Any opinions re mortgages and arrears please.

L

lylolil

Registered User
Messages
8
Hi,
Like lots of people I made some very bad choices in 2006. I owed a small cottage in Dublin at the time with a mortgage of €166,000. It was one bed very small and my partner and I decided to buy outside the city in Kildare as it was closer to work for him and would cut his commute in half and we couldnt afford a bigger place in Dublin anyway.

The mistake made was to remortgage the cottage with INBS as interest only mortgage for 230000 to help pay and furnish our new home in Kildare for which we also got a mortgage of €250000. At first things seemed fine. The rent on the cottage covered the mortgage and we planned once we got sorted to convert that interest only to a proper capital one and foolishly thought it would be an investment for old age.

Fast forward to today. My partner walked out in 2009 and refused paying any further on either mortgage. I needed to supplement the rental property in dublin plus now cover all payments on ppr myself. IBRC gave interest only for a year then refused anything further. I then went into arrears on both as a tenant left and I prioitised paying my home.
My ex's only engagement has been to demand the house is sold but one is in €100000 neg and the other €130000 neg equity. Neither I nor he have any way to pay the shortfall as my credit history and savings are both toast. I have rented rooms in my house and when I finally paid my car loan this February I could just about make the payments again. I have about 5000 in arrears between the 2.

IBRC have now written saying they are moving to repossess the rental cottage. I have asked for any other solution to which the reply was "yes just pay it". I would love nothing more then see that house disappear from my life as it has truly ruined it and has made these last years a mental hell. I have engaged with them since before I hit problems , if I sneezed I wrote and told them. I just would love some opinions on what to do for the best. I have tried to meet all obligations but in the end I know in 7 years that interest only buy to let mortgage will fall due and the house will never be close to covering whats owed. Its an old cottage and I live in fear of a call about repairs or replacement cookers etc being needed as there is no money to fund that.

I should mention the bank did offer to capitialise the arrears about 6 weeks ago but as they couldnt get engagement or agreement from my ex that could not proceed and the repossession letter was issued.

Am I better to surrender it now or keep on trying to pay?

Thanks
L
 
Please copy and paste this post into a new thread. If you give comprehensive information, it will maximise your chances of getting comprehensive and useful results.


Income details
Net monthly (i.e. after tax) Income self: nature of income e.g. self-employed/public servant etc €2,800 net no spouse or children


Personal circumstances so we can calculate your reasonable living expenses
The Insolvency Service has published Guidelines for reasonable living expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.
One adult family or two adult family. One adult
Do you need a car for work or do you use public transport? Yes need a Car
Number of children 0- 2 years old: No Children



Home loan €250,000
Lender: INBS/IBRC
Amount outstanding: €225,000
Value of home: €140,000
Interest rate: SVR about 3% I think
Monthly repayment €1,095
Amount in arrears €1,900
23 years left

Summary of discussions and agreements with the bank

Partner left and then stopped paying anything towards both houses.Bank allowed interest only on PPR for about 12 months. Interest only ended in January 2013 bank would not renew any further and I fell into arrears. Rented a room finally in April 2013 {€320 p/m) and have been able to make full payments since.

Investment property
Lender: INBS/IBRC Interest Only
Amount outstanding: €235,000
Value of home: €90,000
Interest rate: 3.5
Monthly repayment €1,135
Amount in arrears €3,1500
Monthly rent received €670
7 years left

Making full repayments now since April 2013. Loss of tenant for a number of months caused arrears.

Credit Union
Amount of shares
Amount of loan outstanding
Monthly repayment
Term left


Other loans and creditors - delete those which don't apply to you

Credit Card - amount outstanding €2,690
Credit Card - monthly amount you are paying €100

Other savings and investments None

Do you expect any lump sums in the medium term future?
Redundancy, inheritances, injuries awards. NO


How important is retaining the family home to you?
I would like if possible to retain the home as I know I will never get another mortgage and this is my only chance now to have a home of my own

Which of the following best describes your situation?

I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.


Any other relevant information

These mortgages where taken out with my then partner. The investment property, which was our former home is in my name but with my ex partner as guarantor. The PPR is in joint names. Partner as not paid a penny since 2011. He wants the PPR sold but I cannot meet the shortfall and he only works part time and has health issues so I know he could also not meet any shortfall either. If sold I believe I would be left being responsible for entire shortfall and also no home. Ex Partner has demanded to come off the deeds of PPR but bank has refused.Ex Partner now will not engage with bank and so I couldn't get the capitalisation of arrears they offered. Bank has now issued letter for repossession on Investment property.

What is your preferred realistic outcome
To rid myself of the bad investment property, without it i could easily make payments on the ppr. It is an old house and is costing alot in maintenance, It is an interest only loan and when it falls due 7 years from now I will have no way of repaying shortfall. Do I surrender it now or keep trying to make all the payments .
 
You are both liable for the two properties. But you are correct, if he has no income or low income they will come after you for the shortfall.

Your NE is 110 + 145 = 255.

What has the bank told you will happen to the shortfall of 145 on the investment property? They will try and get it off you. So if the cottage is sold, you will have to repay that as well. You've an income of 2800 + room of 320 = 3120. Mortgage is 1135. But in additon to that you are 'subsidising' the investment to the tune of 465 a month. That is the figure the bank will probably seek to get from you monthly. Now is that worse than your current situation. Actually it's better, because you don't have to deal with a property that has endless problems, no issues with tenants anymore. Also you don't have the money to repay the loan in 7 years, plus your ex is tied to you on it, and you can be sure it's costing you more than the 465 a month. That's because there are other landlord costs in addition to the repairs, PRTB, LPT etc.

You need to find out what the bank intends to do? And of course the shortfall will be larger because their are legal and auctioneering costs.

Important to point out that there is also a problem in relation to the PPR, your ex remains on title, while you continue to repay the mortgage. Not a good situation, but if the bank won't allow your ex off the deeds what can be done.
 
Renting two rooms in your ppp will net you 600 a month.

Your total payments are then close to 1k. That sees perfectly manageable on am income of 2800. I don't see the problem tbh.
 
I am inclined to agree with TommyB

Income 2800+670+300 = 3,770
Repayments 1095+1135= 2,230

Income after payment 1,540 This is with your accommodation paid

As for the end of the IO in 7 years, well things may be different in 7 years. Either or both properties may have recovered in value. You might get a pay rise. You might rent that second room.

It seems to me that you have a realistic option to keep both properties. It would be a struggle but a good outcome looks realistic.

You would need to get legal advice to ensure your ex does not reappear and look for a share of the properties then.
 
Thanks for the replies much appreciated.
It was a long struggle to get one room rented as its not the most sought after area. The box room is very small but im certainly open to rent it if possible.

The cottage is a drain of resources constantly id like to be optimistic but can't see a one bed little place recovering to ever be worth that value again.

Bronte the bank would not clarify how they expected the shortfall to be cleared. Its IBRC and they dont seem interested in dicussing anything with the sell off looming. Soon I'll be another institutions problem which im really afraid of.
 
lylolil said:
can't see a one bed little place recovering to ever be worth that value again.
Click to expand...

Well that's a mad idea unless we have another bubble, your property would have to go up by 160% to recover value.

Don't be afraid of the unknown, so far we haven't had any real doomsday scenario for anybody. I think selling the cottage will be a big relief.

Personally I'd move into the box room and rent your room, I've done worse than that myself. I moved my OH into the garage for a summer in order to rent out the house to make money while I worked a summer job. He wasn't too happy when the holiday renters decided to open the garage door one day to find him in bed. But we laugh about it now.

I've been around long enough to know not to be afraid, there will always be a solution. But you have to take it one step at a time. If the bank are not being clear to you, how about you asking them what they intend on doing. Though I wouldn't be surprised if they haven't thought that far yet. You are but a number to them.
 
Definitely move into the box room and rent out the best rooms in the house. The rent for the cottage seems a little low for Dublin in the current market.
 
Thanks Bronte, I think your right.
Selling the cottage would be a massive relief. The constant waiting for the phone to ring with another problem about applicances or maintenance not to mention the taxes, insurance on it hasn't been good for my mental health. When two of us where dealing with it maybe but now that I've been left holding the baby for both houses its not worth it and nothing to be gained battling on I think when the outcome ppears to be facing the shortfall now or 7 years down the road when any gain in value will have been spent anyway in what I'll have put into it.

I'm not precious, I'll take the box room. I've already gave up my room to the current person I'm sharing with. All I want is some peace of mind.

As my ex is guarantor on the cottage will there be any implications for him with a sale and a massive shortfall? Also I know I'm paying the cuurent PPR with the prospect of them coming back and having a claim years from now when any equity in it returns but with the bank refusing to allow them come off the deeds I can't see another way around that?
 
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