Retaining 70k neg. equity as an unsecured loan post sale of house

[Celticcub]

We are sale agreed on our house which is in an area that has become unsuitable ( we need to be closer to work/parents homes). House was for sale for a lengthy period. Looking for some advice on our situation now.
I earn 40k p.a. - public sector permanent
Fiance earns 45k p.a.- temporary
Current Mortgage=270k outstanding (Bought house for 340k, took a mortgage of 300k, it is sale agreed @190k
Monthly repayments = €1300 pm
Current commuting costs to work etc.=€400pm combined / new house would reduce this to €150pm combined
TRS=€216 pm
Combined Savings=100k
No other loans

Husband's cousin, a financial advisor (who is very experienced in the field) liased with our provider and they are allowing us to retain 70k neg. equity as an unsecured loan post sale of house. Is this unusual? What are the pros and cons of us doing this? Can you please assess our financial situation now. How likely will it be for our institution to accept a settlement on the unsecured loan in a year or two? Is there another route we could try? Thanks for reading.

 

[goingforgold]

I'm just surprised the bank in question didn't insist (as part of the sale of the house being allowed to proceed) on the 70K negative equity being cleared out of your 100K savings.

Maybe they aren't aware of your savings?

 

[Brendan Burgess]

How likely will it be for our institution to accept a settlement on the unsecured loan in a year or two? .

Why on earth would they accept a settlement when you have the cash to clear it? But then, it's odd that they allowed the sale to go through without insisting on your clearing the shortfall.

 

[Bronte]

Can you please assess our financial situation now.

That's very difficult to do without more details. Does the bank know about the 100K, I am guessing they don't. How much interest is on the NE loan and what are the repayments. If it's low it might be good value as it leaves you with 100K towards a house purchase, but the negative if that will make it more difficult to get a mortgage.

I cannot remember, but maybe an unsecured loan with may not show up in a credit cheque, and if it doesn't then other than your own bank you would have no problems I assume. Whether that's wise, wouldn't think so.

What is it you want to do re housing in the future?

 

[Celticcub]

Just an update on our situation. Our 70k loan has been taken over by a vulture fund, we are continuing to pay it every month as per our agreement with the previous lender. We are house hunting and we have recently been given mortgage approval for a new home.

We intend to purchase a new home and have been house hunting for a year and think we have found a suitable one. We offered to pay half of the outstanding loan off in full and final settlement six months ago and never received a reply.

This vulture fund has purchased our debt at a significant discount some say 50/60% so we would be reluctant to offer them 100% of the debt. We can't offer to pay it all as then we wouldn't have our 20% deposit or any means.

What would be the best way to move forward with this situation? I worry that if we have children in the future we may not be able to meet the repayments on the unsecured debt. We are both in secure jobs- 90k joint income P.A. We try save 20% of our income P.A.

Hypothetically if we could not meet the monthly repayments of this unsecured debt in the future what action can this vulture fund take? Got advice from a very qualified QFA works for a large well know multinational and really knows his stuff. He tells me our new mortgage would become the priority and that the lender should never have agreed to our proposal as the residual debt is now unsecured and there is little the lender can do should we stop paying the debt. It would obviously impact our credit but if we have a mortgage in place that should be ok.

In answer to a previous question No - We haven't disclosed the amt. of savings to the lender as we were never asked when the agreement was made!

It has been a very long road for us and we have lost a lot of money on our first house purchase, we bought in the peak and sold at a point where it was worth very little. We have rented for over a year and now house prices are increasing again - it has been a struggle. Thank you.