# 27/29yrs in serious debt



## rotate (19 Aug 2009)

Age self: 27
Age Spouse: 29

Annual gross income self: 5k part time
Spouse: €390p/wk disability benefit
child benefit €332 p/mth
Mortgage interest relief application been processed

In general spending more than income

Mortgage
Value of property: 470k peak, maybe 300k now?
Mortgage balance: 320k
Interest rates: 2.69% variable
Currently mthly repayments: 1250

Other borrowings
Credits cards  10.5k
car loans   nil
friends/family   10k

Only managing to pay minium off cr. cards

Savings
20k

Investments
property- purchased with intention to downsize ppr
mortgage amt 128k
Current value: getting valued tomorrow, in neg equity
interest rate 2.35% variable
monthly repayments 580

pensions? no

life insurance? basic mortgage policys

children?  2
2.5yrs
11mths

Specific questions
We found out a earlier in the yr that my husband has cancer. As a result he closed his business which up to 2 yrs ago was giving him a very high wage €100k+. I have not been in paid employment for 2yrs due to children. I am currently gone back working p/t which doesnt effect sw.
We made the purchase of 2nd property last yr in the hope to trade down due to business slowing up. Now i feel we are in neg. equity in both places.
We have everyday costs down to a minium. i understand that it is crazy having 20k savings and lrg cr card debt. we hope to address this once we can get a plan together.
my husband is having a lot of treatment/hospital stays so we are very tied at present in regard to find work etc. i am currently studying p/t also which in 18mths should result in a good wage.
Having spent so much of the last 6mths in hospitals and not addressing our finances we have worked up debt and we would now like to deal with it.
i feel that we should try and sell off both properties and rent for the next 5yrs. It would give us a chance to save and get our house in order with out much pressure, the kids would be a bit older and i'd be in f/t employment.
The 2nd property is in need of renovation of 20-30k. Due to its distance from hospital it wouldnt suit our current situation.It would be possible to rent as a holiday let, except for the renovation work required!
Any advice appreicated, thanks


----------



## BONDGIRL (19 Aug 2009)

Rotate, I wont be great at giving out advice but I would like to say I hope your husband makes a full recovery and this time must be very worrying for you.
However I would PAY off that CREDIT CARD ASAP out of your savings.


----------



## Scotsgirl (19 Aug 2009)

I agree with Bondgirl.  *Pay off your credit card straight away*, as you will be years paying it off, if you are only paying the minimum amount, and also paying a huge amount in interest.  

If you are then able, the money you were paying off the credit card, you could put into a savings account, or at least it can be used to tackle other bills as they come up.

Hope your husband is on the mend soon.  My thoughts are with you.


----------



## pjmn (19 Aug 2009)

Hi Rotate,
Firstly I wish your husband well, in real terms this is your main issue, not money, however I fully understand your need to control your current expenditure...
Difficult to advise you directly based on your posting, but some observations/comments that you might want to consider...
a) You don’t appear to have any short term debt – apart from the credit card – which is good ...
b) I’d suggest you pay off credit card debt from savings – high interest rate will cost you very dearly (or see other option h) below...
c) I’m hoping repayment of family loan is not critical in the near future...
d) As I calculate your gross income is c. E29.3k (I’d suspect given your situation that tax/levy’s should be small – so I’ll discount for the moment).  Therefore gross monthly income c. E2.4k
e) Your current outgoings on mortgages amount to E1.7k with a further E250/E500 on credit cards I’d suspect...
f) In a nutshell that’s not sustainable in the long term ...
g) Not clear from your posting if your two mortgages are with the same bank, might be preferable if they were (just one to negotiate with- but not critical)...
h) I’d suggest you meet with mortgage provider(s) and request an interest only option on both mortgages for say a period of one year, you might want to consider placing credit card debt on to one of these mortgages (not something I’d normally advise – but there’s part of me thinks you might need to keep you current savings intact, in case of emergency) – having said that bank(s) may be reluctant to do this, especially if you feel that you have no equity in either property at this time, so you may be left with no option but to clear from savings.
i) In relation to second property – I’m not sure I’d advise to spend another E20k/E30k on same given your current circumstances – I take it that it’s not rented at the moment – is there any way it’s lettable in its current state, even at a discounted rental to reflect the fact that it needs work doing on it?  Think you will also have to give serious consideration to selling off this property – again you’ll probably have to take a hit on it given its state and the state of the current property market – you might be able to check these latter considerations with a good local auctioneer.  Being a bit clearer on what course you are taking will assist you in negotiating your interest only option with your bank(s).
j) In relation to your husband’s illness are you sure you are getting all ‘allowances’ / state support that you are entitled to – not my area of expertise, but something I think you should check out.
k) If at all possible – don’t use the credit card anymore (ideally tear it up) and don’t take on any short term debt 
l) A lot of people on this site speak very well of MABS – and that may be another avenue to consider for advice.
I wish you and your husband well.


----------



## rotate (19 Aug 2009)

thanks for your quick replys.
I know we need to clear the credit cards although our savings is giving us a false sense of security. 
The family loan is payable when we are back on our feet, so no pressure there. 
We also have been offered to live rent free, in a vacant property for the medium term from another family member.
I would prefer to sell both properties, but i worry about neg. equity and not been able to come up with the difference.
The 2nd property is been valued tomorrow by an auctioner, although we both know that it is in considerable neg. equity where as our family home might not be.It is not in rentable condition at present.
What worries me, is that while we can just about pay everything now. If  interest rates go up, which i expect them to, it would be the straw on the camals back.
Mortgages are with seperate banks.
I have cut up the credit cards.
While my husband is sick , we cant plan for the future is relation to increased earnings etc.
Thanks again


----------



## Scotsgirl (19 Aug 2009)

Would you think about getting your family home valued as well, and if that wasn't in negative equity, putting it up for sale?  If you managed to sell it, you could move into your other property.


----------



## pjmn (19 Aug 2009)

Rotate,
Well done – I think you are further on in the process than you give yourself credit for ...
That’s a very decent offer re rent free home (you can’t beat family at the end of the day) – definitely gives you options to consider and also allows you consider sale of both properties you currently own...
Understand your concern re negative equity, but what you really need to establish is the extent of it, e.g. if say properties could be sold for E200k less than outstanding loans, then you’d have this to deal with post sale – which I think you’d find very difficult to deal with financially – on the other hand say the negative equity was c. E20k/E30k, then it would probably be manageable – disappointing to be in that position, but manageable – my key message – don’t panic re negative equity until you are clear on the scale of it...
Pity that you feel the second property isn’t lettable in it’s current state – are there any builders/trades people in your family that could help out and fix the absolute essentials for less than the E20k/E30k you originally felt – may be worth exploring, family member of not ... 
Best wishes...


----------



## vectra (19 Aug 2009)

so sorry to hear about your husband.  Make sure that you are claiming everything that you are entitled to.  Carer's allowance/Benefit etc if entitled to.  Hopefully that your situation will be only shortterm and that your husband will make a full recovery.  Try not to worry.  you seem to have a good family


----------



## chlipps (19 Aug 2009)

Sorry to hear about your husband.. hope he gets well soon

One thing to check.. What type of mortgage protection insurance policy have you... Has it got serious illness cover and could it pay part of you main house mortgage.. I think serious illness cover is normally 52 weeks at a percentage of mortgage rate so worth checking if the insurance would pay a large part if not all of you main house mortgage for a period of time


----------



## tml (20 Aug 2009)

Sorry to hear about your husband, hope he recovers quickly.

To take the some of the pressure off in the short term, talk to your mortgage lender immediately about switching your mortgage payments to interest only, it will free up some cash for you monthly so you dont have to make any hasty decisions about selling properties in the current climate. Most of the lenders at the moment are being good about giving people interest only payments for at least 6 months to a year.

Perhaps you could also then rent out your current home and move into the rent free property your family member has offered you? Hopefully then when your husband recovers and is earning again your home will still be there for you to move back into.

Also agree with the other posters advice to clear your credit cards from your savings.

Good luck with it!


----------



## rotate (20 Aug 2009)

Bit of an update.
We had both properties valued today.
1st at 370k and 2nd at 90k so it looks on paper that combined we are not in neg. equity! although the reality is prob much difference. 
We had checked and double checked our mortgage ins. policy and they are standard basics that are payable only on death of insured.
thanks


----------



## BONDGIRL (21 Aug 2009)

thats a bit of good news for you isnt it!


----------



## chlipps (21 Aug 2009)

Thats good that you are not in negative equity.. Best though to clear the credit card debt as that is high interest cost...


----------



## niceoneted (21 Aug 2009)

Sorry to here of your circumstances. 
I would firstly clear off the credit card with the savings as it is high interest loading and you will feel a relief when it is gone. 
I would look to go interest only on both mortgages asap. Given the circumstances I think the bank will agree. 
I would not sell both houses, but consider selling the one you are in at the moment.I know it is nearer the hospital etc but as you said yourself you bought the other one to downsize to as a family home - not sure when you intended this for. The reason for this is that if you sell both and your circumstances do not improve as in Husband back in well paid job or you getting that well paid job on finishing college you may not be in a position to get a mortgage again for a while. If you wish to own your own house in the future this might be best way to do it. Also house you are in at the moment is not in negative equity so might be able to gain from it - depending on what it sells for -this may also cover renovations to investment house.  
I wish you well in your journey.


----------



## Deas (27 Aug 2009)

I know this has been covered already, but worth a mention again, mortgage Protection Insurance is not the same as the Life Assurance Policy required to take out the Mortgage.  The Life Assurance is the one you have mentioned above I would expect that pays out on the death of the mortgage holder; however it is worth identifying if you have Mortgage Payment Protection Insurance separately which covers your payments for a period on redundancy/long term illness.


----------



## Elphaba (27 Aug 2009)

[QUOTE I have cut up the credit cards. [/QUOTE]

Check if you have been paying payment protection insurance on your credit cards. Are they in your name or your husbands name? I would seriously advise you to go to Mabs, as they can negotiate with the credit card companies on your behalf, get the interest frozen and work out a minimum monthly payment, whatever you can realistically afford.They can also help you negotiate an insurance claim. Also your mortgage protection ins. if you have one, there may be a cut off date for claims, so dont delay. Good luck to you.


----------



## Bronte (28 Aug 2009)

Contrary to most advice on here I would not pay off the credit cards.  Instead I would switch to a 0% interest rate card and if this is not possible then with MABS advice and help get them to negotiate with your credit card supplier.  They will probably be able to get some of the late fees and interest waived for you.  Then you start to pay off the balance at a set rate.  MABS surely has a fast track system for people in your unhappy situation.

You should keep your savings in case you need to pay anything in relation to your husband's illness, this is far more important than anything else.  Personally I'd hide the 20K from MABS and the banks.

The two properties are too much of a burden and you have two choices. 
1.  Sell both properties.  If the valuations are correct then you can rent and the state will support you in this.
2. Sell the PPR and move into the investment property.  You cannot do it the other way around as you have too much negative equity on the investment property.  
The worst case scenario, and one has to face this, is that the properties sale price does not cover the negative equity.  But really in the scheme of things is this so bad.  What can the banks do to you in this scenario.  Nothing really.  They cannot take away your husband or children, precious  indeed.  Best of luck.


----------



## rotate (28 Aug 2009)

Thanks for all your good advice
I still have my credit cards balances...not using them!Theres isnt any ins. or cover for any credit cards or mortgages. i had this checked out within the first week. We had a lot of policies, which lapsed several months before hubby getting sick also, i had this checked also and no comeback with them.
Our solicitor adviced us to hand back 2nd property to banks, he said there would be nothing that they could do. And if brought to court, it would be thrown out given situation.So we hope to do this.
We have decided to put our own house for sell but at 340k to see would it generate interest. we are doubtful on this, otherwise we will go interest only on the mortgage.
I want to clear credit cards and hubby doesnt as our savings is our security which i understand.so we have decided to slit it and clear half the balance and move the remaining amt to 0% interest or low interest failing that and try and clear it over a short period. 
Our savings have disappeared into cash
I think we will go the renting route, if hse sells, and save like crazy,and in 5 yrs time we will be in a great position again. 
I understand that we wouldnt qualify for a mortgage again,but that ok. We have plenty of options, live rent free and save for few yrs.
Our families are very good, so there will be plenty of help available down the road to buy again if we wanted.
thanks


----------



## pjmn (28 Aug 2009)

rotate said:


> Our solicitor adviced us to hand back 2nd property to banks, he said there would be nothing that they could do. And if brought to court, it would be thrown out given situation.So we hope to do this.


 
Strange advice......
I would have thought this could lead to potential credit history problems for you in to the future – I would have thought it far better to agree some sort of plan with your bank and to work with them in this instance, whether that be an interest only option pending sale, or some other plan...
Just my view (and I’m not a legal eagle)....


----------



## Bronte (3 Sep 2009)

rotate said:


> Our solicitor adviced us to hand back 2nd property to banks, he said there would be nothing that they could do. And if brought to court, it would be thrown out given situation.So we hope to do this.


 
I'm sorry but I would not rely on this advice.  Your solicitor does not know what the banks will do.  If you just hand back the 2nd property they will sell it for more than likely a price less than what you will sell it for, you will still be liable for the shortfall in mortgage and will have bank costs (beyond your control) to contend with.  They may then possible go after your home and force you too sell it. The debt on the 2nd property is linked by the bank to your home.  They are not two separate transactions.  Talk to the bank and try to reach an amicable solution.


----------



## xxx (3 Sep 2009)

You should apply for Fis (family income supplement). You need to have payslips for 4 weeks showing you are working 19 hours per week. If you have 2 kids you will get 60% of the diff between what ye take home (exc childrens allowance) and 590 per week. This is paid into your bank account. By the sounds of things your weekly income is about 490 so you could get 60 or so every week paid into your bank account. Best of luck with it.


----------



## Slim (3 Sep 2009)

Firstly, I am very sorry to hear of your husband's illness. Hopefully, he will make a full recovery.

I would advise that you:
1. Pay off the credit cards. You may not get enough of a limit on a new card to transfer the balance especially as your income is now lower.
2. Sell the investment property if you can
3. Do NOT sell your PPR. Go instead to the Community Welfare Officer and ask the HSE to pay the interest on your ppr mortgage.
4. MAintain your mortgage protection policy and do not miss a payment
5. Go to MABS and discuss your finances
6. Apply for FIS as previous poster said.

Best of luck and good wishes to you and your husband,

Slim


----------



## asho (5 Sep 2009)

Hi Rotate

I totally agree with Bronte re handing back the property to the banks they are basically selling houses for anything they can get at the moment and are selling them at seriously knock down prices just to get rid so you will be liable for the difference.

I can understand you are trying to keep you're savings as you may need so just a little tip on the credit card issue.  I recently contact my bank and advised them that I was going to transfer my card to another back and they knocked the interest rate down from 15% to 5% there and then for 6 months so at least you payments will start to have some effect on the outstanding balance.  I read somewhere that if you just pay off the min balance each month it takes approx 15 years to clear it off.  The other alternative if you don't mind filling out forms etc is to transfer your balance to another card company and get 0% finance for 6 months.

Hope that helps a little bit.


----------



## rotate (7 Sep 2009)

Thanks for that. We have spoke with bank and they have been very helpful and understanding, so we'll see if we can try and settle everything out. Interest rates going up a bit has really made a big jump in mortgage payments. We have cleared one credit card and will do as you suggest and move the other to a new card or get them to lower the rate. Credit cards...never again


----------

