Should my husband and I separate our finances before we potentially default on mortga

D

Dubl

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Hi there,

This is my first time posting to this so not sure if I have included all the correct information below but here goes:

My husband and I are a year married. Before we got married he had 2 mortgages and I had one so we now currently have 3 together.

Summarised by Brendan for clarity
|Value|Mortgage|rate|rent
My house||343k|fixed at 3.2% for 18 months
His 3 bed|200k|203k|3.1% tracker - repayment |€816
His 2 bed|150k|210k|4.93% tracker - interest only until November |€575
My mortgage is for our family home where we currently live - 343K with a 3.2% fixed term interest which has about 1.5 years left before we will have to see what the bank will offer in terms of a new fixed or variable rate. I am assuming it will be around 5 or 6% when the time comes.

The other two mortgages are for two houses ( a 2 bed and a 3 bed). 1 house has two top ups on it so the first 3 lines below are for that house (this is the 3 bed one) and then the 4th mortgage is for the 2nd house. (the 2 bed one)

3. €100,259.58 (€536.30 per mth) - maturity date: 1/12/31
Present interest rate : 3.15%

2. €62,810.57 (€287.37 per month) - maturity date: 1/6/36
Present interest rate : 3.15%

3. €41,188.76 (€220.93 per mth) - maturity date: 1/12/31
Present interest rate : 3.15%

4. €209,680.32 (€897.54 per mth) - maturity date: 1/7/31
Present interest rate : 4.93%

The rent we are getting for the first house (to go against mortgages 1-3) is 816 euro per month and against the second house (mortage 4) is 575 euro per month. Therefore we are currently supplementing the mortgages by 549 euro per month.

The second house is on interest only but capital is hitting in in November which will increase what we are supplementing the house by another 500 euro approx. Therefore we will be supplementing by about 1050 per month.

The mortgage on our family home (my house) is currently about 1400 a month so in total from Nov we will have mortgage outgoings of 2450 per month.

The problem is that now we are okay in terms of covering this (I am on 70K and my husband is on 60K) but once interest rates start increasing we are not going to be able to sustain this. We have no children at present but we would like to start a family. My husband works in public service also so potential for cuts there too.

We have the second house (the 2 bed with the interest only mortgage) for sale for the last year and a half. It was bought for 210K and we have it for sale at present for 150 after consistently dropping the price from 190 over the past year.

I am wondering should we seperate our bank accounts so my husband shows the bank that on 60K he can't cover these mortages once capital hits in and interest rates increase. He is on a tracker for both houses. Or would we be viewed with all of our incomes and exp together because we are married?

Also should we also put the other house on the market which is probably valued more about 200K so should break even for us. Confused re what to do.

Not sure if I have given too much or too little info but any help would be really really appreciated.

Thanks
 
One obvious question. Do you have the savings to cover the negative equity in property 2, should you sell for 150K. So do you have the 60K to clear the outstanding mortgage?
 
Sorry I should have stated this - no we don't. We would have to either try and get the bank to agree to a loan for this amount or else we would have to see could we borrow from family.
 
It's probably no harm in separating your bank accounts. But I don't know if it will do your husband much good. If he wants to get a good deal from the bank, he probably needs to be totally open with them. They can't access your salary or assets but they don't have to do a deal with him either.

He is on a tracker for both houses.
Click to expand...
Are you sure? 4.93% seems to be a very high tracker.

I think that your husband is right to sell both houses. As a couple, you are overexposed to property and you can't manage the repayments.

Are both his mortgages with the same lender?

They will be delighted to see the cheap tracker on the 3 bed paid off. They won't care that much about the 2 bed as it's a profitable loan for them.

The bank may well extend the interest only on the 2 bed as the rate is the market rate.

Your home is protected by the Mortgage Arrears Code, so you might ask the lender to move you to interest only. Although I don't think that they will to facilitate you paying off your husband's investment property.

So, if both his mortgages are with the same lender, then he should approach them but only talk about himself and his mortgages.
He should offer to sell both and ask for them to agree to accept the proceeds in full settlement as they will be getting out of a cheap tracker.

Brendan
 
Yes it is a tracker but I think the reason it is so high is because it was interest only for the first 5 years and also it is a second property so viewed as an investment rather than a lived in home.

Perhaps if he seperates himself from me in terms of accounts and goes to talk to them in terms of his wages and his repayments that might be an option.
 
How about selling the 4 bed ? If you could shift it and lower your exposure without further loss this would take the heat off you for a while. If he's on a tracker with this you should try and get a sale that even if below the actual mortgage would be a final settlement with the bank. I think you may be over-estimating the sale price though. I'm guessing it is not in Dublin.

Post crossed with Brendans above.
 
You mean the 3 bed one? Yeah it is not in Dublin. We are getting it valued on Sat and will look to put it on the market also. Ideally I think we should probably just try and sell both of them and pay off whatever we owe in the difference. And then we should be okay in terms of covering our own house plus the bank loan. I guess its just so hard to know if they will sell as things don't seem to be moving at all - people dont seem to be buying. Do you think I am right in thinking the ECB rate will be back up around 4 or 5 % in the next 2/3 years?? Thanks
 
Property 1 - home, in wife's name only

House value ?
Mortgage 343k
fixed at 3.2% for 18 months repayments ? repayments €1400

Property 2 - investment, in husband's name only
3 bed
value 200k
mortgage 100k (total mortgage plus top ups €203K)
3.15% tracker - repayment € 536
Top Up 1 - 62K, 3.15% tracker - repayments €287
Top Up 2 - 41K, 3.15% tracker repayment €220

Total repayments €1043

Rent € 816


Property 3 - investment, in husband's name only

2 bed, value 150k
mortgage 210k
4.93% tracker - interest only until November repayments €897

Top Up 1 - amount? - repayments?

Question you mentioned there is a top up on this, is that included in the 210K mortgage? Can you split them up into the two amounts and interest rate etc

Rent: €575

Income

Wife: 70K
Husband: 60K

Question: What is the net income. There is no way one could work on this the way it was orginally laid out. Can you check if the figures are correct. Also need a value for your home. You mentioned a bank loan, do you have any other loans of any description. Do you have any savings.
 
Are all the houses in negative equity? If not, you may be able to sell one at a loss and transfer the outstanding balance to one which isnt in negative equity.
 
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