negative equity and circumstances changed - advice please.

Mick31 said:
The bank would charge you what??? They can put you on the black list and that's as far as it goes.
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Well...no....Not correct..

yoganmahew said:
Ho hum, you are still liable for any short-fall on the bank sale versus the mortgage, the banks selling fees, their legal fees to take repossession etc. These will be a lot larger than taking a loss on the house and getting a personal loan to cover them. Plus you will be declared bankrupt and be unable to get standard credit for 12 years.
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All correct.
No further mortgages in foreseeable future, no loans will be possible, no overdrafts allowable, no credit cards gettable.
Also still liable for outstanding money owed (and charges etc as above..)
This would surely put a bit of a damper on life, don't you think?
 
ButtermilkJa said:
Not wanting to stray off topic but it is possible that the house gained value from 2006 up to €360k or €370k in early/mid 2007 and has now dropped to €300k. That's a 16%/17% drop over the last 12 months. My point being, a 10% drop from 2006 levels does not seem unbelievable.
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Buttermilk,
NOV 06 to Early/Mid 07 up 35/40k? The house must be 10 yards from a luas stop with a school accross the road and have nuns and a priest as neighbours either side!
 
That would make me a much less happy bunny anyway :), don't know about you.
I'd be properly damped if I was excluded from doing all of those things I reckon.
I suppose at least you'd learn how to live a credit free life, you'd never have to worry about a car loan, and you'd make sure that you always had enough squids in the bank to cover all your bills, and wouldn't run up those nasty overdraft fees ever (the way sometimes happens after a very expensive month..).
Plus you could save all that interest from mortgage repayments, waste of money anyway
:rolleyes:
 
Mick31 said:
The bank would charge you what??? They can put you on the black list and that's as far as it goes.
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If you think that a bank is going to walk away from thousands of euro and do nothing other than "put you on a black-list", I wish you luck.
 
Mark my words, and see what's ging to happen down the road.

If you are a foreign national with a mortgage, all you need is a RyanAir ticket, is that correct?

If housing market starts really goin' down, not many will be paying off their loans knowing they are throwing away their money. As I said it depends on an individual...
 
Mick31 said:
If you are a foreign national with a mortgage, all you need is a RyanAir ticket, is that correct?
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I'm sure that is correct. If you want to fly out of the country, that is.
But I am also sure that a bank would quite happily chase a large debt up, even if out of this jurisdiction.
Relatively easy to do in the EU I would guess, and I'm sure would certainly be done beyond EU if more than a few thousand.
I'm not sure how realistic you are being, Mick, no offence intended.
Nicola
 
NicolaM said:
But I am also sure that a bank would quite happily chase a large debt up, even if out of this jurisdiction.
Relatively easy to do in the EU I would guess, and I'm sure would certainly be done beyond EU if more than a few thousand.
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That's a messy business. Banks usually call it 'bad debts'
 
It does appear that you may be trolling, Mick, based on your posts.
Either that or you are not deliberately mis-understanding the consequences of leaving the bank 'take a property back' (which I would be inclined to think, preferring to give anyone the benefit of the doubt), it is just that you do not understand full stop.
Either scenario is unfortunate.
Nicola
 
Couple more questions:

1. Whether we are deciding to rent a room, rent the house, or sell, who should we talk to? Mortgage advisor? Financial Advisor? Solicitor? Letting agency? I assume we should not directly approach our Mortgage Provider at this stage?

2. People say here it will cost more to hold onto the house, Im not sure that I follow... my thinking was that if we decided to hold onto the property as an investment for a couple of years and rent, and are currently paying 1450 per month towards the mortgage (amount outstanding will be about 315k at end of this year) how would that not work? Houses in our area are renting for about 1000 - 1400 euro per month. we would be happy enough to rent it out for 1000, keep the house and only have to pay the balance towards the morgage each month (after expenses are removed from the rent) Yes we are broken up but we are still friends and have an amicable relationship, there was no heart breaking reason for the breakup, we just couldnt cut it together. Im not trying to be silly,I value the advice and would just appreciate an explanation in simple terms as to why it makes better sense to sell up completely and take out loans to pay the balance??

3. If we sell up the house and either one of us meets someone else in the future and we go to buy a new house how does that effect our TRS? I know this lasts for 7 years on your Primary Residence but will that be suspended until we purchase a new home and then continue on? Also if my new partner turned out to be an FTB would my status as a previous owner occuppier mean that their stats as an FTB is nullified?

Overall, thanks guys. this is a hard time and i appreciate your advice and help.
 
horatio1 said:
Buttermilk,
NOV 06 to Early/Mid 07 up 35/40k? The house must be 10 yards from a luas stop with a school accross the road and have nuns and a priest as neighbours either side!
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Sorry, missed the part where November was mentioned as the purchase month.
 
morpheus said:
1. Whether we are deciding to rent a room, rent the house, or sell, who should we talk to? Mortgage advisor? Financial Advisor? Solicitor? Letting agency? I assume we should not directly approach our Mortgage Provider at this stage?
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Well if you want general financial/investment/tax advice then a good independent financial intermediary might be the best option. However many of the issues and implications of renting under the owner occupier rent a room scheme or renting out a (former) PPR outright (thereby converting it from PPR to investment) are covered in detail in many threads and posts here.
2. People say here it will cost more to hold onto the house, Im not sure that I follow... my thinking was that if we decided to hold onto the property as an investment for a couple of years and rent, and are currently paying 1450 per month towards the mortgage (amount outstanding will be about 315k at end of this year) how would that not work? Houses in our area are renting for about 1000 - 1400 euro per month.
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Gross? Net of taxes and other expenses? You really need to crunch the numbers carefully before jumping to conclusions about the viability or otherwise of such an investment. You might also want to switch to interest only when renting out. See the Property Investment key posts thread on this.
3. If we sell up the house and either one of us meets someone else in the future and we go to buy a new house how does that effect our TRS? I know this lasts for 7 years on your Primary Residence but will that be suspended until we purchase a new home and then continue on?
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Yes - you have whatever remains of your 7 year "FTB" preferential relief periods left to claim now or in the future.
Also if my new partner turned out to be an FTB would my status as a previous owner occuppier mean that their stats as an FTB is nullified?
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Yes if you buy jointly.
 
morpheus said:
2. People say here it will cost more to hold onto the house, Im not sure that I follow... my thinking was that if we decided to hold onto the property as an investment for a couple of years and rent, and are currently paying 1450 per month towards the mortgage (amount outstanding will be about 315k at end of this year) how would that not work? Houses in our area are renting for about 1000 - 1400 euro per month. we would be happy enough to rent it out for 1000, keep the house and only have to pay the balance towards the morgage each month (after expenses are removed from the rent) Yes we are broken up but we are still friends and have an amicable relationship, there was no heart breaking reason for the breakup, we just couldnt cut it together. Im not trying to be silly,I value the advice and would just appreciate an explanation in simple terms as to why it makes better sense to sell up completely and take out loans to pay the balance??
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What people are probably refering to is the potential drops in property prices and how your house could drop in value over the next 2 years.
Assuming that you have a mortgage of 315 and can sell it at a slight loss would suggest this is not the worst case scenario, but is assuming prices will drop over the coming years.
If prices were to rise 20% in the next year then I'm sure nobody would be telling you to sell now.
 
Hi, in a similar situation but unfortunately nothing amicable about it. The good relationship is the best thing you have going for you so hang on to it, but don't be surprised if it's too difficult to sustain long term. With that in mind I'd be very careful about how you proceed and I would seek independent legal advice (prob not the sol who handled purchase) on how to prevent a Mexican stand-off at some point in the future whether you rent rooms/rent the house. I always thought that in the worst case scenario the house would be sold but far worse is wanting to sell and being prevented by co-owner while house prices plummet, how would you agree when to sell if you were renting house/rooms out? Ex could be very comfortable and have no interest in renting/moving back home/buying smaller place alone. You have to allow for a change in relations as time progresses and your situations change. Stick the house on the market and rent out one of the rooms(the better of the three), keep your interest in the property, you don't have to stay there full time (maybe crash at the folks at the weekend) but keep it as PPR for both of you until it sells, if that takes six months or a year at least everyone knows where the process is heading. Maybe now, while things are good between you, decide on what sort of financial hit you are both prepared to wear to get out of this so that you can deal realistically with offers on property, factoring in sols fees and EA fees. Just my opinion...
 
burntfingers said:
far worse is wanting to sell and being prevented by co-owner while house prices plummet
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get a good solicitor to get them to wear it, not you.

(try to use paragraphs, it's easier for the rest of us to read your post :))
 
Can you both move out, convert to an interest only investment property mortgage, rent the place out and just pay back the interest over the next few years?

Set up a new account for the rental income and mortgage repayments and make it very transparent. You will have to pay tax on the excess of income minus interest. Of course you will have to pay back the capital eventually - this is a long term deal - but maybe the market/your income will improve.

If not, sell it and move on.
 
Partner wants to stay in the house and rent 2 rooms (can you rent a box room?!!!) I think we should just finish furnishing the spare rooms and rent the whole place out.
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I think your partner is right. Let her stay and rent out rooms.
She has somewhere to live and near her work place while keeping an eye on the property plus paying the mortgage.

You can live almost rent free with your parents and let the dust settle til next year
 
chippengael said:
Can you both move out, convert to an interest only investment property mortgage, rent the place out and just pay back the interest over the next few years?

Set up a new account for the rental income and mortgage repayments and make it very transparent. You will have to pay tax on the excess of income minus interest. Of course you will have to pay back the capital eventually - this is a long term deal - but maybe the market/your income will improve.

If not, sell it and move on.
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I don't think tax on the income in excess of the interest repayments will be an issue somehow! Owning a house to live in is one thing as you'll always need somewhere to live. Owning a house as an investment is simply an investment, a large investment in a single risky asset. This is as big a gamble as going out tomorrow and borrowing 5 times your income to invest in stock in a single company.
 
levelpar said:
I think your partner is right. Let her stay and rent out rooms.
She has somewhere to live and near her work place while keeping an eye on the property plus paying the mortgage.

You can live almost rent free with your parents and let the dust settle til next year
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So she continues with her life (minus him) and he goes back to square one?
Like a previous poster said they should disentangle themselves from the situation whilst still on good terms
 
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