Escaping Negative Equity...thoughts

S

sharedRespon

Registered User
Messages
5
Hello,

I am hoping to get some advice on options available to me ...

Personal and income details
Income self: PAYE worker - 60,000 PA
Income history: In current job 1 year
Income partner: PAYE worker – 46,000 PA
Number of children: 0

Home loan
Lender: EBS
Taken out: 2007
Amount outstanding: 400,000
Value of home: 210 approx
Interest rate: Fixed 4.25% one more year then move to SVR
Monthly repayment: 1600 (inc. MIR)
Type of loan: 100%
Life of mortgage: 35 years
Amount in arrears: none

Summary of discussions and agreements with the bank:
None as yet

Other loans and creditors
No other loan commitments

Other savings and investments
3,000

Any other relevant information
We want to be able to move abroad and not have this house hanging around our necks like a millstone. The MIR is due to complete in 2017 which, at current interest rates, will push our mortgage repayments up to 2100 a month – this will make life very difficult and utterly depressing.

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

Other Information:
Although we can afford to pay our mortgage, currently, we can’t afford to do much else, hence the paltry savings.

I am looking for options and would appreciate any insight people might have.

Thank you.
 
Would I be right in thinking that with both salaries you would have a rough income of €6000.00 per month? Or maybe a bit less with pension payments and such? That leaves roughly 4,000 per month, give or take, after mortgage. Where is the rest of the money being spent? Have you done the money makeover section to see where you can cut back on spending.
 
I'm not sure why you think any bank would or should write off your negative equity. I appreciate you want to move abroad but I dont think you are in a bad financial position. Your incomings far outweigh your outgoings.
 
Time for a reality check me thinks!!! Based on your salary figures, it would appear that your disposable income is higher that of most families in Europe and the USA and as another poster pointed out even after paying the mortgage you still have about 4K of disposable income, so moving for economic reason does not seem to make much sense...

You need to do some proper analysis of where your money is going because blaming the mortgage for your lack is savings does not seem to fly!
 
Is it just me or is their more and more of these type threads appearing lately?
 
mark71 said:
Is it just me or is their more and more of these type threads appearing lately?
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I would agree with that. Could be that word is spreading that AAM is a good place for advice or it could be that people are realising more that they need help.
 
I don't disagree with anything said above. You have high earnings and a mortgage you can easily service. There is no way a bank will agree to a write off.

You should be able to save 1.5 to 2k a month on your earnings/outgoings no problem-so you need to look at what you spend your money on.

In addition to saving you should be looking to pay down debt. You could request a reduced mortgage term-which will pay off in the long run. It's the only escape to your negative equity that I can see.

Alternatively, put all your spending up here (case study) to get an analysis on your spending.
 
Thank you for the responses.

The reason I posted here is that people seem genuine in their advice.

I will look at all our outgoings but we certainly do not feel as wealthy as you are suggesting.

The problem I have is that we will pay 200k approx of dead money. We take the full hit for a mistake of buying our first and only house and that's how it is I suppose!
 
sharedRespon said:
The problem I have is that we will pay 200k approx of dead money. We take the full hit for a mistake of buying our first and only house and that's how it is I suppose!
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That is a different matter!! Negative Equity is only a problem if you are selling. If not - forget about it until you need to concern yourself with it.

You are earning way way above average earnings. Many families with two or more kids and multiple debts are spending less each month than you earn and getting by. You should read through some of the threads on negative equity, debt, bankruptcy and the plight of some people with their banks and you will realise that being in a position to pay your bank, even if the home is in negative equity, and still have lots left over for anything you want to spend it on, is a dream for many. Long may it continue that way for you.

If you get your spending sorted, you will be flying and you won't have to live a frugal lifestyle to start saving either.
 
I would love to get my hands on your budgeting to see where the money is going :)

Spending diary, sounds boring and it is but it is a very valuable exercise to see where the money goes. Alternatively maybe you pay most things by card in which case some forensic checking of your statements should throw some light on the subject.

Identify you main annual bills such as insurance and your monthly ones like phone, esb etc, averaged out this will tell you how much you need for bills every month, the rest is discretionary spend other than food. Then start to cut down every bill you can, shop around for everything, check your food spend, are you a M&S or a Lidl shopper?

Would be very interested to see how you get on with this exercise.
 
I have more sympathy for the position of sharedRespon than others seems to have.

I recognise that his income position is good and he is not suffering the same hardship as many others.

However he faces 35 years paying €2,100 a month for a property he cannot sell, or more if interest rates rise. This situation is not going away for him.

People in the various types of arrangement will eventually have their situations resolved and be able to move on with their lives. The cost of that will be borne by the tax payer, i.e. sharedRespon.

Looking at irelands economic future, there is not going to be inflation to wipe away the debt, either public or private debt, both of which sharedRespon will have to pay for . There isn't going to be a big increase in the numbers at work in the country to share the burden of public debt.

You have got to ask yourself why bother? If you had the option to walk away and earn good money elsewhere wouldn't you? Especially if you are young and have the rest of your life ahead of you.
 
cremeegg said:
You have got to ask yourself why bother? If you had the option to walk away and earn good money elsewhere wouldn't you? Especially if you are young and have the rest of your life ahead of you.
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Totally agree with your sentiments Cremeegg, there has to be an incentive for people to continue servicing their debts if they are in serious negative equity regardless of how they got there and if they are on an average income (even a relatively ok income).

In my (strong) opinion, when a property market crashes by 50% to 70% and an economy contracts so severely that it's a once in a century phenomenon, then all bets are off!! We are living in unprecedented times and normal lending and repayment terms no longer apply to legacy debt. It is only human nature that people will want a brighter future for themselves by removing the burden of debt they find themselves in, and good luck to them I say. Don't be a debt slave for the next 30 years because you think it's 'the right thing to do'. Make your decisions based on whats right for you and your family's future and don't let anything else cloud your judgement on that.
 
Negotiator said:
Totally agree with your sentiments Cremeegg, there has to be an incentive for people to continue servicing their debts if they are in serious negative equity regardless of how they got there and if they are on an average income (even a relatively ok income).

In my (strong) opinion, when a property market crashes by 50% to 70% and an economy contracts so severely that it's a once in a century phenomenon, then all bets are off!! We are living in unprecedented times and normal lending and repayment terms no longer apply to legacy debt. It is only human nature that people will want a brighter future for themselves by removing the burden of debt they find themselves in, and good luck to them I say. Don't be a debt slave for the next 30 years because you think it's 'the right thing to do'. Make your decisions based on whats right for you and your family's future and don't let anything else cloud your judgement on that.
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Yes but who ends up paying for their decisions to walk away from their debts, if everyone in that position (excellent salaries, manageable debt) decided to follow suit - where would we be?

Nobody seemed to worry about selling their houses for huge amounts during the boom and how that impacted on society but now want to be bailed out or walk away from their debts now and place that burden on society.

Just in the last couple of days there have been a number of threads started by people who want to walk away from debts yet still get maternity benefits or pensions from the state - people seem to forget that with rights come responsibilities, we are a nation of mé féiners.
 
Negotiator said:
Totally agree with your sentiments Cremeegg, there has to be an incentive for people to continue servicing their debts if they are in serious negative equity regardless of how they got there and if they are on an average income (even a relatively ok income).
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If we followed this thinking then we'd need to compensate everyone who made a bad financial decision:

- The pensioners who invested in BOI/AIB shares because they thought it was safe for their retirement.
- The parents who invested their hard earned savings in college funds for their kids.
- The business man who's enterprise fails through no fault of his own...
- The pension funds who invested in Irish bonds and now have large deficits and will be unable to pay out the expected pensions to their members
- The list just goes on.....

Everyone of these people made bad financial decisions that they will have to live with well into the future, why should we single out the property owners in negative equity for special treatment???

It is bad enough that taxpayer will be on the hook for people who simply can't meet their obligations, but to expect them to also carry the can for someone who is capable to meeting their obligations and does not feel like it is just not on.
 
Thank you for the continued responses.

My point was, as was mentioned, about the 35 years. There were two parties to our mortgage yet we must take the entire burden of the loss.

I am looking for a way forward, like crystallise the loss and share that with the bank. We could then plan for some sort of future beyond this debacle. I am not looking to walk away from the debt but if some sort of way is found what's to stop me from declaring bankruptcy?

We are in that sector of society that can afford their mortgage in the short term but long term we will need some sort of attention as 35 years of paying dead money is utterly depressing and unsustainable.

Also we don't get 6k net a month I don't know where that has come from, it is based on a false premise.
 
sharedRespon said:
My point was, as was mentioned, about the 35 years. There were two parties to our mortgage yet we must take the entire burden of the loss.
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We the taxpayers are the other party, since we had to bail out the banks, why should we be on the hook for your mistakes, when you are well capable of servicing you debts?

sharedRespon said:
I am not looking to walk away from the debt but if some sort of way is found what's to stop me from declaring bankruptcy?.
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Well in the first place you do not declare yourself bankrupt, you apply to the courts and the judge declares you bankrupt if you meet the criteria. Based on your figures you clearly do not meet the criteria.
 
sharedRespon said:
Thank you for the continued responses.

My point was, as was mentioned, about the 35 years. There were two parties to our mortgage yet we must take the entire burden of the loss.

I am looking for a way forward, like crystallise the loss and share that with the bank. We could then plan for some sort of future beyond this debacle. I am not looking to walk away from the debt but if some sort of way is found what's to stop me from declaring bankruptcy?

We are in that sector of society that can afford their mortgage in the short term but long term we will need some sort of attention as 35 years of paying dead money is utterly depressing and unsustainable.

Also we don't get 6k net a month I don't know where that has come from, it is based on a false premise.
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Hi,

You get €106k gross per annum. What is the annual net figure approximately
please?
 
You see your mortgage as being unsustainable yet it accounts for somewhere between 30 and 40 of disposable income. Where is the rest going?

When you bought your property, what were you thinking- pay some of it back and look for a deal? No, you like everyone else borrowed to pay it all back. Thats the way it was till a few years ago-now some people who can pay, don't want to pay for myriads of reasons that in some cases are hardly credible. What has changed in your circumstances that makes you think the bank won't expect it all back?
Look at it another way;
If your property increased in value by say 50%, would the bank come looking for 50% of the increase? No
Now, just because it has fallen, why should they take a % of the fall when the loan is being paid.

The reason is that it's your house and all they want back is their money. There is no shared responsibility. If you start looking for reduced payments they will forensically examine expenditure and if you really earn a combined 106k, they will refuse.

I have to say, I find your thinking on all this difficult to fathom.
 
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