DCC SO has asked me if I wish to switch to a 100% mortgage?

S

Sinbad311

Registered User
Messages
40
Hello,

I am hoping someone could shed some light on the following for me please.

I purchased my SO house in 2010 for 232,000 euro. In 2011 I lost my job and fell into arrears of 21k (was paying a few hundred each month). I have since returned to work and have been repaying full mortgage with a little extra each month for the last 12 months but not enough to make a real dent in arrears.

On Friday I received a letter from DCC asking if I would be interested in switching to 100% mortgage. Not sure if this a generic letter sent out to all SO mortgage holders or if there actually is a real chance for me to switch to 100% mortgage and perhaps capitalize the debt.

Maybe it's a pipedream that the council would make such a gesture and help me remove this 21k noose around my neck by adding debt to "new mortgage".

Has anybody any experience in this? Or could someone give me an educated guess as to what my options are regards 21k debt and rising annual rent that effectively makes it even harder to repay the debt portions.

Thanks in advance,
S.
 
Hi Sinbad,

Afraid I can't answer your question but it too got the same letter on Friday about transferring to 100% so I'm wondering have they sent it to all people on Shared Ownership. I bought my house in 2009. I wonder is there a reason they are sending these out now?
 
So in that case maybe it was sent out to all SO mortgage holders with a minimum number of years under their belt. Im gonna buzz them today to see where I stand. Will keep you posted.
 
Hi Sinbad

I think that the arrears bit is irrelevant here. Did you read my Key Post on Shared Ownership? From this you will see

"Should I transfer the rental bit to a council mortgage?"

Probably not.

The interest rate is the same on both the rental loan and the mortgage, assuming you have your mortgage with the Council. So I don't see that transferring it makes any difference?

If the Council keeps some of this notional "ownership" you don't have to pay the Household Charge. This could be very significant if the Charge rises to €1,000 as it's forecast to do. Make sure that they keep 1% ownership just in case.

You may qualify for TRS on your share, but not on the council's share.

I see now that the exemption for Household Charge does not apply to Local Property Tax. So it makes little difference if you switch to a 100% mortgage or not.

Could one of you email me a copy of the letter you received please? brendan askaboutmoney.com

Thanks
 
The key to understanding this is that the Shared Ownership bit is already a mortgage and the interest rate charged is the same on both bits. The Mortgage Protection is charged on both bits as well.

If you switch to a 100% mortgage, it will be less confusing. You will realise that you have a huge mortgage.

I am not sure how the repayments are calculated on the "rental bit". If the repayments are lower on a mortgage, then a mortgage would be preferable, as the actual interest rate charged is such good value, the longer the mortgage lasts the better.

Brendan
 
Hi Brendan,

Thanks for the reply, unfortunately I have already posted back the form. There wasn't actually an accompanying letter more of a leaflet that I had to tick relevant boxes and include my name, email addr and whether or not I was interested in switching and post it back to them.

My assumption was that switching to 100% mortgage would mean I would be the sole owner of the property and would not have to pay the rental portion anymore. I understand my mortgage would increase significantly more than the half I pay at the moment. In saying that, I wont be paying the rental portion anymore and the two would kind of cancel eachother out if you get my meaning. In my mind this would be the lesser of two evils because the property would be mine outright (or am I wrong?).

Also, since purchasing the house my rental portion has increased significantly over the last 5 years and will continue to do so, which as I said above makes it very difficult to tackle the arrears..

My hope was/is that the arrears would be added to the lifetime of the new 100% mortgage at the cost of a few euro extra on mortgage repayment. (Again, I could be wrong?).

I will give your post a read asap Brendan as you seem to know your stuff re: SO

Thanks again,
Simon
 
Sinbad311 said:
In my mind this would be the lesser of two evils because the property would be mine outright (or am I wrong?).
Click to expand...

Yes, you are wrong. Since you bought the property it was yours outright, subject to two mortgages. The second one called a rental agreement, but in fact a mortgage. So your ownership or liability has not changed in any way by sending back the form.



Sinbad311 said:
my rental portion has increased significantly over the last 5 years and will continue to do so, which as I said above makes it very difficult to tackle the arrears..
Click to expand...

The "rental portion" is a payment of interest and capital. It has been increasing because you have been paying more capital each year. If the repayment on the mortgage is lower, then it's worth making the switch.


Sinbad311 said:
Thanks for the reply, unfortunately I have already posted back the form.
Click to expand...

Anything to do with your mortgage or your home is hugely important. You should keep copies of everything in case there is a dispute later.

Brendan
 
Hi Brendan,

I have already sent mine back also. It was literally a little note of paper the size of a postcard saying something along the lines of 'interested in transferring your shared ownership property to 100% mortgage' and on the back was a space for name, address, phone number and email address and it said 'fill in your details and we will make contact with you'.

My understanding with my shared ownership is that I bought a house in 2009 for 200k. I am currently paying a mortgage of 100k and rental on the remaining 100k. After 30 years, unless I either change to a mortgage with a bank or 100% with the council, that I would technically have only paid off half of the mortgage and would this still owe 100k, despite having paid for 30 years.

Am I completely wrong here?
 
I was talking to the DCC about this today. The 100% mortgage will still be with the council. The Standard Variable interest rate will still be 2.75%.
 
Hi Brendan

"If the Council keeps some of this notional "ownership" you don't have to pay the Household Charge. This could be very significant if the Charge rises to €1,000 as it's forecast to do. Make sure that they keep 1% ownership just in case"

I have shared ownership loan with Cork County council. You indicate above that if the council retains some element of ownership there is an exemption of Household Charge ,now the property Tax. Can you clarify this please ?

Initially
I was exempt from household charge but each subsequent year have paid property tax as I had been advised this was not exempt.
Please make my year and tell me your above information is correct. Thank you
 
There was an exemption for the (first) household charge for shared ownership owners, but NOT for the property tax.

Pat
 
You must log in or register to reply here.
Menu
Log in
Register