Case study Negative equity - ex refusing to pay anything

J

jules30

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Bought house 270000. Now worth 140000. Husband wants seperation(no Kids) wants to move out and will not pay mortgage. Both names on mortgage PTSB. Does he legally have to pay 50% ? Read other posts and looks like if someone walks there is no way you can force them to pay. I rang a solicitor she said to ring bank go to interest only mort and give them my husbands mothers address ans work address and they will chase him. Has anyone done this?? I am afraid if I go interest only I will loose tracker mortgage.
Any advise??
 
You are both jointly and severably liable for the whole loan.Your solicitor should have reminded you of this.Whilst you may have had a family arrangement that you paid half out of your wages and he paid half out of his wages,as far as the bank is concerned,you both owe all the loan and are both liable for all the repayments.
 
Sorry to tell you but I know directly that he can get away without paying. If will continue like this until you either agree or you get a judicial separation and the court mandates what is to be done with the house. What would you like to happen with the house? Are both of you working?
 
I would like to stay in the house. We are both working. He earns 20k more than me per year but is refusing to contribute anything to the mortgage. On paper I should be able to manage the mortgage €800 per month but it will be tight. But the problem is he entitled to half regardless if he pays or not. The solicitor said I may also be entitled to maintenance is that possible if I am working?
 
Some assumptions - please correct them if they are significantly wrong.

House price|€270,000|
Deposit|€30,000| shared equally
Balance outstanding now|€220,000
House value|€140,000
Negative equity|€80,000
Monthly mortgage repayments: €800
Tracker rate: ECB + 1%

What would be reasonable?

If your husband has moved out and is paying rent elsewhere, it would not be reasonable of you to expect him to pay half the cost of your accommodation, i.e. €400 per month.

On the other hand, your husband has a liability for half the negative equity of €40,000.

So if the bank allowed it...

  • You should buy half his share of the house for its current value of €70,000
  • He should pay the bank €40,000 to pay off his negative equity
  • You take full responsibility for the mortgage
House value|€140,000
Tracker mortgage|€180,000| 2%
Negative equity|€40,000



Will your husband go for this?

  • He probably won't want to pay €40,000 to get out of negative equity.
  • He probably can't afford to pay €40,000
  • He might be glad to be shot of it as he continues to be liable for it
Will ptsb go for it?


  • If you are making the monthly repayments on time every month, they won't have any incentive to do anything.
  • As of now, both of you are jointly and severally liable for this mortgage. If you don't pay, they can go after him. They will be slow to give up this "guarantor"
  • If your salary would justify a mortgage of €180,000 on its own, they might
  • If they get €40,000 paid off a cheap tracker which also reduces their negative equity, they might.
They might agree to it on condition that you switch the remaining mortgage of €140,000 to a Standard Variable Rate


It's in your interest to sort this out now...


  • You will be gradually paying off his share of the negative equity
  • You are paying off about €5,000 in capital repayments a year
  • The house might rise in value
  • A combination of price rises and capital repayments would eliminate the negative equity over time (although this is some time away)
  • He could claim a stake in the house when the equity returns
  • He could move back into the house at any time
It's in his interest to sort this out now as well...


  • He continues to have a liability for the mortgage until he gets his name off the mortgage (and the property)
  • If you default on the mortgage, they could come after him
  • He probably won't be able to borrow again while this mortgage is hanging over him
If he agrees to resolve it, but ptsb won't allow him off the mortgage


Get a solicitor to do up an agreement between you

  • He agrees that he has no further interest in the house
  • He agrees to pay a sum of €40,000 off the mortgage within 2 years
  • You agree to pay the mortgage in full apart from the €40,000

If you can't reach an agreement with him now ...

  • Tell ptsb the problem and ask their permission to switch to interest-only. Tell them why you need it.
  • If they say no, switch to interest-only anyway.
  • ptsb will chase him as well as you - if you pay the mortgage in full, they won't have any need to chase him
  • Get an independent valuation of the house now as it may be needed at some later stage in legal proceedings
  • Keep a note of all expenditure on the house
 
Other issues

His negative equity should be adjusted for the tracker

If the mortgage was on a Standard Variable Rate, the true negative equity would be €80,000. However, a tracker of €220,000 is probably the equivalent of around €200,000 on a Standard Variable Rate.

So the true negative equity is about €60,000 and his share €30,000

Can you rent a room?

If you rent a room, it will contribute to the cost of the repayments. Keep a full record of all rent received and payments made in case they are needed at a later stage.

Can you rent out the house?

You could rent out the house in its entirety if the rent received covered the mortgage repayments. This would be a lot of hassle, but worth considering.
 
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