Joint Mortgage - will bank write off half of debt

Hi,

I got a mortgage with my brother. He has left country has no plans to return and not interested in paying anything back on mortgage.

based on my current salary I can pay my half but would need to rent out a room in order to do so. I am wondering if I should try and get bank to write off my bothers half of mortgage which would be around 130k and agree to take his name off mortgage or would they even consider such an offer?

To answer the question you pose it is highly unlikely. You and your brother are probably jointly and severally liable liable for repayment of the loan. Read the terms and conditions of the mortgage offer.

You need to give a lot more information on your circumstances and your brothers and the value of the house and the amount of the mortgage and any other assets and income etc.

yes I am aware we are both jointly and severally liable but I don't want to be putting more money into the house if he is never going to pay towards it but may benefit from it in the end.
bought the house in 2007 for 250k. house now worth 70k. balance of mortgage is 260 approx. as there are arrears on it. mortgage is with KBC the girl I was speaking to during the week said they may offer me 50/50 split mortgage but this means reviewing it again in 5 yrs. my salary is 20k ( 1700 net monthly)per annum and mortgage is approx. 1350 per month,

Sounds as if you are insolvent.

You should consider going bankrupt and then your brother would be wholly liable for the full mortgage.

Brendan

is there any other option do you think apart from going bankrupt? I will loose my job if so

I can afford to pay back half the monthly mortgage if I rent out the room if I go for split mortgage option but I am not keen on paying the mortgage for the next 30 years with his name still on it so he will reap the benefits in the long run

You should read this thread

A guide to splitting up when in negative equity

and this post in particular

http://www.askaboutmoney.com/showpost.php?p=1278996&postcount=5

You should ask KBC to agree to a voluntary sale of the house.
Your brother must agree to this. Presumably he will.
You will be left with a shortfall for which you will be jointly and severally liable.
You should apply for a Debt Settlement Arrangement which would wipe out your debt after 5 years without going bankrupt. However, KBC may veto this.

Brendan

thanks for reply. so if bank veto DSA after house is sold my only option would be to declare myself bankrupt?
Also, I have heard some banks are doing deals for people that have balance left over after house is sold to pay a certain amount back over a few years. do you not think this would be an option in my case?

Jer99 said:

Also, I have heard some banks are doing deals for people that have balance left over after house is sold to pay a certain amount back over a few years. do you not think this would be an option in my case?

Click to expand...

Well of course bank would have to set up a payment schedule for you to pay off the negative equity over a number of years if the house is sold. You don't have the money to pay it off all in one go so they would have no other option but to set up a loan-type structure for you to pay it off over a long period of time.

To be honest it sounds like your brother has really left you in the soup here. He's buggered off and you risk losing your job and having to go bankrupt over this house.

Any chance the value will go up at all over the next few years? I would say that it might be worth your while renting out a room and paying back the mortgage for a few years til house prices rise, but the fact that after 7 years ye have not managed to pay down any of the mortgage (in fact ye owe more now than the mortgage you took out) doesn't bode well. Sounds like you'd spend the next few years just paying off arrears to be left with the same dilemma in a few year's time so maybe it is time to just cut your losses and go for a voluntary sale.

thanks for response Lucuma. I suppose what I want to know is how likely KBC would be to write off his portion of debt and leave me to pay half 130k approx? its a better deal than me going bankrupt for both parties surely? or
if I sell house and am left with the shortfall of around 200k would they agree to write some of this off and accept a monthly payment over 5 years say?

Banks will not write off the non-contributing person's half of a loan. Joint mortgages don't work that way unfortunately. Ye are jointly and severally liable for the debt. If one won't pay their half, the other must pay all.
The only way to get out of paying is if you leave the country like your brother has, or if you stay here and go broke. They can't get blood out of a stone so if you have nothing to give, they can't get it off you. But if you have a job and assets like the house itself, they will get court orders against you for the amount owed.

Jer99 said:

or if I sell house and am left with the shortfall of around 200k would they agree to write some of this off and accept a monthly payment over 5 years say?

Click to expand...

They will only do this (write some of it off) if they can see that you physically don't have nor will ever have the potential to pay them back. It depends on your income basically.

It may make sense for the Bank to do a deal with you for a notional 50% of the residual value of the property, provided you in turn can get your brother to agree to a voluntary sale of the property. Your first port of call is to address this with your brother and then approach the bank with your proposal. You will need to complete a up to date SFS and provide the bank with a statement of affairs.

In a situation where after a forced sale there is a shortfall and two parties jointly/severally owe €300k.
One party can get lump sum from family and suggests an arrangement to bank whereby she agrees to pay back "her share" - €150k plus interest - over next 10 years.
If bank insists on continuing to hold her liable for full amount, she has no choice but to go bankrupt. (This is turn will force other party into bankruptcy as they cannot afford full amount either)

Can a bank legally entertain such an arrangement?
Are they likely to?
Can the other party veto it?