Voluntary sale of negative equity - pepper/ danske

Hi

I'm hoping that there might be someone who has previous experience in dealing with pepper/danske in this issue. I purchased a two bed terraced house in 2006 for 240k in meath and over the course of the last nine years I have married and now have two children under 3. In 2011 we moved out of the two bed terraced house, rented it out and rented a larger house ourselves five minutes down the road. The two bed terrace was far to small to even get a buggy in through the front door. Our joint incomes are 75k, we have a 10k car loan and savings of about 5k. Our monthly mortgage commitment is 1088 against a rental income of 750, we ourselves have to pay out 850 per month on the rent of he the house we are in. We are fully compliment with a tax and Nppr liabilities and the property is managed through a letting agency

There is approximately 177k left on the mortgage and the property is valued at 135k. With living costs, commute and childcare costs, we struggle to put any savings away and find ourselves in complete limbo in terms of getting a new home as it could be years before the value of the house meets the value of the mortgage. We are not in arrears and have perfect credit ratings

This week we are making an application through a broker to Dankse/pepper to sell the house at its current market value and to see what they will do in terms of the shortfall of the mortgage. There is 21 years left on the mortgage, current mortgage balance is 177k on a 4.5% s.v.r. We feel that getting rid of this property is the only way for us to move forward as it will mean not having to be landlords, freeing up extra cash each month.

My questions are

Q1 has anyone any experience with pepper/danske in this and what was the outcome
Q2 what is the most realistic outcome
Q3 Should we even be trying to do this , should we just wait until the market value and mortgage value break even ( I fear doing this as my husband and I are in our thirties and we want a real home for our children)

Any advise or input would be hugely welcomed.

There's no harm in asking Pepper but the important thing would be what would happen about the shortfall were you to sell? There's potentially €42,000 of negative equity there. Would it be converted into a short-term loan? This might not free up any money for you as you'd be paying a higher rate of interest over a shorter term. It's unlikely that they will write off anything as you've been maintaining payments.

Hi Mrs D

You should not sell your house as you will be left with a shortfall and Danske will pursue it as you can well afford to pay it.

There is nothing wrong with asking them to do a deal on the shortfall in advance, but I think it's unlikely that they will do so. The only deal which you might get would be that they would offer to write off some of it in exchange for cash up front. For example, if your family could give you half the shortfall.


However, your situation is not as bleak as you think it is.

MrsD said:

Our joint incomes are 75k, we have a 10k car loan and savings of about 5k. Our monthly mortgage commitment is 1088 against a rental income of 750,

Click to expand...

You mortgage commitment may well be 1,088 but the interest element is around 660. That means that you are paying around €5,000 capital off the balance each year.

In four years time, your mortgage will be down to €155k and, if house prices don't change in the meantime, your negative equity will be down to €20k.

If you sell your house now, you will end up with a shortfall of €40,000, and you will probably not be able to buy a house ever again. Nothing disastrous about that, but most people do want to own their own home.

It's possible that Bank of Ireland, or someone else, might buy the loan book of Danske Bank. If they do, you would then be able to buy another home and move the negative equity if there is any at that stage. If you sell your home, you will not be able to take out a mortgage as instead of the 20% deposit required, you would have a €40k shortfall.

I agree with Brendan. For now you are better not to sell & have to deal with the negative equity.

You can have a real home for your children in a rented house. Kids have no idea if their home is rented or being paid for by a mortgage. It's just home. I think time will get you out of negative equity & you'll still be able to buy if that's what you want to do.

Wait for the outcome of the Millars v Danske bank and F.S.O. court judgment before selling; if the Millars are successful, you may well be entitled to a large lump sum repayment of overcharged mortgage interest since November 2011

Thanks for the responses folks, we are still awaiting feedback from the bank but I think you are all right in relation to not selling the house. As a matter of interest does anyone know when the verdict of the millar case is expected?

Personally I think that if the Millar's case is applicable to other cases without having to take individual action, then even if you sell you could take a case against Danske.
There are lots of people awaiting the result!

Another option we looked as is asking the bank if we could go interest only for a year so that we could through everything into out savings? Do you think this would be a good idea, would it affect future mortgage applications?

You can ask of course but you are unlikely to be successful as SFS overview would probably reflect an ability to meet P&I payments.

Rte online referenced that the six major banks in Ireland will now take on dankse and nationwide negative equity mortgages - is this true I'm struggling to find another source to verify it - I've even contacted some of the banks and they don't know

MrsD said:

Rte online referenced that the six major banks in Ireland will now take on dankse and nationwide negative equity mortgages - is this true I'm struggling to find another source to verify it - I've even contacted some of the banks and they don't know

Click to expand...

This is the text " For customers with Danske Bank and Nationwide which is now IBRC, he said the result would be they could move to better competitors. Negative equity customers will also be allowed to move." and here is the link http://www.rte.ie/news/business/2015/0522/702949-michael-mcgrath-mortgage-rates/

This could be great news if true for those with Danske/Pepper who were locked in due to negative equity.