Case study Approach our lender and get some of the debt written off: Realistic Outcome?

Personal and income details
Income self: 28k gross
Income history: in my current role (same salary) for 5 years
Income partner/spouse: 53k
Income history: same employer for 7 years. Salary has increased lately.
number of children: 0
Amount of Mortgage Interest Supplement received: not sure
Home loan
Lender: prefer not to say
Amount outstanding: 283k
Value of home: 120k
Interest rate: specify whether tracker or SVR or fixed rate part tracker, part variable
Monthly repayment 1100
Amount in arrears 0

Summary of discussions and agreements with the bank:
N/A



Other loans and creditors - no other debts
Other savings and investments : none really


How important is retaining the family home to you?
Not at all. We are currently stuck there and wish to get out.


Any other relevant information: nope

What is your preferred realistic outcome?
Approach our lender and get some of the debt written off.

This post will surely get some negative responses.
We bought the house as a starter home in 2005 for 320k. We still have around 283k of the mortgage outstanding and a similar property beside us has just sold for 120k.
We don't like the house, don't like the estate and I work in financial services so my future earning prospects look poor to say the least.

We can afford the payments but my opinion is that I don't want to. We were victims of the past governments mistakes and a global financial crisis not of our creating.
We would like to move to a nicer home but unless we can get some debt written off we would be looking at a mortgage top up to bring us to over half a million in debt. So we would most likely be dead before the new house is ever paid for.

I am sure some will start pointing out that we bought the house so we should shut up and pay for it. To be honest I don't see why I should spend the rest of my life in debt while a lot of the people who contributed to the problem haev retired with pensions of over 110k!

Anyone here ever had any experience of approaching the lender and looking for a part write off? They could make more money off us in the future with a new mortgage without a tracker part to it ( I'd imagine) rather than leaving us stuck in a house with 160k negative equity.

We want to get married and start a family soon but under our current circumstances (facing a lifetime of debt) we don't feel able to do so.

You have an income of €81,000
You have a mortgage of €243,000
Part of this is on a tracker rate, so the interest on your loan is probably around €10,000.

You will not get any write-off from any bank. There is a small possibility that Bank of Scotland might do a deal as they want to exit the market, but I presume you don't have the cash to do a deal? Banks do allow people to carry their negative equity, but I don't think you would qualify on your income and the amount of negative equity.

You have a few options.
1) Save hard to reduce the loan amount and hope that an increase in prices might eliminate your negative equity. Because you have a part-tracker and because interest rates are low a good bit of your monthly repayments is actually a repayment of capital. This increases every year.

2) Let out your house and rent something more suitable elsewhere. I don't think that this is a good idea as it pushes up your annual costs of housing and makes a solution to your problem further away.

I think you should focus on reducing the negative equity as quickly as possible. If you absolutely have to move before you have it paid off, let the house and rent elsewhere.

There should be no negativity in asking the Bank to agree to a write-off. Unfortunately for you, you are not in a strong negotiating position given your ability to meet loan repayemnts at the current mortgage level. All of us who own property have suffered a significant fall in value as a result of the decline in values. Whether the Banks have a moral obligation to write down high mortgages is a completely different arguement. By all means approach the Bank, but without the offer of a lump sum to take out the bulk of this mortgage, I see your chances of success as slim.

Thanks for the replies guys.
Savings of probably only around 13k which will most likely go towards a wedding whenever we can afford to do it.
Also a new car is needed :mad:
Renting it isnt really an option unfortunately, surplus of accomadation in our area. As far as I know that would change the mortgage type from residential to a buy to let so would lose the tracker?
It's very frustrating so just said I'd see if anyone here had ever had a similar situation and managed to get out of it.

So if we managed to get a lump sum of say 20-25k would it be a possibility in anyones opinion?

So if we managed to get a lump sum of say 20-25k would it be a possibility in anyones opinion?

Click to expand...

Only if it was Bank of Scotland. But still would not be enough to clear a 160k shortfall.

Brendan

I'm not sure what you have in mind in respect of an approach to the Bank. i.e. you could knock 20/25K off the loan in a lump sum, but this will not benefit the Bank, unless there is a high probabiity that you cannot continue meeting the existing loan repayments on the facility. Any deal put to them, should involve a full take-out of a significant element of the current loan, otherwise it does'nt make commercial sense from their perspective. Currently you are not regarded as a potental defaulter and while you could stop meeting your loan repayments to try and force a deal with them, this would be a high risk strategy, as you will have no alternative option of obtaining finance from another institution. I'm afraid you will just have to put up with the current situation unless your financial position changes significantly!!

I am dealing with a similar situation but just ask yourself if you were the bank and were approcahed with the above scenario would you forego 25k???

not a hope but note the 120k could have been a fire sale. and your home could still be worth a lot more

The way I look at it is - if the lender wrote off some of our current mortgage and gave us a new bigger mortgage (which would be without a tracker), they may actually make more money off us than they would by holding us to the curretn agreement.
Hypothetical really as there would be a lot of figures that would need to be looked at. Just wondered if anyone in here had had a similar situation.
Best of luck with your situation Noah. As far as the fire sale thing... possible, but one sold for about 140k a year and a half to go so I'd reckon it's not too far off the mark.

Hi Brendan,
From my experience BOS are not doing writedowns on family homes. Has this changed?

As regards the OP, I don't there is any chance of a writedown for now. What I have heard some banks do is put 25% of the debt on 0% interest rate and the balance is left on full repayments. This reduces your monthly repayment and you are still paying off your loan.

But your income is too strong for any type of writedown at present.

MrOutraged said:

The way I look at it is - if the lender wrote off some of our current mortgage and gave us a new bigger mortgage (which would be without a tracker), they may actually make more money off us than they would by holding us to the curretn agreement.

Click to expand...

The objective is for the banks to reduce their exposure to private property and spread their risk more evenly across other sectors, so given you a bigger mortgage is not going to get them there!

posted by accident - sorry.