Extend commercial mortgage term to take stress off? Good idea or not?

Brendan Burgess said:
Do I understand this correctly?

You have a loan of €160k on a €600k field which you use as a hobby.

You are unable to service the loan with 6 years left.

Why not just sell the field and have €440k in the bank?

Or can you sell some of the field so that you own the remainder mortgage-free?

Brendan
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Brendan my hubby farms it part time. We sold our previous home with intention of moving onto the farm to farm it and build our home again ... The move was to go back to farming..not to build a new house...it was a lifestyle decision with the knowledge that we both would have to continue to work off farm jobs...but we got it wrong when we sold our home. We should have used the proceeds of our home sale to pay back the commercial loan, but I got cancer in the same month, panicked and we contracted a builder to build our new home as I was particularly afraid that if I died, the kids had no home built for them (at that time we had just moved into mobile home on farm with intention of self building)..
Hope that clarifies.
 
Hi,

Ironically, you may find a bit more flexibility (in the short term), given the coronavirus. Banks are currently going into their "let's try and help people" mode...so reduced payments, interest only or short payment holidays, are all very much on the radar, when the circumstances evidence the cause and need for same.

It didn't solve your long term issue, but at the moment, no one has any certainty about how long or how badly the coronavirus is going to impact our county. Expect to get a 3-6 month commitment to a request for a payment reduction / payment holiday, with intention to revisit thereafter.

Subject to us getting past this coronavirus problem, I do find myself thinking that you should sell the property to clear the debt.

I'm guessing that you've got under 100 acres and depending on where your located, possibly even closer to 75 or even 50 acres.

Commercial farming, particularly for small farmers, is becoming a thing of the past. Many people who come from a rural background don't like to hear that, or don't want to accept it, but it's reality - small farms aren't commercially viable, and the consumer isn't going to agree to pay higher prices, to allow small farms continue. A potential niche might be the exception to that (organic veg is probably done, farming boar or other less common meats maybe), but opportunities are few and far between.

There are other kinds of jobs out there for everyone, even if its not their first choice or doesn't perfectly suit their lifestyle. The reality is that few of us very to do what we'd really like to do in life, or do it where we want to do it. There's also a hell of a lot of be said in favour of the chance to be debt free.
 
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Thanks Earl, yes being debt free is sounding very attractive now...suppose we have to get over how our bank has treated us and look to happier, healthier future..stay safe and thank you.
 
Lookingforadvic said:
suppose we have to get over how our bank has treated us
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No.

You have to get over your irrational feelings about how the bank has treated you.

The bank is not doing anything wrong in refusing to finance your hobby.

Take Mr Earl's advice. You can't afford this hobby or lifestyle. Sell it and be debt-free.

Brendan
 
Seeking clarification please.
Am I incorrect in my understanding that all the major banks including AIB have agreed to a 3 month mortgage break (because of the Corona virus and loss of jobs/income) for all home mortgages, buy to lets and commercial mortgages?

I called AIB today and they told me it only applies to home mortgages..that the Central Bank is meeting the banks today and more will be known after that meeting...

I think I'm so stressed now that maybe I misunderstood the RTE news..

Your clarification would be appreciated.

Thanks Judy.
 
Hello Judy,

The Banks have given the Minister for Finance certain assurances about supporting businesses, but that's not a guarantee that every commercial borrower will get a 3 month payment holiday, the second they ask for one.

Individual borrowers will need to state their case, discuss and evidence their circumstances, then see what options are open to them. Potential assistance may include reduced payments, payment holidays or additional funding.

Put a formal request in for a 3 month payment holiday, referencing the need for one due to problems caused by the coronavirus and supported by relevant financial information - up to date management farm accounts, evidence of sales having been cancelled, no access to market for your crops or livestock etc.

Do either you or your husband also have income from other sources, such as employment income, rental income etc.? If so, information on this other income will also be questioned and relevant documentation requested by the Bank.

If the Bank try to fob you off by phone, insist on a formal written response. If your formal request is declined, it can subsequently be appealed within the Bank and later, through the Credit Review Office.

Given you've mentioned AIB, I'm taking it that they are your Bankers.

Have a look at this page on their website :
business.aib.ie

Business Banking, Business Online Banking | AIB Business

Business Banking from AIB, supporting businesses with a wide range of business bank accounts and services. Discover the benefits now.
business.aib.ie business.aib.ie

.. And in particular, this document:


It may also be prudent to ask your accountant to assist you, when dealing with the Bank.
 
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Earl, thank you. Only about week and a half ago, I formally appealed their decision internally not to extend our commercial loan, they have 15 days to reply to us.

The bank ahave all our most up to date financials already from that original extension request of last month.

They know that my income has dried up now as I'm a casual sub teacher and hubby's off farm income drying up too as a result also of covid 19.

My contact in the bank was talking yesterday about giving us another loan as a solution but I'm not happy with that as our capacity is the issue now more than ever.

Last week we put the buy to let on the market but God only knows when and for how much this will sell in the current environment!

Time will tell I suppose..
 
Hello,

Notwithstanding the current ongoing appeal relating to your request to extend the term of the loan, I think you should be submitting a seperate request, along the lines that I've suggested.

They are seperate requests and will be considered independently. Amongst other things, any appeal has to be considered by staff within the Bank, who were not involved in the original decision making.
 
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