Interest Only Investment Mortgage problems

[loki_irl]

Hi, looking for some advice.

I have an interest only tracker mortgage with Ulster Bank for an investment property in Ireland that is now in negative equity. Hindsight, should have sold it, obviously. The mortgage was taken out by my late husband for 10 years due to his age/health, and he got a 5 years interest only agreement in 2006. I got an extension of 1 more year last year on top of that to continue paying interest only. I am renting the investiment property and the rent is covering the payments.

Now ulster bank are saying the mortgage is unsustainable and are demanding I sell the apt and pay the shortfall from my own savings. Which I really cannot afford doing as I am on a widows pension, and the little savings I have, I do not want to be left with nothing. I own my own home, with no mortgage. The alternative is to start paying the capital and interest per month, which again are totally huge amounts of money that I cannot afford.

I feel I am paying the IO mortgage to Ulster bank all the time no problem, but now is not the right time by any account to sell porperty, it just does not make sense to me at all. I would hope in the next few years I could sell this retirment investment at no profit/loss, (but who really knows) and would be happy to do so. Are they trying to force me off my tracker IO?

what are my options? Do I have any way of just continuing IO until the next 4 years are up and then sell it at loss/profit to pay off mortgage? Should I re-mortgage with my children on the mortgage, and somehow keep the tracker mortgage but start paying the capital too (over 15 years)?

any advise would be greatly appreciated at this very stressful time.

 

[KillianS]

Hi, looking for some advice.

I have an interest only tracker mortgage with Ulster Bank for an investment property in Ireland that is now in negative equity. Hindsight, should have sold it, obviously. The mortgage was taken out by my late husband for 10 years due to his age/health, and he got a 5 years interest only agreement in 2006. I got an extension of 1 more year last year on top of that to continue paying interest only. I am renting the investiment property and the rent is covering the payments.

Now ulster bank are saying the mortgage is unsustainable and are demanding I sell the apt and pay the shortfall from my own savings. Which I really cannot afford doing as I am on a widows pension, and the little savings I have, I do not want to be left with nothing. I own my own home, with no mortgage. The alternative is to start paying the capital and interest per month, which again are totally huge amounts of money that I cannot afford.

I feel I am paying the IO mortgage to Ulster bank all the time no problem, but now is not the right time by any account to sell porperty, it just does not make sense to me at all. I would hope in the next few years I could sell this retirment investment at no profit/loss, (but who really knows) and would be happy to do so. Are they trying to force me off my tracker IO?

what are my options? Do I have any way of just continuing IO until the next 4 years are up and then sell it at loss/profit to pay off mortgage? Should I re-mortgage with my children on the mortgage, and somehow keep the tracker mortgage but start paying the capital too (over 15 years)?

any advise would be greatly appreciated at this very stressful time.

I would suggest telling Ulster Bank that you will sell the property if they write of part/all of the negative equity to get you off your tracker mortgage. If the bank are the ones telling you it is unsustainable and you cannot afford it they may be willing to do something for you.

I wouldn't advise remortgaging as that will undoubtedly involve losing your tracker rate. If by adding your children you are just hoping to extend the term and reduce the monthly C&I repayment you will also lose your tracker. If you want to add them to the mortgage to start helping you with the repayments they can do that as it is now without being party to the loan.

Would it be feasible to move into the investment property and would you obtain a higher rental income from your current unencumbered property to put you in a better position to afford the repayments?

There are a lot of variables to this, I'd certainly suggest meeting with UB and trying to thrash out a compromise. The fact that you have a tracker mortgage is in your favour and they may be willing to buy you out of it to some degree. Hope this helps in some way..

 

[loki_irl]

Thank you for the reply, you have answered some of my important questions/

It is clear that I will have to have a meeting with ulster bank. If there is anyone else in this situation with experience that would help to find out what they did. Or if anyone has any other ideas that would be great.