Negative equity case study

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P.o.p.p.y

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Income details
Net (i.e. after tax) Income self: nature of income e.g. self-employed/public servant etc €650 approx
Income history: e.g. "I was made redundant in June 2011 and have not had any work since
Net income partner/spouse: nature of income
Income history: I was made redundant 3 yrs ago
Amount of child benefit received none, one on the way
Amount of Mortgage Interest Supplement received (MIS is the social welfare payment to unemployed people, don't confuse with TRS) 0

Personal circumstances so we can calculate your reasonable living living expenses should be.
One adult family or two adult family 2 adult family
Do you need a car for work or do you use public transport? car required
Number of children 0- 2 years old: 0
Number of 3 years old children: 0
Number of 4 - 11 years old:0
Number of 12 - 18 years old:
Monthly childcare costs: 0
Montly spend on special circumstances: e.g. exceptional healthcare costs



Home loan
Lender: Springboard Mortgages
Amount outstanding: 258,000
Value of home: 74,000
Interest rate: specify whether tracker or SVR or fixed rate variable rate at 6%
Monthly repayment 1,420
Amount in arrears 28,000

Summary of discussions and agreements with the banke.g. in Marp since Jan 2011 . Have been on interest only since then. make full payments as we have availed of the marps process five times now (6 month periods)



Credit Union
Amount of shares 420
Amount of loan outstanding 1950
Monthly repayment 150
Term left 13 months


Other loans and creditors - delete those which don't apply to you
Term loan Amount outstanding 6,500
Term loan term left forever
Term loan - monthly repayment 40

Other savings and investments

Do you expect any lump sums in the medium term future?
Redundancy, inheritances, injuries awards. no


How important is retaining the family home to you?
Which of the following best describes your situation?

I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it.


Any other relevant information

What is your preferred realistic outcome?
I will never be in a position to repay the home loan. So I want to sell the house.
 
Hi Poppy

It probably doesn't make that much difference, but are you earning €650 per month or per week?

Does your partner have any income?
 
I'm assuming it's 650 monthly so 33800 annually. Mortgage is 17,040 annually, CU is 1800 and loan is 480. Leaves 14480, or 278 Euro a week.

OP are you living on 278 a week? Quite clearly you cannot pay the mortgage if you were on a normal repayment. Other than Marp, what has been discussed with your bank? Have you asked them if you can sell the house?
 
We have between 400 _ 500 from my husbands wages weekly and I receive 150 on has. The lender its constantly threatening legal action and has asked us to voluntarily surrender the keys as the property is only worth 74000 I don't think this would be am option.but if it is what do we do about the huge short fall
 
Hi Poppy

I think you should be talking to Springboard about surrendering. The sub-prime mortgage lenders are much more open to doing deals. It's quite possible that they will agree to write off the shortfall.
 
P.o.p.p.y said:
The lender its constantly threatening legal action and has asked us to voluntarily surrender the keys as the property is only worth 74000 I don't think this would be am option.
Click to expand...


What is not an option? Quite clearly the bank have given you the option of doing it the easy way, voluntarily surrender, or the hard way, court action.

Why don't you go the easy way, and give yourself some time to find a new home, the bank will probably allow you to stay in the house while it's put up on the market, and you can save for a deposit and whatever moving costs you will have.

Obviously I'm using the word 'easy' above about a process, not in relation to the emotion cost of giving up a home. But I would imagine it will be a relief not to have such a mortgage anymore. I cannot see the bank chasing you for the shortfall, you'll have to pay rent out of your income and there won't be anything left for them to get. But they probably will refuse to put it in writing that they are not chasing you for the shortfall.
 
They have said we will be responsible for the full outstanding balance after we surrender the property
 
Of course they have!!! This is a standard process. However, you have then the option of availing of current insolvency legislation. i.e. paying an affordable amount of the arrears over a defined term. Alternatively you could state that you will only surrender the property to them if they negotiate fairly with you. It will take them time and money to remove you from the property!
 
P.o.p.p.y said:
They have said we will be responsible for the full outstanding balance after we surrender the property
Click to expand...

Yes of course they say that. And it's true. You will be still responsible for the full outstanding balance after you surrender the property. But if you cannot afford it, and that would be you, after you start renting, they cannot get the money from you. Not unless you have assets or a large income. What they will do is not pursue you. But they won't write and tell you that they are not going to pursue you. Basically they will write you off in their books as a bad debt. After a period of time the debt becomes statute barred, or you apply for one of the insolvency options, if you want a clean sheet.

One thing to watch out for, and you should ask it on the social welfare part of this website, if you voluntarily surrender, does it affect your right to rent allowance or being put on waiting lists for social housing, I believe the rules may have changed, but it's something important to be aware of.

What is it you want Poppy? If you make a decision, you put control back in your life. What is holding you back from making a decision?
 
Just noted your income. While nothing is certain, I would broadly agree with Bronte on them ultimately writing off the balance. Seems to be your best option!
 
The only thing holding us back is the fact that this our home and we have put so much work into it and the thought of being effectively homeless is really scary and also never being able to own our own home in the future, but I think we just need to bite the bullet and accept that its just not sustainable. Thanks Bronte
 
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