Primary Residence in Positive Equity and Investment Property in Negative Equity

P

pguyo

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Income details
Net monthly Income self: €2513 nature of income: Public Servant
Income history: Public Servant since December 2001
Net monthly income partner/spouse: €2700 - €2800 nature of income: Nurse with HSE
Income history: HSE employed since 2002
Amount of child benefit received €260
Amount of Mortgage Interest Supplement received €000

Personal circumstances so we can calculate your reasonable living expenses
The Insolvency Service has published Guidelines for Reasonable Living Expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.
One adult family or two adult family
Do you need a car for work or do you use public transport? Two Cars Required for work
Number of children 0- 2 years old: 2
Number of 3 years old children: 0
Number of 4 - 11 years old: 0
Number of 12 - 18 years old: 0
Monthly childcare costs: €480 (Children taken care of by grandmother)
Montly spend on special circumstances: €0

Home loan
Lender: BOI (ICS)
Amount outstanding: €173000
Value of home: €270000-€290000 – 3500 sq ft, 5 bed, 3 bathrooms, single house in country side
Interest rate: SVR 4.5%
Monthly repayment €900
Amount in arrears €0

Summary of discussions and agreements with the banke.g. in Marp since Jan 2011 . Not Applicable

Investment property - Delete if not applicable
Lender: EBS
Amount outstanding: €237500
Value of home: €140000
Interest rate: SVR 4.58%
Monthly repayment: €1245
Amount in arrears €0
Monthly rent received €625

Credit Union
Amount of shares €100
Amount of loan outstanding €0
Monthly repayment €0
Term left 0

Other loans and creditors - delete those which don't apply to you

Credit Card – Cleared at end of each month
Term loan Amount outstanding €9000
Term loan term left 2 years & 9 months
Term loan - monthly repayment €323
Term loan – AIB Personal Loan 10.66%
Family loan - €4000
Family loan – Nothing currently. Interest free loan from in-laws that want it back in lump sum

Other savings and investments: €3900 in child benefit account and €1200 in another savings account. Currently saving around €500 month now as had been using savings to finish current house.

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

How important is retaining the family home to you? Vital


Which of the following best describes your situation?

I don't care about keeping the family home.
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.
I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.

Any other relevant information My wife bought a house in 2007 for €257000 before we met. This is now our so called “investment” property. We built our current house in 2012 and we do not intend to move and do not want to as it is next door to family.

What is your preferred realistic outcome?
We would like to be able to sell the Investment property. It was our first home but we built next door to in-laws on a gifted site. Hence the LTV on the Home Loan.

We are now accidental landlords and want to be rid of the hassle of renting and the investment property is getting to the stage where things are needing repair.

I know our situation is probably a dream compared to some people that have posted here in the past but would really like to know what our best option would be (re mortgage??) before we talk to either bank or our own. We are both customers of AIB.
 
I don't mean to be deliberately rude, but I don't understand the dilemma. You have a reasonable income level and have good repayment capacity as evident by your savings record. the only deal that would be available to you is to sell the investment property and agree a term out of the residual debt over a reasonable term. I can't see any write off being agreed by the bank given that you have an ability to pay the balance due!
 
I understand what you are saying. Certainly not looking for any type of write down or relief.
Just looking for an opinion on what the best option might be. To continue on presently or sell and re mortgage ppr and would a bank be willing to do this. Would a negative equity mortgage product be viable even though we already have the trading up part done so to speak.
 
OK apologies if I inferred that you were looking for a write down!!
HL is fine. You have a house I assume you are happy with and a very affordable mortgage.
BTL is in negative equity and your issue is that you are reluctant landlords. It's on a SVR and is costing you c400pm accounting for rental income. Your decision would need to be based on what is the expected best result for you. Sell now and you will need to do a deal on the residual debt. You aren't in a position to agree a negative equity mortgage as loans are with different lenders and BoI will not take on the EBS shortfall. However, you need to take account of the potential for an increase in value in any decision. This will primarily be dependant on location. Also EBS are unlikely to agree to a sale request as then they will need to have to deal with you on the residual debt. It would be difficult to sell and agree an acceptable solution on residual amount without their co-operation. First port of call is to assess their response to a sale request!
 
Small point but you shouldn't be claiming mortgage interest relief (TRS) in respect of your investment property.
 
Apologies my mistake. That should be € 1245 for the investment property repayment. That was the amount prior to moving out. That is what is making it expensive to rent it out. house insurance and managemnt fees total around €800 for the year.
 
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