# Realistic - will anything be done about negative equity



## qs222 (23 Nov 2011)

Being realistic do ye think anything will be done about negative equity?

I know we are not alone but we have 2 houses in negative equity (reluctant landlord on one).   All we wanted was to do the best for ourselves and we are now stuck in a 2-bed house (v nice and love the location). We now have a baby and are completely stuck where we are.   

I'm not looking to get away from the debt that we borrowed and are responsible for but I hate this feeling of being trapped and not being able to choose to have a second baby in the future because of decisions we made with the best of intentions for our future.

Hindsight is great and yes we should have thought about 2 bed etc... but at the time we were trying to live in a nice area within an easy commute of work and its all we could afford.


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## ClubMan (23 Nov 2011)

qs222 said:


> reluctant landlord on one


What does this mean?


> I'm not looking to get away from the debt that we borrowed and are responsible for


So what _are _you looking for then?


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## qs222 (23 Nov 2011)

ClubMan said:


> What does this mean?
> 
> Bought 2nd house and sale of 1st house fell through, then could not sell so had to rent i.e. I do not want to be a landlord if I could sell the property and clear the debt I would but I cannot.
> 
> So what _are _you looking for then?



To not feel like I have no control over where I can live.  To escape from feeling trapped.    To no longer have a noose of negative equity around my neck.   To be able to make decisions for the future for our family.   Clubman, you obviously are not in negative equity because that is not a question you would have to ask if you were.


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## Pyrite-home (23 Nov 2011)

I can sympathise with qs222. I have one property in serious negative equity and pyrite so you would have to wonder what the value is at all. It is not a nice feeling. We also feel trapped, we thought we were buying as a stepping stone as our parents did or to get on the so called "property ladder". The reality is we would of been better bumming it for the last ten years rather than killing ourselves to get somewhere. Its a horrible feeling and made worse when your family is starting to expand. People may say sure years ago they had to fit 10 kids in a room. That may be but were both parents out working to pay the mortgage ? - I doubt it. We are in a terrible mess in this country. Some are a lot worse off than others. Some got lucky, others not. I have no answer for you sorry - just a rant.


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## ClubMan (23 Nov 2011)

qs222 said:


> To not feel like I have no control over where I can live.  To escape from feeling trapped.    To no longer have a noose of negative equity around my neck.   To be able to make decisions for the future for our family.   Clubman, you obviously are not in negative equity because that is not a question you would have to ask if you were.


What specifically are you looking for to be done to address these issues? 

My situation is irrelevant to your post looking for feedback/comment on this issue...


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## oldnick (23 Nov 2011)

My sympathies go out to younger people caught in this negative equity trap. What is particularly annoying is that these people are not trying to avoid paying their loans, and that they are stuck in places where it is difficult/impossible to raise a family .

 Ireland -like all European states - needs children and it is amazing that there is no govnt action to aid this problem that unless solved will adversely affect the nation - less children being born, more young people emigrating and for those who remain,childless and in cramped accommodation ,a never-ending feeling of despair.

Having said all this - have either of you (qs and pyrite) approached your lender or a mortgage broker and asked if you could transfer mortgage to another property assuming that you could get a bigger place for a few grand more? 
E.G.your home is worth 150k but you owe 300k. A bigger home is available for 200k. Can you please, Mr Lender, let us sell the small place and give us 50k more ?

The bank will probably say no  but if you told them that you would stop paying altogether and they could have the keys back because your only alternative is to emigrate maybe they would re-consider. 

In the meantime I'd start opening a small account in another bank and build up a reasonable credit  rating  -credit cards etc.


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## billybound (23 Nov 2011)

I would email merkel that question.

But in all seriously it seems if nothing drastically changes within governement legislations on this matter, this is going to be an ongoing problem for my lifetime at least.


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## elcato (23 Nov 2011)

> People may say sure years ago they had to fit 10 kids in a room. That  may be but were both parents out working to pay the mortgage ? - I doubt  it.


What's the relevance of whether both parents were working ? (honest question btw). I think ten kids to a room is over pushing it but I really don't see why families of three or four can't live in a three bedroom house either.


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## truthseeker (23 Nov 2011)

elcato said:


> What's the relevance of whether both parents were working ? (honest question btw). I think ten kids to a room is over pushing it but I really don't see why families of three or four can't live in a three bedroom house either.


 
Cost of childcare maybe? 

I empathise totally on the NE issue. Im married a couple of years and stuck in a tiny 2 bed apartment thats worth half what I paid for it. I couldnt afford anything more at the time and rent was more expensive than my mortgage repayments. Its ok for now, we dont want to have children which is lucky i suppose because if we did we simply couldnt stay here but we have no hope of selling so my dreams of a garden to sit in are on hold for now, and maybe Ill never be able to have the home I would have dreamed of - not an outcome I ever expected considering we are both well educated professionals who were taking home a 6 figure sum between us a few years ago and are both on the dole now. Life sure seems to have turned into Monopoly. Im at 'Do not pass go' at the moment.


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## Pyrite-home (23 Nov 2011)

The relevance is quality of life.


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## Pyrite-home (23 Nov 2011)

I should add to the above that it kills me as a mother to work full time and sacrifice all that time with my young kids. I do it because I have to.


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## Bobbyg (23 Nov 2011)

We are not in the same boat but can sympathize, we bought in 2007 through affordable housing so thought we would be safe from falling house prices, now apartment is probably 100k in negative equity. Our situations changed drastically in the space of a 2 years through job promotions and wanted to move to a house but could not sell the apartment.

   We  decided to rent it out (with councils permission) and moved back with parents to save for a deposit. In the last 18 months at home we have saved 30K and we were hoping to approach the banks next year to see if we could get a second mortgage but now we are having second thoughts as the apartment will probably be a big drain on our finances. 

  We currently have to subsidize the rent we receive by €150 a month to cover the mortgage, still have to pay management fees of €1,400 and will have a tax bill of approx €1k this year but this will increase in the coming years when the government no longer allow mortgage interest to be written off against rent.

  Not sure what the solution is but I would love to see some proposals put forward for individuals/couples and families that have the means to move up but can’t sell negative equity properties.


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## Purple (23 Nov 2011)

Pyrite-home said:


> I should add to the above that it kills me as a mother to work full time and sacrifice all that time with my young kids. I do it because I have to.



It kills me as a father to work full time and sacrifice all that time with my young kids. I do it because I have to as well.
I'd also loke to take up golf and other pass times (I've never played golf but it looks like fun) but nobody's willing to give me a free ride. Who'd a thunk it?


Back on topic and to answer the OP's question; No.


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## Jim2007 (23 Nov 2011)

cashier said:


> Thousands of parents are rearing 2 + kids in 2 bedroom houses.  We need to put things in perspective here.



Very much so!  The result of this crisis, will among other things, be a much tighter integrated economic zone, with us having to move more towards the mainland European norms...

All over Europe, people are bring up a family in two bedroomed apartments, never mind a two bedroomed house!  In fact home ownership is not a high priority with most people and many even consider it a very risky thing to do!  Most couples renting something small starting out, then move to something thing larger during the child rearing years and scale down again once the kids leave the nest.  On retirement they often move to the country while they are still active and later to the town, so that can be near doctors etc as they become less mobile.


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## 44brendan (23 Nov 2011)

Agreed, but is this not straying from the original post. I.e. Once you are in negative equity your options are limited. I'm sure that the  OP would love the opportunity to return to a position where he/she could simply rent a property of choice. While I have sympathy I can see no easy solution to this issue in the short term. No Magic Bullet I'm afraid.


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## Jim2007 (23 Nov 2011)

I think my answer suggest the mind set of some of the people who will be involved in any decision making in future and for the most part those people with have hard time understanding the holy cow issue of owning a house in Ireland.

The other problem is that the proposal I've seen so far all include the owners holding on to the property in some soft of guise, in other words not a case of pressing the "Reset" button...  that is always going to be a very difficult one to sell to the taxpayer.  Non-recouse debt might fly, but if it does, I wonder how may will take it up???


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## bacchus (24 Nov 2011)

qs222 said:


> we are now *stuck in a 2-bed house* (v nice and love the location). *We now have a baby and are completely stuck where we are.   *



What's the problem?


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## Newbie! (24 Nov 2011)

We are also caught in NE but luckily are both still working and have a modest income between us. We try to be frugal and save monthly but still allow ourselves luxuries of going for a drink at the weekend and the odd dinner out. We have already decided that when we outgrow our home, we will rent it and find a bigger property to rent for our family. This may cost more than our current mortgage but if it improves our quality of life at that time, we are willing to take on the extra cost. This isn't the dream we had but sometimes you have to adapt to new situations. Life could be a whole lot worse. If this is the worst card we'll be dealt, I think we are incredibly lucky.


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## Purple (24 Nov 2011)

qs222 said:


> we are now stuck in a 2-bed house (v nice and love the location). We now have a baby and are completely stuck where we are.



You think that’s bad; we’ve got 4 kids and we’re stuck in a 4 bedroom house. Not only do two of the kids have to share a room but so do my wife and I! 
We also have a dog but if things don’t pick up she’s for the high-jump. I’ve spoken to her about it and explained the facts of life. She says that it’s not her fault, that she didn’t buy the big kennel in the garden, but I told her that she was happy to sleep in it and had to take responsibility for her own actions. She’s now frightened every time I bring her for a walk that it will be her last view of the home place.

If that doesn’t help we’ll pick one of the kids by drawing straws.


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## Boyd (24 Nov 2011)

Purple said:


> I’ve spoken to her about it and explained the facts of life. She says that it’s not her fault, that she didn’t buy the big kennel in the garden, but I told her that she was happy to sleep in it and had to take responsibility for her own actions. She’s now frightened every time I bring her for a walk that it will be her last view of the home place.



Is this about the dog or wife


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## ClubMan (24 Nov 2011)

qs222 said:


> Being realistic do ye think anything will be done about negative equity?
> 
> I know we are not alone but we have 2 houses in negative equity (reluctant landlord on one).   All we wanted was to do the best for ourselves and we are now stuck in a 2-bed house (v nice and love the location). We now have a baby and are completely stuck where we are.
> 
> ...


As alluded to earlier - I'm really curious to get some idea of what YOU realistically think should be done, why and by whom in your specific situation?

By the way - are you in an arrears or pre-arrears situation with either of the properties or managing to service the loans?


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## DaisyD2 (24 Nov 2011)

> Being realistic do ye think anything will be done about negative equity? NOTHING
> 
> I know we are not alone but we have 2 houses in negative equity (reluctant landlord on one). All we wanted was to do the best for ourselves and we are now stuck in a 2-bed house ( nice and love the location). We now have a baby and are completely stuck where we are.
> 
> ...


 
Your problem isn't the negative equity and lack of choice, its your mindset that percieves this to be a problem. 

You have two house (including your HOME!) - Good for you.
Your in a nice area and good location - Fabulous.
You have a baby - Congrats.
You have two bedrooms - whats the problem with kids sharing a room?

Honestly, we have lost the run of ourselves with the child/bedroom ratio of households. I shared a bedroom with my brother (5yrs younger) til I was 10. My
grandad came to live with us in our 3bed/1bath. It was great. Why are you putting off a 2nd child if thats what you want because of a bedroom? Its a wall?
The wall is in your mind.

Be thankful for a nice home, healthy baby, easy commute (being closer to home means you get back to your baby quicker at the end of a long day instead a a trek to some godforesaken "spatial hub" whilst your babys in a childminders).

Don't worry about the negative equity, its a state of mind, you don't "need" to sell - a smaller home just means you have to learn to watch where you put your feet (mine has toys everywhere and they're the dogs! , and declutter regularily, teach the kid/s to share and give to others.


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## newirishman (24 Nov 2011)

Purple said:


> [..] Not only do two of the kids have to share a room but *so do my wife and I*![...]



It doesn't get much worse - really sorry to hear...


Joking aside - I am with Clubman here, as I would like to know what the OP thinks that should be done. 
I am generally opposing any short-term debt forgiveness scheme where the general public picks up the tap. You never know what happens 10 years 
down the line, we might have inflated all the debt away anyway.

I am quite sure that I am in negative equity. Would I like have less debt? Hell ya. Do I expect anybody else to pay off some of the debt for me? Absolutely not. There's no such thing like a free lunch.


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## Pope John 11 (24 Nov 2011)

newirishman said:


> There's no such thing like a free lunch.



Hold that statement for now......Sean Quinn is looking for a free lunch, lets see what will happen in this scenario.

Big developers are getting free lunches, why for borrowing millions they cannot afford to pay back, but you are happy to pay this back, it could only happen in Ireland.


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## LittlePiggy (25 Nov 2011)

As somebody who is "trapped" in negative equity, I feel I can say that the "trap" is indeed a mental one that can sadden you about your options for the future.

We have no need to move or a desire to move, but should that need or desire arise you are powerles, and this can be demoralising.

What can be done about negative equity? Well if I were asking, I would simply like the ability to transfer that negative equity to a new property. Myself and my wife have good incomes (at the moment) and are actually over paying the mortgage to reduce capital. We have an excellent repayment record.

If we could move to a different property, pay all additional costs so that the bank provides nothing else to us, then I think that should be allowed. We are not increasing or reducing our debt, but we are moving.

We are probably in a luckier situation than many, and to deny us the need/desire to move is unfair in these circumstances.


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## dereko1969 (25 Nov 2011)

LittlePiggy said:


> As somebody who is "trapped" in negative equity, I feel I can say that the "trap" is indeed a mental one that can sadden you about your options for the future.
> 
> *We have no need to move or a desire to move, but should that need or desire arise you are powerles, and this can be demoralising*.
> 
> ...


 
With regard to the first point in bold above, what's the point in worrying about something that doesn't affect you at the moment? You might as well worry about asteroids hitting your house.

With regard to the second, are you suggesting there are many people "out there" who wish to move to a house that costs the exact same as the current outstanding amount on their mortgage? I don't really understand this point - the bank would be giving you (presumably) more than 100% of a mortgage or am I reading this all wrong?

If you do wish to move at some stage in the future would you not be better off not over-paying so that you can have some sort of a deposit?


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## moycullen14 (25 Nov 2011)

To answer your question, probably nothing for YOU. You see you are not of systemic importance to anyone. You'll carry on doing your best, paying as much as you can until something catastrophic happens (illness, redundancy, etc). If you want to do solve the problem, do it yourself. Your problem is one of debt management and in that situation, you have to prioritise the debts. Your PPR is the most important, the second house is not. Chances are it will be decades before it gets back out of NE and your income on it is going to decrease because of taxes, charges, PRSI, etc, etc. So just stop paying the mortgage. What can the bank do? Repossess it? Fine. They will of course be able to come after you for the balance but you stand up in court, tell the judge that you can't afford to pay them anything, get a payment plan that you can deal with and off you go.

Your credit rating will be in sh**e but, let's be honest, it is anyway. To be honest, it is the only way out of the problem for you. Otherwise, keep on paying. You could try threatening the bank with this, as they are well aware of the risks of default, and see who blinks first. 

I am not advising you to take this course of action, I am merely saying it is open to you.  Short of immigration & bankruptcy, I can't see too many other options.


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## LittlePiggy (25 Nov 2011)

dereko1969 said:


> With regard to the first point in bold above, what's the point in worrying about something that doesn't affect you at the moment? You might as well worry about asteroids hitting your house.


 
I worry about, and over-analyse, everything. There is no changing that I am afraid!



dereko1969 said:


> With regard to the second, are you suggesting there are many people "out there" who wish to move to a house that costs the exact same as the current outstanding amount on their mortgage? I don't really understand this point - the bank would be giving you (presumably) more than 100% of a mortgage or am I reading this all wrong?



I meant move to a house with the more or less same value as their current house. For example, if my house is worth 100k, I have a mortgage on it for 180k, and I want to move to another house worth 105k, this is not allowed. But if there was a mechanism to allow the outstanding 80k NE to be transferred to the new property, and I provide the 5k short, I have not increased my debt (I still owe the bank 180k) and the bank have not incurred new costs. I have, however, moved house to suit my needs.

Do bear in mind that I am unfamiliar with the detail of how these things work, so I am thinking very much from a simple man's point of view. I speak of a "mechanism" with little idea on how that would work. 

And yes, I do believe people could quite possibly want to move to another house of the  same or similar value. They may want to upsize to a cheaper area or move to an  expensive area but are prepared to downsize.



dereko1969 said:


> If you do wish to move at some stage in the future would you not be better off not over-paying so that you can have some sort of a deposit?



I really was speaking theoretically... I haven't the intention to move currently. Your point on whether to overpay or squirrel money away is a good discussion for another day!


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## bugler (25 Nov 2011)

moycullen14 said:


> To answer your question, probably nothing for YOU. You see you are not of systemic importance to anyone. You'll carry on doing your best, paying as much as you can until something catastrophic happens (illness, redundancy, etc). If you want to do solve the problem, do it yourself. Your problem is one of debt management and in that situation, you have to prioritise the debts. Your PPR is the most important, the second house is not. Chances are it will be decades before it gets back out of NE and your income on it is going to decrease because of taxes, charges, PRSI, etc, etc. So just stop paying the mortgage. What can the bank do? Repossess it? Fine. They will of course be able to come after you for the balance but you stand up in court, tell the judge that you can't afford to pay them anything, get a payment plan that you can deal with and off you go.
> 
> Your credit rating will be in sh**e but, let's be honest, it is anyway. To be honest, it is the only way out of the problem for you. Otherwise, keep on paying. You could try threatening the bank with this, as they are well aware of the risks of default, and see who blinks first.
> 
> I am not advising you to take this course of action, I am merely saying it is open to you.  Short of immigration & bankruptcy, I can't see too many other options.



Did you read the OP's post? Why do you say their credit rating is poor?

There is no indication from the original post(s) that the OP is under financial duress of any sort, or that they are struggling to repay. They simply don't like the 'feeling' of NE, and potentially would like a bigger house.

Are immigration, default, and bankruptcy now the responses to being in this scenario?


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## mcaul (25 Nov 2011)

There are a lot of people that have no understanding or feeling for those who got caught in the bubble. That's a sad state we have got ourselves into.

Thankfully I'm not in negative equity and have a dream house and don't care whether its worth 1c tomorrow or €1m as I won't be moving. But I have staff and friends who are in negative equity and have tried to put a positive spin on their situation.

Example. Staff A purchased in 2005 for €225,000 and house a few doors away is on market for €150,000.
Their mortgage balance is about 200k.

BUT - they have a 0.95% tracker and have now lived in the house for 6 years and morgage balance is 200k. they also have mortgage interest relief for another few years and their net mortage is about €730 after the most recent reduction.

Whoever buys the neighbour house (assuming 140k and after January) won't have mortgage interest relief and certainly won't have a tracker. Assuming a €140k mortgage, they will be paying €720 per month (based on 4.5% interest rate).

So the difference between buying then and buying now is €10 per month!

OK, so this calculation is not for everyone, but if you have a tracker and still have mortgage interest relief, you are not paying a huge amount over the monthly payments you would be paying now on current available interest rates.

As for debt forgiveness, I doubt if it will happen, but I do think some banks are already facilitating negative equity loans to some people - these are separated from the property and are paid off as a separate loan and allows for the homeowner to move house a lot easier. A more widespread availability of this type of loan with minimum interest (ecb rate) is probably one of the solutions to many people's problems where the actual payment is not an issue, but the negative equity is preventing a move.


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## andycole (25 Nov 2011)

I believe that anybody who has bought a home and is experiencing the pyrite problems with the quality of the construction of their house should be entitled to 
 either a new home similar in build to the one they are presently living in - or if a similar house in a similar location cannot be identified by the Government should then be entitled to be released from the mortgage contract's. No questions asked - because it is not acceptable that people are being left in houses that were not properly built by developers and builders. And I'll go further and say that the amount of mortgage payments that the people have paid should be totaled and then subtracted from the price of their replacement home or else refunded to them!

And if this pyrite problem is located within Apartment Blocks then it affect the complete block of Apartments and everybody living in them. So again as above - these people should be treated fairly as well - either placed in new homes in similar location - or if none can be found then refunded their mortgage payments paid to date!


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## STEINER (25 Nov 2011)

I don't think anything will be done about negative equity.

Out of curiosity I looked up nearby property for sale.  One 3 bed which was brand new at 360k 5 years ago is on DAFT for 160k.  I don't know how they can afford to take that much of a hit, assuming that the original buyers are the current sellers.


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## Swyper (25 Nov 2011)

One thing that really should be done about negative equity is the creation (forced on the banks if necessary) of negative equity mortgages. It is ridiculous in this jobs environment that it can be very hard to fill an experienced-position vacancy. Too many 30-somethings are so handcuffed by negative equity that they are unable to move within the country to take jobs. That is bad for the economy, and there is no loss to a bank which just changes the physical property that the loan is secured on. The banks would not even need new capital for that.

When we're making it easier to emigrate than move from Dublin to Cork, something is seriously wrong.


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## cormirl (31 Dec 2011)

*I am in negative equity also*



qs222 said:


> To not feel like I have no control over where I can live. To escape from feeling trapped. To no longer have a noose of negative equity around my neck. To be able to make decisions for the future for our family. Clubman, you obviously are not in negative equity because that is not a question you would have to ask if you were.


 
This noose you are talking about is exactly how i feel and i'm so dam angry.It kills me to pay any more for my house in Navan that has lost at least 160k since the time of purchase and I reckon will drop another 20-30k over the next few years.I'm seriously considering default and saving my mortgage repayments for another place in 10 years time that I can buy with cash...Fxxx the banks,they have received bailouts while we foot the bill and pay off debt of NEs that are unsuatainable.Life is too short.Everyone needs to default...My hse cost 280k today I would be luck to get 120K,more austerity and emigration means less demand,prices keep dropping...So I'm looking at it from the point of few that a third of the way through my mortgage term and my house is only worth a third of its original cost,what am i paying for!...the maths don't add up..


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## tvman (31 Dec 2011)

cormirl said:


> So I'm looking at it from the point of few that a third of the way through my mortgage term and my house is only worth a third of its original cost,what am i paying for!...the maths don't add up..



You're a third of the way through your mortgage term and presumably you owe exactly what you thought you'd owe at this stage, when you signed the mortgage contract on day one. 

These maths add up - you're paying because you signed a contract. 

If your house had increased in value would the bank be entitled to say "actually we're going to increase your mortgage amount to compensate"?


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## Pope John 11 (2 Jan 2012)

cormirl said:


> I'm seriously considering default and saving my mortgage repayments for another place in 10 years time that I can buy with cash.



But could the banks take this new cash house off you if you fail to make payments on your present house?


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## so-crates (3 Jan 2012)

cormirl said:


> This noose you are talking about is exactly how i feel and i'm so dam angry.It kills me to pay any more for my house in Navan that has lost at least 160k since the time of purchase and I reckon will drop another 20-30k over the next few years.I'm seriously considering default and saving my mortgage repayments for another place in 10 years time that I can buy with cash...Fxxx the banks,they have received bailouts while we foot the bill and pay off debt of NEs that are unsuatainable.Life is too short.Everyone needs to default...My hse cost 280k today I would be luck to get 120K,more austerity and emigration means less demand,prices keep dropping...So I'm looking at it from the point of few that a third of the way through my mortgage term and my house is only worth a third of its original cost,what am i paying for!...the maths don't add up..



YoU are right, your sums do not add up. 

120/280 = 3/7 not 1/3

93k as a current valuation would be a third of the price you deemed it was worth when you bought it.
 You are repaying the capital you *chose* to borrow and the interest that accrues to it because you owe it, irrespective of the value of the house. Don't think that great plan of saving will work either, the debt will still be yours to clear, and that is what the savings would end up being used for. Give yourslf a break, you gambled on the property and in the short term, that hasn't panned out. It may not provide you with the current gain you hoped for but it may do so in the future. These are very long term investments yet so many people seem to expect them to perform brilliantly all the time. Plan instead to pay down your debt as fast as possible that way minimising your interest bill.


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