negative equity

Hi,
I bought a house about 4 years ago and now its worth probably just about a half of what I paid for it due to the area now having a bad name.If I sell the house I wont be able to pay a considerable balance due on the mortgage. If I give everything I make on the house sale to the bank, is my mortgage considered paid off in total, because there is no way I can get the funds for the difference.Or can you give the house to the bank and let them decide what they would like to do with it, considering its the collateral on the loan?
Thanks.

"If I give everything I make on the house sale to the bank, is my mortgage considered paid off in total, because there is no way I can get the funds for the difference."

No - unless you manage to do a deal with them, you will have the debt until you clear the debt. You borrowed the money - you have to pay it back.


"Or can you give the house to the bank and let them decide what they would like to do with it, considering its the collateral on the loan?"

But you took out the loan. The house is security for the loan but its not the same thing as the loan and giving them the house does not relieve you of your debt.

mf

Thanks Mf1,
I would think the best thing to do would be to talk to the bank but I have no idea how much of a reasonable approach they would take. I have looked at the mortgage rule book and it says if you miss 3 mortgage repayments , they are entitled to repossess the house. I dont want to go down that route but if the bank were not to come up with some compromise with me, isn't that an option.

even if they repossess your house, you will still owe them the balance of the money...once borrowed it must be paid back (with interest)..according to some though, the banks do not like to repossess the family home - it may be different if you are trying to sell and will not be able to cover the loan - in this case i think they may be less lenient and your mortgage would still need to be cleared

hi quizquaz

I'm sorry you're in the situation you're in. However I dont think you fully understand the situation. Even if the bank repossess the house, you are still responsible for the debt. The bank can sell the property but they will not be bothered about achieving the best possible price - in fact it could go for a real knockdown price. In the meantime, you will still be liable for all the interest accumulated in that time until the sale is achieved. As well as that, you will be responsible for legal fees, selling agents fees etc - all those costs will come out of the sales price before anything goes towards the capital debt. After all that you will still be responsible for the balance!
Do not go down this road if at all humanly possible. Remember your credit rating will be crap for a long time if not for life. Go see your local MABS (money advice and budgeting service) office - www.mabs.ie - its free advice.

I am shocked that a house is worth half of what it was 4 years ago, considering the growth of house prices! Have you had the house valued?

Do you actually HAVE to sell the house right now or do you just want to move? Could you consider just riding out the negative equity situation? You haven't actually said if you are moving or unable to pay the mortgage or whatever.

I didn't think there was any property in Ireland that fits this criteria ,bar theres extenuating circumstances like a new dump on your door step or similar situation ? can you elaborate on the type of house and general area and why you think the place has a bad name ? I'm curious.surely it would be better to hold on and wait and see ? and at least have a roof over your head,you can let a room and earn up to 7K approx tax free if your finding things hard ,foreign students are a good source of income in the summer months also.

Either it's Moyross, a poorly chosen foreign property or a troll. My money's on the latter.

hello perseus, i dont understand the troll reference.all I know is im down a hell of a lot of money and not through my own doing.
I had rented with others for a long time with others and thats part of reason why i decided to purchase a house,so I could have my own space.Thats why its a non-runner for me to rent out the room and get the 7k tax-free.

OK so. Answer the following to start:
Where is the property (roughly)?
What type of property is it (house/appartment/1 bed/2 bed/etc)?
When did you buy it?
How much did you pay for it?
How much did you borrow for it?
How much is a similar property in same area selling for now?
Are you living in it, or renting it out?
If renting, how much rent are you getting?

Sorry if you think I'm being suspicious. It's just that the conciseness of the title topic is at odds with the vagueness of the post. And I find it hard to believe that a property could have halved in price in the last four boom years. If it's true, I'm genuinly curious as to where it could be.

I would like to say thanks to other people here for their contributions.
Perseus,this is an anonymous website.You are anonymous,so am I.I have no interest in any of your details.I simply asked a question which is at the top of the topic here.I gave the fact as I see it.And I am trying to see is there any light at end of tunnel.Your suspicion/nosiness is irrelevant to my query.

quizquaz,
You are correct this site is anonamous - however I would contend to agree with leafs.
Mr. Bear and I bought our first place in Finglas west 4 years ago, this was never a good area. Even now house prices in Finglas south and west (neither of these areas within Dublin would have a great rep), and these houses are worth about €100k more now...

The thing is these areas are still good buys for investors as local authorities do rent these houses from investors.

Are you in Ireland or the UK?

Your suspicion/nosiness is irrelevant to my query

Click to expand...

This is an independant site, and people are free to give this information if you want appropriate help and advise your personal infomation is not accessible so your anonaminity still remains.

Im afraid the bank wont let you get away with writing off the debt ... unless you run for election and get into the cabinet

Folks-please stick to the topic-the moderators will decide on whether this is suspicious or not-alternativley, if you think someone is trolling, just ignore them.

CCovich.I misunderstood what the troll reference was in Perseus reply.I have the gist of its meaning from your reply.My def of troll is mythological monster.So thats how I took it from perseus reply.well can I just say that I take great exception.what i asked at the top of topic was a simple question.i have been given simple relevant answers before Perseus' reply.There is no need to go into the detail that Perseus is looking for.I have put the problem into a nutshell.I have made it deliberately vague so as not to give any of my details or details of those who live in the same estate. As far as I am concerned I gave enough detail in the original query.It doesnt matter where the location is,if I spent 200k or 500k on the property.Its all relative how much a loss is to a person .Perseus, I gave the query the title I gave it because that is what it is.I understand the situation is something that might sound impossible in the Celtic Tiger greed is good era but this is happening.Anyway I am no longer interested in any more replies to my query as I feel I have been slighted.

I can see this is going nowhere-and I think the question has been answered.