900k of mortgage debt & really struggling


I've done this as best I can based on what you've posted, can you go back and fill in the blanks and make corrections.

You may have to default on the 2 investments and concentrate on the PPR, but do the figures please.
 
I think we have pretty much all the info we need.

Approx €12k of the €48k expenditure would be on cars, utility bills etc (roughly €36k on mortgages, childcare and personal loan).

This €12k could probably be lumped in with the €180p.w. leaving about €20k p.a. disposable income per annum after loans & childcare.

There is no way that will cover the capital repayments on investment property 2, even if all discretionary expenditure was cut out. So step 1 has to be to renegotiate interest only for an extended period - a no brainer.

The PPR loan is the most positive aspect of the whole deal. At less than €800pm, you'd pay more to rent so continuing with this is another no brainer.

Finally there is a need to assess whether they can continue to live on the current budget or whether they are living so frugally that they'd be better off on the dole. It's clear to me that the best source of additional disposable income would be to go interest only on all 3 properties (this would free up €7k p.a. in repayments on the first investment property).

I see no logic in default when interest only repayments are affordable leaving a reasonable disposable income to live off. If they can start to contribute to the capital repayments to some extent all the better.
 
DerKaiser said:
I see no logic in default when interest only repayments are affordable leaving a reasonable disposable income to live off. If they can start to contribute to the capital repayments to some extent all the better.
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But long term is it sustainable, OP wanted to know how if things stayed as they are how would he pay back capital?

Also banks are playing ball now, not putting interest on interest etc but will they do this forever. Not nice being subject to the whim of banks.
 
Bronte said:
. Not nice being subject to the whim of banks.
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To be fair I see no evidence here of any approach to the Banks by OP. The core problem is the ability to meet P&I repayments on the 2 investment mortgages. My previous advice to the OP was to approach KBC and request that the monthly repayments be reduced to the level of the net rent. The Bank should not have an issue with this, but may insist on 1 or both properties being put on the market, given that a return to full monthly repayments appears unlikely.
I don't see this strategy as being unfair!
 
Bronte said:
I've done this as best I can based on what you've posted, can you go back and fill in the blanks and make corrections.

You may have to default on the 2 investments and concentrate on the PPR, but do the figures please.
Click to expand...


Principal Private Residence: husband and wife BOS
Interest rate:1.5 over ecb
Term remaining: 32 years
Balance €485,000
Value: €305,000
NE: 180K
Mortgage (IO) is €790 per month
Mortgage with capital: it's IO for entire term.

Investment 1: Husband
1 bed Apartment - KBC - annuity - tracker 1.1%-
Rent= €825
Mortgage = € 1145 - is this interest only? No.
Mortgage with capital: 1145
Term 30 years remaining 25yrs
Amount outstanding: €255,000
Value: 175k
NE: 80k

Husband: Investment 2
2 bed apartment in England, KBC,
Term remaining 14 yrs.
Tracker @ 1.45%.
Balance: £166,000 (265k euro)
Value: €205 in £ ? Yes
NE: €50,000 in £? yes
Rent = £600
Mortgage (IO?) = c.£265
Mortgage with capital = £1300
Fees/expenses = £125
Total costs €390 plus taxes
 

Investment 2 was to go P&I last August. Filled out income and exp sheet and they gave me another year IO.

Been away with work last week so only started to draft letters and data for bank
 
Principal Private Residence: husband and wife BOS
Interest rate:1.5 over ecb
Term remaining: 32 years
Balance €485,000
Value: €305,000
NE: 180K
Mortgage (IO) is €790 per month
Mortgage with capital: it's IO for entire term.

Investment 1: Husband
1 bed Apartment - KBC - annuity - tracker 1.1%-
Rent= €825
Mortgage = € 1145 - is this interest only? No.
Mortgage with capital: 1145
Term 30 years remaining 25yrs
Amount outstanding: €255,000
Value: 175k
NE: 80k

Husband: Investment 2
2 bed apartment in England, KBC,
Term remaining 14 yrs.
Tracker @ 1.45%.
Balance: £166,000 (265k euro)
Value: €205 in £ ? Yes
NE: €50,000 in £? yes
Rent = £600
Mortgage (IO?) = c.£265
Mortgage with capital = £1300
Fees/expenses = £125
Total costs €390 plus taxes


You have a 32 year IO mortgage on your home which you love -790 pm
you have a secure home to live in for the next 32 years at 1.5% above ecb on 485k - I would love that kind of security - In 32 years 485k euro may look like small potatoes.Inflation will be your friend. When your term is up simply sell the house and pay back the capital,there may even be a nice surplus.

Your investment 1 is being paid in full and will be totally paid in 25 years
your contribution to paying the difference between rent and repayments on this mortgage 320 pm consider this as a savings or pension figure .
In 25 years this property could be worth more and even if not it will be a great cash positive asset.


your investment 2 should be sold to make your life less complicated and any profit used to reduce any unsecured debt or put it aside for a rainy day.

I think you need to forget about the current values of the properties and realise your situation is really not that bad .
Id love to see your household income and expenditure , dont understand how your struggling on 57k pa net ,have a look at my situation and see what mess in in .
 

I think on my PPR the question i have been posing is - suppose the house is worth less or the same or I have 250k left outstanding on that loan. I should be retiring as will my wife with little or no pension. You suggest selling the house - where do you propose we go?

Investment 1 is a drain on our funds. I am adding 320 per month to the mortgage but I am also paying HHD Tax 100, NPPR 200, Management fees 1300, tax on income is c. 1200 throw in another 1000 for maintenance and repairs. I would love to keep it as its a great apartment just down from where we live. Its beside the DART and always rents within the first week or two. It was purchased with the intention of being a pension.

Investment 2 will leave me in NE of 50-60k. I dont think bank will allow this sale to go through....I have filled out my forms and am submitting to the bank this week.

57k net last year. Earnings for me this year until up to end Feb are 4500e Gross - Net about 2250. I am self employed and business has dried up very fast. This year that 57k will be 40-45k (joint). I would be better off on the dole....Dont think I am entitled to dole though.
 
Well I suppose its a judgement call -
would the house in 32 years be worth more than 485k in todays money ?
personaly I think it would, but its totaly up in the air though .
Would I be happy living in a house I like for 790 pm for 32 years- hell yes !
Between your (PPR) and (investment 1) your on the hook for for circa 1450
790pm + money being diverted to investment1 650 pm avg
.
I think your situation is very sustainable on properties PPR & investment 1.
For example : After 25 years you will have investment 1 fully paid and mortgage free producing a regular income and 7 years left to run on your home IO term.
Even if the home is worth 485k at time of maturity you can sell it and live in the appartment mortgage free or sell apartment and rent, Or live off proceeds - lots of options.


The English property has to be addressed first
If you want to try keep the property :
Make a proposal to the bank that you can continue to pay the interest, and any balance left over from the rent will
be paid against the principal, after managment fees insurance etc are deducted.
If the bank dont accept these reasonable terms inform them that this is the best offer you can make in the current circumstances and you may have to default on the mortgage otherwise.

IF YOU WANT RID OF THE PROPERTY:
Tell the bank you want to sell the property for whatever it acheaves in the current market and you will give them an unopposed judgment or a loan for the shortfall.
Further negociations can be done after property is gone on the payment of the loan . ie - extended terms , writedown etc.
If the bank refuses to accomodate any plan of action.

Stop paying anything ,( mortgage) and put any rent recieved into a fund and wait.... and wait... and wait ..and keep building up some reserves of cash
to face the inevitable repossesion ,could be 1-2 years.

I feel your pain about being self employed , I was self employed 1998-2010 went looking for help when things blew up and went through the whole social welfare interviews etc
only to be told I get nothing as my partner earns over 400 pw No Fas ,NO Bluebrick courses ,no re-training help , absolutlley nothing !! I CONFRONTED MINISTERS QUINN,Bruton, by email and
got fobbed off by Quinns office only RICHARD BRUTON gave any assistance ,he looked into it and agreed its a terrible anomolly in the system and said joan bruton may bring
in some changes in the budget but alas NOTHING, He called to the door the other day and I confronted him again ,In fairness he took details again and said he would be in touch... see what happens
If your not on the register your not getting in !

Can you re check your figures for the English property maybe put everything into euro VALUES STERLING/EURO SEEM OFF.
 
Wipetheslate said:
Can you re check your figures for the English property maybe put everything into euro VALUES STERLING/EURO SEEM OFF.
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Investment 2
2 bed apartment in England, KBC,
Term remaining 14 yrs of 20
Tracker @ 1.45% I think
Balance: €219,000
Current MKT Value: €170-180
NE: €50,000 i
Rent = €790
Mortgage (IO?) = €270
Mortgage with capital = €1700 (from aug 2012, unless other agreement is put in place)
Monthly Tax,Fees/expenses/Mgmt Co etc = €288

At present there is a slight excess of c.€230. I have had several months in the last few years where tenants have done a runner, refused to pay rent etc and as such Management Co etc have not been paid. actually, now that i think about it, approx 4 yrs ago I was in arrears of 7-8k£ on the mortgage. I had taken my eye off the ball and the Direct Debit was not coming out of the account but I was getting some rent. The bank were writing to me directly to the property re arrears but obviously i never got the letters. Proceedings were issued and I was summonsed to court in UK. I phoned the bank solicitor and pleaded with him not to repossess. I paid a lump sum off the 7-8 k with the remainder paid the following months. Got hit with a 2k legal bill that was added onto the mortgage. I probably should have let it go then...anyway, I'm rambling...in short the excess of 230 is being paid to the Freeholder and Mgmt Co. thats 180 per month. So a whole €50 is profit!!
 
If I was in your situation I would pay the interest on the PPR and continue to live there ,pay full payments on Investment 1 and be happy in the knowledge that It will be your in 25 years .

I would direct my energies on extracting myself from the Investment 2
take your pick which way you want to go about that.
I think If you can get rid of the uk property you should be fine ,even if you have to pay token ammount to a loan for the balance of what you sell it for and what you owe .

By the way I get 8 k per year tax free from renting a room in my home to a mature foreign student ,(I have 2 kids and they are picking up Italian for free ) This may be an Income stream you could look into .
PS.
Cancel private health insurance ,not worth it IMO, review all insurances & life assurance & critical illness etc a good broker would be happy to review things for you to fine tune benefits v costs.
Consider giving back cars on hire purchase under the half rule and downsize iF POSSIBLE ,you can get a perfectly good used car now for 1000.
Get a saorview/freeview tv box and get rid of sky/ntl
Make sure your family mobiles are on the same network which offers free calls text to each other if possible.
Order an extra Green bin from greyhound /panda and reduce the number of black bins you put out ,green bin pick up is free, you would be supprised how much can go to green if you try .
Im sure more people will have money saving tips and remember make sure you know where every hard earned euro goes and not to just give it away for something you dont need .

Good Luck with everything .
 
Just to give you all an update...

I have submitted my SFS to the bank for Investment 1...I am waiting to hear back but id say they will suggest either IO for a year or take the rent less tax and fees....Kicking the can down the road me thinks.

On another front..I got word that my employment contract is now terminated with immediate effect....I am self employed so I will be starting another thread to find out what I am entitled to through social welfare....
 
Sorry to hear about your job. I think this changes everything, simplifying it to an extent.

The theoretically correct course of action would be to offload the investment properties and cut a deal (writedown) with the banks unless you get another job quite soon.
 
Just an update.

It looks like KBC will suggest a payment of C&I of €700 per month on the Irish RIP. Thats down from €1,150. The rent less the service charge is €700 so I just pay the tax.

They will review on a month to month basis. It does not cost me any money from my pocket for now (aside from the tax) so it is manageable (unless tenant refuses to pay or moves out etc).

The RIP in the UK is up for review in August.

My wife is able to maintain (for now) the IO payment on our PPR.

On another note... I have found KBC excellent to deal with. I am able to sleep at night for now!

Currently seeking work at the moment and a visit to the social welfare office to see what I am entitled to tomorrow. Don't think I will get anything as self employed....

That's all for now.
 
Glad to hear you've got a little breathing space to get yourself in order.

3rd Gen said:
Currently seeking work at the moment and a visit to the social welfare office to see what I am entitled to tomorrow. Don't think I will get anything as self employed....

That's all for now.
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You will be means-tested on total household income and assets, so whether you get anything will depend on your spouse's earnings. As an aside, have you looked into FIS?
 
3rd Gen said:
Just an update.

On another note... I have found KBC excellent to deal with. I am able to sleep at night for now!

.
Click to expand...

Well that's good that you've posted that a bank are excellent to deal with. Good for others to know. Glad you're sleeping, most important to not let the stress take over your life.
 
over 32 years the rental income from your investment properties will also likely rise and rise and provide a very good form of income, and every bust era is followed by an era of prosperity (albeit probably many years to come still)
 
Great advice from everyone, but it's one sided, only looking at your outgoings on the mortgages.. What can you do to increase your income? it seems if you can earn an extra 30-40k per year you're back in the black as per your original investment plans, no?

Take a hard look at your business, it's model, what you can do to imrpove it, grow the business. There's money out there. be a fisherman, not a farmer.
 
UPDATE 12 Months Later

Just wanted to give an update on where I am at the moment.

I've been on rolling agreements with KBC on the 2x RIPs paying IO on the UK property and IO & part capital repayment on the Irish property.

The Irish property is up for review and they currently have offered me a 3yr deal on THE SAME BASIS / agreement as the last year. The money that's not being paid off is accruing interest and the cost of that interest is €4500 approx.

The Uk is up for review again in 6 months and I assume they will ofer the same deal.

My wife and I are paying €250 every 2weeks off our PPR.

I am in full time employment now with a salary of 40k ( thank God)

I have not yet signed the agreement with KBC and would welcome some feedback on what they have offered.

Thanks to one and all for the support and advice.
 
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