I've emigrated to Australia. What to do with investment in big negative equity

[equity]

Purchased for €400,000 in 2006
Todays value is €154,080

Currently renting out & have lived in Australia for the last 2 years.

Loan with Ulster Bank was €368,000 over 35 years.

Current rate of interest is 4.5%
Repayments per month €1,172.12 interest only
Our rent is €1,000 per month but fees brings it to €877 per month
Shortfall €295.12 per month (not paying at the moment)
Also service charge €1,680 per year.
Current level of arrears is around €17,000.

Owe €368,000 plus €17,000=€385,000

What is best best option?

1. Hand in the keys to the bank? What can they do? Chase in Australia? Agree settlement on residual value?

2. Continue as is kicking can down the road and hoping the property will appreciate in value and continue to pay interest only?

3. Go bankrupt in Australia?

Thanks

 

[Brendan Burgess]

The first question is whether you can afford to pay the total loss of €5,000 per year.

If your other income allows you to pay that, then you should continue to honour your debts.

If you can't meet your repayments as they fall due, then you are insolvent.

hoping the property will appreciate in value and continue to pay interest only

You have negative equity of around €230k. Prices will have to appreciate by 150% for your negative equity to evaporate.

What are the insolvency procedures in Australia? If they are as easy as the UK, then go for it.

It's probably better for everyone if you sell the property yourself.

So offer UB a deal.
You will sell the property and they will write off the shortfall.
You may agree to pay a small part of the shorfall as a compromise.
If they don't agree, then you have to decide whether to sell the property or just hand back the keys.
You are better off selling it yourself as the insolvency process is much easier with unsecured debts.

The question of insolvency in Australia comes up on Askaboutmoney from time to time. A Key Post on the topic would be very useful so if you investigate it, you might do a summary for us.

Brendan

 

[DB74]

How very bloooody noble of you , somebody forced from this country to live abroad and you feel he should ''continue to honour your debts'' .Equity get advice on re bankruptcy in Australia but forget about paying back on that property here , better burn your money !

So someone who can afford to pay their debts shouldn't pay their debts - is that your opinion?

Sure why doesn't everybody just up and stop paying their mortgages, credit cards, personal loans etc etc. Do you think we'd all be better off by doing that.

And why stop there? Let all employers stop paying wages and suppliers and let consumers just stop paying for their groceries and household necessities.

Who needs money or banks or law and order anyway. In fact lets all just go back to living in caves and making our own clothes and slaughtering wild animals for the dinner.

Or maybe lets all just realise that everyone in this country who took out a stupid loan or unsustainable mortgage or ran up a credit card debt is just as responsible for the mess as everyone else, be they bankers, politicians, builders, whoever. And let the people who can afford to pay back their debt pay it back and if you can't, well then there's a process to follow.