A Split mortgage, where some of the 225k, (maybe 100k), would be warehoused allowing you to continue living in your home and paying off on maybe 125k. Could be a good solution for you.

They will concentrate  on the credit union loan, and perhaps tell you that this is not as important as your mortgage. They will ask for proof that you have renegotiated this down as low as possible, as it is unsecured debt. 

The new insolvency laws may also be available to you with the personal insolvency practitioners to be announced any day now. Check out www.isi.gov.ie for that.

Hope this helps a little.

Regards.


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## DebtCert (12 Aug 2013)

The details of the first PIPs authorised are up on the ISI website.


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## Phillipa (13 Aug 2013)

Thank you both so much for the replys. 

daftpunk, with the split mortgage does that mean I would be essentially renting my home from the bank? I really want to keep the home but want to own it at some point too, is this an option? I have a SFS ready for the meeting plus bank statements etc. I will have a talk to my credit union about payments too, I think maybe I am paying more off the loan than I could, I repay it at 60 euro per week currently. I will look at your link and the ISI website now too.


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## daftpunk (13 Aug 2013)

You will not be renting. You will be repaying but only on the amount they deem you can afford, maybe 150k with 75k 'warehoused'

Your current mortgage looks prob like this;
Amount 225k
Interest 4.5%
Amount per month 1093
Years left: 33


A split might look like this
Main loan 150k @4.5%
'Warehoused' amount 75k @ 0%
Years left: 33
Amount per month; 756

At the end of the term you are liable for the parked/warehoused amount and maybe a lump sum etc will cover this or a new loan/mortgage perhaps for this amount. Plus with inflation,maybe 75k in 30 years time might not seem that bad, either way you get to remain in your home and pay your debts, obviously the figures can be altered to suit how much you can afford and the bank assesses the split every three years or so to see if your situation has improved or worsened, allowing them to move from the warehoused loan into the main loan or vice versa.


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## daftpunk (13 Aug 2013)

Phillipa said:


> How important is retaining the family home to you?
> I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.



This should stand to you and tell the bank how you want to repay something with the alternative being a voluntary sale, where they will only recoup a certain amount and you may then be eligible to have the remaining written off under the new insolvency bill. 

You should maybe seek 'expert' advice from MABS or somebody like them


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## Phillipa (13 Aug 2013)

Thank you again for your advice. I currently have 21 years left on the mortgage so maybe this split mortgage thing would work out better than extending? I am 36 if that makes any difference.

I will also try to get a MABS appointment as soon as possible.


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## daftpunk (13 Aug 2013)

Hi,

yes if you only have 21 years left and paying that amount per month(1092), and presuming that is the full amount required, then your interest rate must be around 1.9%??? Prob a tracker. Trackers are loss making for the banks so use this to your advantage when negotiating(if possible).

If your 36 and you will be 57, when the 21 years are up, then a split could be a really good option. Still a few working years to retirement with a salary to repay the warehoused amount.


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## Phillipa (20 Aug 2013)

Thanks daftpunk, still unsure of the rates as I forgot to ask at the meeting the other day but it is definitely not a tracker. The result of the meeting anyway was just a payment restructure which has given me leverage with some extra cash for myself at the end of the month, we are to discuss the arrears and the entire situation again in 12 months time.


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## Brendan Burgess (21 Aug 2013)

Hi Philippa

"a payment restructure" is very vague. Will they be putting it down in writing for you? 

They are supposed to offer long-term solutions, and not 12 month agreements. 

If your net income is €2,000 and your monthly repayments are €1,000,  you will be living on the breadline for many years trying to clear your negative equity.

And even then, you will just have cleared your negative equity i.e. you will be back to square 1. 

You should seriously consider opting for bankruptcy which would see you back to square 1 after 3 years or a Personal Insolvency Arrangement which would last 6 years, but you would get to keep the house. 

Brendan


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## Phillipa (21 Aug 2013)

They have agreed a payment restructure with me and I am currently waiting on the paperwork out to sign on this as they said it could take 4-6 weeks to come out to me. They did give it a title but I cannot for the life of me think what it was. 

I am not really 'well up' in the personal insolvency deal. I presumed to be insolvent I would have had to loose the house?


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## nec (21 Aug 2013)

Brendan Burgess said:


> Hi Philippa
> 
> You should seriously consider opting for bankruptcy which would see you back to square 1 after 3 years or a Personal Insolvency Arrangement which would last 6 years, but you would get to keep the house.
> 
> Brendan



I also though to be insolvent I would have to loose the house, could you please provide links to information above?


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## Brendan Burgess (21 Aug 2013)

Hi nec

There are covered extensively in the forum. 

You should start a new thread providing this information: 

Standard Format for unsustainable mortgage Case Studies


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## cremeegg (21 Aug 2013)

I think there is a little too much emphasis in the replies here on the exact mechanism there would be to a new arrangement, and not enough on the original question. Is the mortgage sustainable?

You owe €225k

You have an income of €2177 per month inc CB

This means you can pay about €700 per month toward a mortgage. (This is my guestimate, what do you think).

We need to know if this is enough to pay the interest and clear some capital each month. I.e. is it sustainable?

You need to check out the interest rate. Just phone the bank and ask them. Also is it a tracker, a standard variable or some other.


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