Holiday home - PTSB interest only ending - sell?

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Green336

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We have a holiday home which we purchased in 1999 and have a €100k mortgage outstanding on it. It has been interest only since around 2008 as we were planning to sell it as soon as the 11 year Section48 letting requirement was met.

The house is currently on the market for €99k and hasn't had any offers. It is in excellent condition, in a good area, detached and suitable for starter home (not a typical box-type holiday home).

Based on feedback from the estate agent and observing similar properties in the area that have sold we believe if we dropped to €90k and accepted offers over €85k we could sell it this summer.

Today we were informed by PTSB that the interest only period on the mortgage is ending August 1st and based on the term of the original mortgage repayments will be over €1500 per month which will put a severe strain on our finances.

As I see it some of our options are:

- try to get agreement from PTSB to remain on interest only until the property sells
- put the mortgage on principal + interest and reset the term of the mortgage so that the repayments are manageable
- take the property off the market and let it long term for the next 5 years, move to principal + interest. try selling again in 5 years. The rent we are likely to get will not fully cover monthly payments however we would be able to afford to bridge that gap in payments and it would be less than our interest-only payments allowing us to put more into savings
- sell for less than we want to (I figure the interest only payments for the next 3 years would equal the drop in price) and find financing for the gap between the selling price and the balance of the mortgage. We have a credit union account and could probably borrow from PTSB also

Our savings are limited and are set aside for college fees.

We have a meeting next Monday in the local PTSB branch to start the process when it is then handed over to the mortgage section.

Are there any other options we should consider?
 
You need to assess the above options on the basis of your financial circumstances. i.e. Option 1 would appear to be the most appropriate one, as it will consolidate your loss and you will then have a low level of residual balance to meet. Repayment options on this will in time need to be discussed with PTSP. Ideally you should try & cover a littel over the IO repayments as this will reduce the residual balance following sale. Other options involve taking an element of risk on property prices. Generally PTSB should be satisfied with you meeting a 5% notional interest rate on the exposure. i.e. this would involve repayments of c€416pm and would meet the Bank's "MARS" repayment target
 
Thanks. If the property does not sell this summer I want to move to a situation where we are paying down the principal.

I have had zero dealings with PTSB aside from paying the mortgage every month (our family home mortgage is with BOI) so can you elaborate on this please?

44brendan said:
Generally PTSB should be satisfied with you meeting a 5% notional interest rate on the exposure. i.e. this would involve repayments of c€416pm and would meet the Bank's "MARS" repayment target
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Will I likely be offered this or will I have to ask (and what exactly am I asking for?). The bank classify this as a commercial mortgage. Does that limit our options?
 
Each Bank is obliged to produce a MARP strategy for residential mortgages and a MARS strategy in respect of buy to let loans. Most Banks approach re these loans is relatively standard. In the case of the Bank I am currently with, they are generally disposed to agree to deals where the client is in a position to pay the notional 5% level of monthly repayment. You should see the PTSP MARS policy on their website. It's not a commercial mortgage as you are not a professional property investor. Your loan would be classified as "Consumer".
 
Thank you, hopefully they will take a reasonable approach and we can sell the property in the near future. I appreciate the additional answers.
 
PTSB have been completely inflexible. We spent time completing as accurate as possible a set of forms with income/expenditure. They have refused to extend the term of the mortgage as they believe we can afford to pay these higher interest+principal payments. We want to extend from the 7/8 years left to approx. 15 years. They also refused to discuss changing the interest rate from their commercial rate.

Fortunately we have an offer on the house and it should be closing in the next couple of weeks. We're making up the negative equity with an approved credit union loan. PTSB indicated that the negative equity could be converted to a term loan at the same interest rate. No incentive to pay it off early (I can pay it off in 14 months using stock I get from my employer each year). I'm not giving them another cent if I can help it.

I'll be closing my current and savings accounts with PTSB as soon as possible. It appears being a customer for 30 years with an excellent credit history and a salary in excess of €100k means nothing to them.

Thanks for the responses here and good luck to anyone trying to deal with PTSB.
 
And reading here it appears the best deal on banking fees is with PTSB. :rolleyes: just my luck...I can't even stick it to them without cutting off my nose to spite my face.
 
Green336 said:
We're making up the negative equity with an approved credit union loan. PTSB indicated that the negative equity could be converted to a term loan at the same interest rate. No incentive to pay it off early (I can pay it off in 14 months using stock I get from my employer each year). I'm not giving them another cent if I can help it.

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Be careful you are not biting off your nose to spite your face.

What is the interest rate on the ptsb loan?
What is the effective interest rate on the CU loan? Does the CU require you to keep shares? If so, it will push up the interest rate.

Our savings are limited and are set aside for college fees.
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Why not use your savings to pay off the gap? The rate of interest on your savings will be a lot less than you are charged by the credit union or ptsb.

Pay off as much as possible of the shortfall with your savings.
Borrow from the CU when the college fees arise
Pay off the CU with the share sale.
 
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