Considering selling house with negative Equity

Hello,

I am hoping to get some advice on options available to me - feel like I am getting deeper into dept and need to do something ...

Personal and income details
Income self: PAYE worker - 60,000 PA
Income history: In current job 6 years
Income partner: none
Number of children: 0

Home loan
Lender: KBC
Amount outstanding: 238,000
Value of home: 120
Interest rate: SVR 4.25%
Monthly repayment: 895
Amount in arrears: none

Summary of discussions and agreements with the bank:
Currently on a 1 year Interest Only arrangement since last August (completed the SFS)

Other loans and creditors
Credit Card - 3,000
Car loan 18,000 @ 10.6%

Other savings and investments
None

Any other relevant information
I bought the house back in 2006 with the intention of living it in ... 6 month later I was made redundant from my then job and had to relocate to get another job.
Since then I have been renting the house for an average rent of 110 euro per week ... unfortunately I have had a high turnover of tenants and am constantly putting money into the property.

What is your preferred realistic outcome?
Sell the house and get the shortfall written off.

Other Information:
Last week i approached the bank to better understand what options are available to me, and to determine if they would have an issue with me selling the house.

KBC do not have an issue with me selling the house, but require an agreement to be signed pay off the shortfall (over the remaining life of the mortgage and at the same interest rate - so in my case 28 years @ 4.25%)

Whilst this would at least mean that I would no longer have to be dealing with difficult tenants, or having to put good money after bad into the property the thought of paying off on average 400 euro a month and not having a house is not something that appeals to me.

I asked if KBC would consider writing off a certain percentage of the shortfall (meet me half way so to speak) and this is not there policy.

I discussed various options with them from handing back the keys and implications of that, to moving to the UK and filing for bankruptcy there.

I don't know where to go next with it ... so I would appreciate any feedback or advice.

I am surprised KBC agreed to sell and put the (loss) on an unsecured basis. If they do this, I would go for it. @ least you stop the rot. Also if matters get bad in future you can then apply for Personal Insolvency .When the (new) personal insolvency comes in , cases like yours will be clearer but there was a good article in yesterdays Sunday business post.try FRost debt management 0749364000 for initial advice as I am told they are up to date on this.

Thank you for the response salmon9077 !

I agree that it is a good way to stop the rot and like you I was surprised that KBC said they wouldn't have an issue.

Do you have any link to the article in the Sunday Business Post? I would love to read it.

Another option I would consider is relocating to the UK and file for bankruptcy there. The question I would have is does it make sense to sell the house before I would do this, or am I just better off to go? Are there implications on a pension if one is to declare bankruptcy?

Hi JMS,

You seem very unfortunate to have bought a property at the peak of the credit bubble AND then made redundant.
But you made the right decision and moved to find work and have been employed since - so well done on that.

KBC have offered to agree to sell if you pay the balance left over. I know it would seem weird to have to pay back the money you borrowed - some other banks dont seem to even offer this.
You should agree to it, cut your losses and move on.
Do you really need a car worth 18k? can you sell it and buy something more economical ? then throw that money at the loan to bring it down further.

Difficult and tricky one actually. Your case is not particularly that bad so any decision needs to be proportionate. In an ironic sense easier for someone who is hopelessly insolvent to make a decision but you are not.

Fact is you seem to have a good secure well paying job so I would be very careful about doing anything which threatens that.And particularly after the redundancy do you want to go through a period of turmoil again? That's the difficulty with the uk option and indeed the insolvency option may not be a great one for you either as it may severely limit you and our spend. If you go to the uk how will future employers view your bankruptcy? Does this have an impact, can you get a similar job/pay as current? Your call on this.
Sounds to me a number of things need sorting. Firstly there seems difficulty in renting. Why is that? Is it bad location or are you not experienced and cut out to be a landlord? If possible work hard at the rent or get an estate agent to help though there is a cost. Still they may do a better job than currently so worth talking to one to see what the options are.


Unless KBC do a deal I would not be inclined to sell just yet. It will put a heavy debt burden on you for 28 years and may likely impact your possibility of getting somewhere in the future, perhaps when your settling down. So don't rush in to selling just yet. Try to work out the current house by seeing if you can do a bet job on rents and particularly cutting down the vacancy period. May be worth reducing rent modestly to get a long term tenant. Also agree with prior comments on car loan.