7 years left on mortgage and struggling with credit card debt

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desmond22

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I am a BOI customer since 1969, I have never defaulted on a loan of any kind over those 45 years. I have a good company pension but still have another 7 years to run on my mortgage. I availed of early retirement from my job in 2004 but a few factors in making that decision have not worked out. The key factor that did not work out was I thought I could avail of equity (there is a minimum of positive equity of €130K after the outstanding balance of €40k is cleared) from my house at age 60. I found that out when I reached my 60th birthday that it was not an option because there is an outstanding balance on the mortgage. Unfortunately I let my credit card run up to €10k coming up to my 60th birthday 3 years ago to find that equity from my house, e.g., Seniors Money, was not an option.

I will be able to draw the State Pension in 3 years from now and my wife the "dependant" equivalent amount. In the interim I am struggling to pay the various loan amounts. In addition to my mortgage €577 per month I am currently paying €396 per month between a term loan from BOI, Avant and Revenue (tax arrears settlement). Ideally I would like to borrow enough to clear those balances (circa €15k) in one loan over a longer period or in some way get equity from my home to do the same. I would like to restructure my financial situation but I have been told banks will not loan to pay off credit cards. Is this true and if so does anyone have a suggestion as to how I might resolve my situation. Thanks.
 
Do you have a credit union account? They might look more favourably on your predicament if you have an income at the moment, maybe I am not reading it properly but not clear what your present income is.
 
credit card and term loans restructure

My income after tax etc is €38,800 and I do not have savings or credit union account.
 
desmond22 said:
Ideally I would like to borrow enough to clear those balances (circa €15k) in one loan over a longer period or in some way get equity from my home to do the same. I would like to restructure my financial situation but I have been told banks will not loan to pay off credit cards. Is this true and if so does anyone have a suggestion as to how I might resolve my situation. Thanks.
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Have you actually approached any bank for a loan? From what you say I don't think you have, it may be worth actually talking to a bank and asking the question.
 
Open a credit union account and start saving something, they might be a good option if all else fails.
 
It's very difficult to give much meaningful advice without the full story. I suggest you complete this:

Standard Format for mortgage arrears and negative equity case studies

It appears that you have a SVR mortgage. Of the €577 a month repayment, around €400 is capital. You should not be paying off the capital if you don't have the money to do so.

The bank should be delighted to switch your mortgage to interest only. They keep a secure loan which is paying a profitable interest rate. Unfortunately, I have been unable to get the banks and the Central Bank to see it like that.

I suggest that you approach the bank and ask them to allow you to switch to interest only long term. It will cost you only around €150 per month to service the interest. You can use the money you are not paying on your mortgage to pay down your more expensive credit card debt.

I don't think that the Credit Union is a good idea. As a new customer, they will probably insist that you keep money in shares while borrowing. This puts up the effective APR to around 16% and much higher later in the loan.
 
Brendan, I agree with your proposal to Desmond to seek interest only long term but wouldn't be hopeful for positive reply.

I would be in a similar situation but with different amounts but with SVR Mort , positive equity, other creditors, 7 yes left on Mort , on pension , 6 yrs older

I requested interest only for a few years to pay off unsecured debts but was informed emphatically that my mortgage is sustainable and it is my priority and must be paid fully. I was advised to negotiate with other creditors which I did and have reduced repayments.

But it means those repayments lasting on into my seventies ! plus paying mortgage til 75 (20 yr mortgage in 2001)

Why will banks not allow interest only when there is equity in house and a willingness to pay it and not looking for any write downs , write offs or losses of any type to bank?

My repayments to all concerned all stretching my purse, my mind and my health so much that I am on the brink of selling and go rent . It's all too much.
 
My mortgage is with EBS rather than BOI and I did get interest only for a period of 6 months 2 years ago but they refused an extension of that facility when I applied. I would still like to know whether a bank will loan to clear a credit card debt. Thanks
 
Unlikely unless the credit card is with the same bank, banks will not take on other's banks debts in general in the present climate.

Actually just notice that your card is with Avant, then it is unlikely that BofI or EBS will give you a loan to clear it.
 
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