Redundancy:Hand back keys

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flowstone

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This is a hypothetical post but i need to know if a mortgage holder can hand back the keys to the property in settlement of the loan.

In short, there will be redundancies at our company and if this came to pass, I would have enough savings along with redundancy payment to buy outright a property further out but have no mortgage. This could be important if we were relying on social welfare for a long period of time.

Take the following simple example
Current Houe value: 500k
Mortgage: 400k
Savings/redundancy: 200k

House further down country : 195k

I am loath to put our savings against an asset that may never recover but we could be mortgage free if we were willing to downgrade.

There are problems with this idea re. the mortgage contracts etc. but just need someone to confirm what these may be. Not seeking to do this but want to have some options if the situation comes to pass.......
 
I don't think that lenders would be amenable to you just handing the keys to them but would be more concerned with you dealing with your debts. If this means selling up (possibly at a loss and a shortfall to the outstanding mortgage) then they might prefer you to do that. In extreme cases where borrowers default or get into arrears on a mortgage they may try to repossess.
 
Hi Flowstone

if a mortgage holder can hand back the keys to the property in settlement of the loan.
Click to expand...

No. Your loan and the security for the loan are separate. If you foolishly hand back the keys, they will sell the house and you will owe them any deficit.



You have a mortgage of €400k - you owe that and must repay it legally and morally.

You have a house valued at €500k. Sell the house and repay the mortgage.

If the house is worth only €350k, sell the house and pay the proceeds off the mortgage. Use €50k of your savings to discharge the debt.

Brendan
 
No. This is Ireland. Not the USA. Now if you were to move to the USA and never step foot in Ireland again, you may have a chance... If you search the forums you will find that the Irish banks will be after you for 12 years / life, if you default on the loan. BTW, I know of a house in Rathfarnham where the owner who is from Eastern Europe and ran a plumbing company here appears to have done a runner. I think he also owes a few bob to the tax man as well. The Guards are calling to the door every few days looking for him. The fun is only just starting. :eek:

Google
 
I have an Indian colleague, who took out a mortgage 5 years ago, then with the equity in the house, took out further loans and bought 3 houses back in India. He sent his wife and child back to India about 9 months ago, stopped the repayments on the mortgages, waited around for his redundancy payout in November and was on the next plane back to India where I imagine he's kicking up laughing at the Irish banks.
 
If you lost your job you could pay 200K against your mortgage leaving you owing 200K mortgage. There is a scheme whereby the health board pays the interest portion of your mortgage. I assume you are in a city and it's generally easier to get a job in the cities. Or you could sell your current house, pay back the mortgage with the proceeds and have 100K left over plus your 200k to purchase a house outright in the countryside and still have a lump sum. You could also rent and have 300K to start a business/invest.
 
Can you take out a mortgage protection policy before the redundancies hit?
 
I presume you mean mortgage repayment protection and not mortgage protection [life assurance]? I thought that you could only take out the former at the very start of the mortgage? Or course something like salary protection insurance may be an option.
 
flowstone said:
This is a hypothetical post but i need to know if a mortgage holder can hand back the keys to the property in settlement of the loan.

In short, there will be redundancies at our company and if this came to pass, I would have enough savings along with redundancy payment to buy outright a property further out but have no mortgage. This could be important if we were relying on social welfare for a long period of time.

Take the following simple example
Current Houe value: 500k
Mortgage: 400k
Savings/redundancy: 200k

House further down country : 195k

I am loath to put our savings against an asset that may never recover but we could be mortgage free if we were willing to downgrade.

There are problems with this idea re. the mortgage contracts etc. but just need someone to confirm what these may be. Not seeking to do this but want to have some options if the situation comes to pass.......
Click to expand...

Am I missing something here? If house is worth 500K and mortgage is only €400K you have €100K equity in the house so why walk away from it?

If redundancy does come to pass sell the house, pocket the €100K, buy the house in the country (but look at your options at that stage as it may be preferable to hang onto some of your savings/redundancy and take a small mortgage)
 
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