Father wants to reschedule tracker mortgage, to pay off son in law's arrears

[Branz]

Income details
Net monthly after VHI and property tax 4,100 [2,800 pension, 1,300 disability] Age 62
Net monthly income partner/spouse: nil
Income history: as above for 5 years


Personal circumstances so we can calculate your reasonable living expenses
they were on IO on 283,000 up to June 2011, when it went to a split
100,000 IO pending sale of holiday home
183,000 P&I.
Holiday home sold in Dec 2013 for 100k, leaving 154,000 outstanding.

The current P+ I repayment is 975/month, based loosely on on a 12.5 year term, which is just about doable, based on one kid in college and supporting parents in law, etc.
The 12.5 years matches the term of 200,000k level term life cover on husband. The exact repayment was 1,100/month which was undo-able.
The loan is up for review soon, having been extended in Nov 2013 for 6 months pending sale of holiday home.

The question that arises now is that the daughter and son-in-law [ three children: 8,4,2 ], no earned income, are at risk of loosing their house so my friends want to approach AIB to restructure their repayments to free up some monthly cash to help the daughter, but not in a formal way, so as SW, lender don't twig, mean-test, the support, or put more pressure on the daughter, whose mortgage is 160,000, including 20,000 arrears with NE of 60,000.
This surreptitious support is their preferred option to having 5 extra mouths in their home.
The mortgage is in the son-in-law's name only.
My friends don't want to explain to AIB why they want the reduced payment as they are also the lenders to the son in law.

So the question is: would AIB run with say 100,000 IO and 54,000 P+I over 12.5 years, (making a payment of 450/month ) or some combination thereof.
The six monthly reviews are a real bind for them.

Their income is pretty much fixed so no post retirement drop off and the life cover takes it up to when husband is 74

The life cover can be extended with no medical, for an increase in premium of course.

The life cover would be assigned to AIB, they already have the house.


Home loan
Lender: AIB
Amount outstanding: 154,000
Value of home: 800,000
Interest rate: tracker = ECB +0.6%
Monthly repayment 975
Amount in arrears nil


Investment property - nil

Other loans and creditors - Nil

Other savings and investments
3,000 which is the last year college fees for the kid

Do you expect any lump sums in the medium term future?
No

Any other relevant information

What is your preferred realistic outcome?
Reduce the current repayment by half to 450/month by way of warehousing/split/etc, without having to say why, other than trying to put a bit of cash aside, or similiar.

Looking at their paperwork, it seems the 154,000 includes 10,000 interest roll up which occurred because AIB did'nt change the rates as they approached their peak in 2008.
Any thoughts on this.
Thanks

 

[Brendan Burgess]

Amount outstanding: 154,000
Value of home: 800,000

Surely the answer screams out from this.

Why on earth should the taxpayer owned AIB give these guys a reduction on the already loss making tracker?


If the parents want to help their chidren, they can sell their home, pay off their mortgage and maybe even have extra cash.

AIB might consider allowing them to trade down and keep the tracker and retain some cash, but unlikely.

Alternatively, be straight up with AIB on both cases. They might come up with some other solution.

 

[Gerry Canning]

I appreciate you want to help your daughter but shuffling like this only extends issues.
If daughter is on SW it is unlikely they can retain their home long -term without Banks support.
I think you need to start with daughters Bank and see what is the minimum that Bank will do .
You can then review your finances to see how you may then engineer help.

Try and avoid 2nd guessing what you/Bank/Sw will do .
Go down that road and you will end up in a mess.

As for having more mouths in your home ; that is a long way off, ie deal with today , things change and I see no appetite for repossessions.

 

[44brendan]

Short answer here is that there is no way that AIB will agree to a deal as proposed by the OP given the net income earned.
Mortgage payment of c1K pm is well affordable and while proposal to help out daughter is well meaning, it should not be done at the expense of the HL mortgage payment.

 

[Branz]

Thanks for the replies.
Had a chat with the mother today on her own.
The picture is a little different than I understood: it seems the son-in-laws loan is from a Local Authority (LA) and the mother made some online payment's to the LA without telling the daughter..... or her hubby: they put up 20k originally and she still had the bank details.....
The LA picked up on this and when the most recent signed paperwork from the son-in-law made no reference to this....
Anyway the LA wants the arrears paid or else..........so far its a verbal threat.

Hubby not best pleased to be filled in on this at this stage so he has abandoned any notion of making any more payments to what he sees as a lost cause at this point.

The Citizens advice Bureau suggest that the LA wont actually evict them as they would have to rehouse them, I no zip about this: their guess is they see the possibility of a bail out from the parents.

Thanks again.
Case closed