Case study Unsustainable Mortgage

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Stuckinarut

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I have a joint mortgage, ex partner no longer pays anything towards the mortgage and will not going forward.

Currently living in PPR with new partner who pays "rent" towards the mortgage.


Personal and income details
Income self: Unemployed €188 p/w social welfare & €240 p/m childrens allowance
Income history: e.g. "I was made redundant in June 2012 and have not had any work since..."
Income partner/spouse: 0
Income history: Previously earned 27000 pa
number of children - 2
Amount of Mortgage Interest Supplement received - Zero as I am cohabbiting

Home loan
Lender: 307,000
Amount outstanding: 295000
Value of home: 90,000 max
Interest rate: 3.9 % SVR
Monthly repayment 1450. Currently paying 1000
Amount in arrears 2500

Have been on Interest only for past four years, currently paying interest & small amount of capital. New request in for interest only but cant afford either as now unemployed. Bank are proposing I pay off my personal loan and extend my mortgage b 12 years.

Other loans and creditors
Bank loan 10,000 @ 200pm

Other savings and investments
€10000 from redundancy payment

How important is retaining the family home to you?
Which of the following best describes your situation?

I don't care about keeping the family home.

Any other relevant information

What is your preferred realistic outcome?
I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall. My ex partner wants nothing to do with the house and is now living in the UK so could easily apply to be bankrupt.
 
Given the circumstances as described above, you have no real ability to meet any element of interest or capital on this loan. You have the option of just ignoring the Bank and in time they will threaten reposession proceedings. If you decide not to defend the proceedings you can then advise them that you are willing to voluntary give up posession of the property, but have no ability to pay off any of the residual debt. They may threaten further legal proceedings, but given your circumstances are unlikely to progress with these. Unless you feel that your financial circumstances are likely to change in the short to medium term, there is nothing that you can offer the Bank at this time.
 
I think you need to sit down with the lender and both agree that this mortgage is unsustainable. The absence of your ex makes it even more difficult. Presumably, he won't agree to sell the house or engage at all with the lender.

So what have you got to offer the lender?

You can agree to surrender the home to them.
They will need to get a repossession order against you and your ex. You will agree not to challenge this. In fact, you will support it.
They will get the order and you will agree to maintain the house and keep it in good condition while they try to sell it. This maximises the selling price for them.
In return, they will agree not to pursue you for the shortfall. I presume that they can do that while retaining their right to pursue your ex. Although as he has left the country, they probably won't bother.

There is no advantage to you or to them in your going bankrupt.

They might demand that you pay the €10,000 over to them in exchange for agreeing not to pursue you.

If you like the house, is it possible that your new partner might buy it in his sole name for the current market price?
 
Hi

Just an update on this. My lender has now agreed that the mortgage is no unsustainable and they will not offer any further forbearance. They have issued a leter to me confirming this and that the option I have is to voluntarily surrender the house to them.

They have said this is their final leter and that I no longer need to write to them which I find strange. There is no mention of what I am to do next.

Do I just reply to them and return the keys? No mention of the residual debt apart from the fact I will remain liable which will be over €200k and I will never be able to repay.

If anyone could offer me some advice to next steps would be great.
 
You should reply back to them and say you are agreeable. Ask them when you should vacate the property. They probably would prefer if you stay in the house until it is sold (vacant houses can cause problems and incur costs).

Don't worry about the NE of 200K. They will have to write this off. But they probably will not confirm this in writing to you.
 
Thanks for the reply Bronte. Should the fact there is a joint holder on the mortgage cause problems? He has gone to the UK about five years ago and have already written off personal loans connected to him. The letter they sent me was only addressed to me.
 
Hi All

Quick update on this case.

My lender has offered to put us forward for the mortgage to rent scheme. Does anyone have any experience of this? Is it a better option than jus handing back the keys? I will still have to deal with the shortfall but as I am unable to pay large amounts monthly I would need o do a deal with the bank. I presume it is the best option for the bank as they would get more back than if they just sold at aucion.

Any advice would be greatly appreciated
 
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