KBC rental, advice before meeting

Clara16

Registered User
Messages
95
Salary 1 €68,000 monthly €3500 (after BIK for company car)

Salary 2 €61,500 monthly €3100 (after BIK for VHI)

Both age 35 2 children

Rental property balance €315K current value €220k SVR 4.3% €1664 p/month (KBC Bank) monthly rent €1200 28 years left on mortgage no arrears

Management fees €150 p/month

We did live in this property unfortunately the area went very downhill, drug dealing, unsociable behaviour we had to move out as we had to small kids.

We rented for a while and finally managed to buy a new family home this year with second mortgage before the new rules kicked in.

AIB 3.5% SVR balance €287,000 approx vaule €320k repayment €1250 p/month

Income €3500

Income €3100

Children’s allowance €270

Total €6870

Mortgage rental top up €614 mortgage and management fee

PPR €1250

Crèche €1200

Loan to parents €250 (balance €9000)

BOI loan €170 (balance €5000)

No credit card debit or other loans.

All the other usual housefold bills, insurance, tax, groceries


Obviously we can afford to pay both mortgages. Our new family home is in a lovely location but very small and in desperate need of work and hopefully one day an extension. We both work full time and our children do almost full time hours in crèche thankfully we the help of grandparents they are collected early. We are out of the house each day 8-7pm, I feel so frustrated we are doing this each month and such a big chunk of my money goes to rental property and is essentially down the drain.

I am going to approach KBC to hopefully reduce they payment maybe increase the term, or park some of the capital for a period. I am hoping to get a meeting with them in Jan we have always paid the mortgage no matter how short of cash we are. Any advice on what to ask for?
 
Very difficult ask here! Negative equity mortgage and the fact that you can afford full repayments will be a further deterrent to KBC to offer any reduction in repayments. By all means ask them for a term extension, but I doubt that you will get a positive response. If such a request came to me I would be turning it down in my own organization.
 
I have a rental property with KBC and found them very helpful when I wanted to extend the term to reduce the monthly payments. However, I had 20 years remaining on the mortgage and increased it to 25 years. I was told that they only give max 25 year terms for buy to let mortgages. So I am unsure of whether they will increase the term for you if there are 28 years remaining?

From my understanding they only offer split mortgages on home loans, not buy to let - although this might have changed since I last spoke with them (which was approximately 18 months ago).

They might offer interest only - but be careful with this option as the monthly repayments will increase even more then when you return to full repayments!

But as I said, I found them very helpful in the past so they might well offer you some solution.

One point I would mention is that you have no reference to property tax, PRTB and income tax in your monthly calculations for your rental income costs - these costs can obviously add up - so ensure you have your full figures when speaking to them. They will ask you to complete their standard financial statement so your figures don't need to be exact for the meeting but will for when you complete the statement
 
thanks for the replies, I have yet to tell KBC it is now a buy to let and not a family home anymore. All property tax, PRTB and income tax are up to date. I have a feeling when we fill out the statement of means KBC wont respond in our favour.
I have had friends in similar positions that have simply stopped paying and got deals but this is someone I don't want to do, I am keen to keep my credit rating.
 
Income 6870

Expenditure
Crèche €1200
Mortgage €1250
Loan 1 €170
Loan 2 €250
Housefold bills, insurance, tax, groceries €1464
Rental €615 +

Total:4949

Excess of Income over expenditure = 1920 ???????????

Both age 35 2 children

PPR 320K
Mortgage 287K
AIB 3.5% SVR Term: 29 years remaining
repayment €1250 p/month

Rental

Rental property €220k
Mortgage €315K
SVR 4.3% 28 years remaining
1664 p/month KBC
rent €1200
Management fees €150
1200 - 1664 - 150 = 614
Tax, usc, property tax, prsi - HOW MUCH?


Loan 1
BOI loan €5000
Term remaining 2.5 years
Repayments €170
Interest rate?

Loan 2
Parents €9000
Repayments €250
Term 3 years

No credit card debit or other loans.

Renovations on PPR
20K estimate, probably more

Questions

1. Please outline your spending on cars, house, groceries and utilities -
done
2. Why did you borrow from the parents - to insulate house we bought
3. What was the BofI loan - a car
4. Why is there no savings - because we just bought a house and used €50k savings also crèche was €2k per month before daughter started school
5. Why did you buy a house you never see ? - we did see it and lived in it where is this question coming from I never said that???
6. Why did you buy a too small house, - it has great potential in an excellent location with a great garden
7. Why did you buy a house that needs work. - same as above, houses done up in this area are now selling for €400 ++ I don't think we will lose on this house


I find that those that give the fuller picture will receive better advice. Your answers will help. The questions may seem personal, they are, and they are for you to help yourself. We don't know you and never will.
 
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Very difficult ask here! Negative equity mortgage and the fact that you can afford full repayments will be a further deterrent to KBC to offer any reduction in repayments. By all means ask them for a term extension, but I doubt that you will get a positive response. If such a request came to me I would be turning it down in my own organization.

Age 35, well able to afford, term remaining on rental is 28, brings them to age 63, not a lot of room there for negotiation.
 
thanks for the replies, I have yet to tell KBC it is now a buy to let and not a family home anymore. All property tax, PRTB and income tax are up to date. I have a feeling when we fill out the statement of means KBC wont respond in our favour.
I have had friends in similar positions that have simply stopped paying and got deals but this is someone I don't want to do, I am keen to keep my credit rating.

Do not go near KBC until you tell us more details, this could be a big problem but I've no time now.
 
Airtricity gas & electric 112
life policy 1 28.51
Sky 53
city bin 17
prpoerty taxes 45
life policy 2 27.63
insurance 21
UPC 20.5
house insurance 39.67
food 600
medical 100
children clothes 50
children saving 100
car costs 250 tax insurance petrol
1464

tax bill this year on rental income was low, due to work done on apartment and new furniture bought approx. €1000.

my the big issue money wise is we have so much work to do on new house, it needs new windows, new bathroom, etc
Income 6870

Expenditure
Crèche €1200
Mortgage €1250
Loan 1 €170
Loan 2 €250
Rental €615 plus tax, usc, property tax, prsi - HOW MUCH?
All the other usual housefold bills, insurance, tax, groceries - HOW MUCH FOR EACH
Total €3485

Excess on income over expenditure = 3385

Both age 35 2 children

PPR 320K
Mortgage 287K
AIB 3.5% SVR Term: 29 years
repayment €1250 p/month

Rental

Rental property €220k
Mortgage €315K
SVR 4.3% 28 years remaining
1664 p/month KBC
rent €1200
Management fees €150
1200 - 1664 - 150 = 614



Loan 1
BOI loan €5000
Term remaining 2.5 years
Repayments €170
Interest rate?7.5%

Loan 2
Parents €9000
Repayments €250
Term 3 years

No credit card debit or other loans. - GOOD

You didn't ask but before I advise on KBC please do the following

Questions
1. Please outline your spending on cars, house, groceries and utilities done above
2. Why did you borrow from the parents to insulate house we bought
3. What was the BofI loan a car
4. Why is there no savings because we just bought a house and used €50k savings also crèche was €2k per month before daughter started school
5. Why did you buy a house you never see ? ??? we did see it and lived in it where is this question coming from I never said that???
6. Why did you buy a too small house, it has great potential in an excellent location with a great garden
7. Why did you buy a house that needs work. same as above, houses done up in this area are now selling for €400 ++ I don't think we will lose on this house

I find that those that give the fuller picture will receive better advice. Your answers will help. The questions may seem personal, they are, and they are for you to help yourself. We don't know you and never will.
 
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I note no reply to the questions?

Where is the money for the children's savings going? How much is in those savings?

3385 - 1463 = 1922! I wonder are my figures incorrect, will check another time.

I would respectfully suggest your big issue money wise is to sort out two loans, the rental and savings before renovating.
 
All questions replied to in quote if you expand. Children's accounts €50 each per month since they were born they are 1 and 5.
 
All questions replied to in quote if you expand. Children's accounts €50 each per month since they were born they are 1 and 5.
Sorry Clara the new website drives me nuts.

Have I made a mistake with the figures, you seem to have 2 k or the guts of it left over every month.

How much are the house renovations and how are you planning to fund it. You have no savings, no contingency fund. When are you hoping to renovate?

For the rental you also have no contingency, is the deposit in the current account, ie gone.

How much have you in the kids savings account, what type of product, what is the interest received. Must be about 6k.
 
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Hi Clara

Even if KBC did extend the term of the loan on your rental property by a few years, it's not going to make that much difference to your cashflow.

Your debts are very high relative to your incomes (over 4.5 LTI) so I think you are just going to have to be patient and try to pay your debts down to a more manageable level before you even start to think about refurbishments.

I appreciate that you are at a stage in life where your outgoings are very high. This will pass.

It's madness to deposit €100 per month into accounts in your children's names there are yielding next to nothing after DIRT while you are carrying personal debt at a rate of 7.5% - paying off that loan should be your first priority.

Do you really need SKY and UPC?

Best of luck - you'll get there in the end.
 
I know I can afford the repayments I just feel I am wasting money each month on what is now a really bad investment. Always paid my bills each month even when we lost our jobs within a month of each other back in 2010. We depleted our savings buying the new home this summer we were renting for €1900 started out at €1300 and kept a climbing so we are in a much better position now with home mortgage at €1250 and crèche fees down by €800 month. We finally now have breathing room.Kids accounts have about €3k and €600 each.
I guess I am wondering if I could ever sell KBC property and do a deal on negative equity or extend the term so we can clear loans and hopefully save €20k to upgrade our family home we are hoping to convert garage and attic.
 
I don't see any possibility of KBC writing down your outstanding debt following a short sale. To be blunt, why would they?

I also don't see any possibility of KBC (or AIB) rolling up your other debts into an extended mortgage.

KBC might extend your term by a couple years but that won't make that much difference to your cash flow.

You're actually not in too bad a position.

If you paid back your two personal loans (which, based on the posted numbers, you should be able to clear within a year if you really put your mind to it), stopped depositing money to accounts in your kid's names for the time being and cut back on cable TV, etc., your cash flow would improve fairly dramatically. That would allow you to establish a decent rainy day fund and to save up the refurb costs of €20k within a few years.
 
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, I feel so frustrated we are doing this each month and such a big chunk of my money goes to rental property and is essentially down the drain.

I am going to approach KBC to hopefully reduce they payment maybe increase the term, or park some of the capital for a period. I am hoping to get a meeting with them in Jan we have always paid the mortgage no matter how short of cash we are. Any advice on what to ask for?

Note: post above modified to reflect all the figures now supplied.

What is the mortgage rate with KBC for investors? You do realise that it's probably your mortgage contract allows them to move you to this much higher rate (generally) if you no longer live in it as your home? So going to them might get you in very deep hot water.

KBC would love to see someone with your income come in the door and tell them it's a rental, and you've the money to pay it, and they've not got the business of your PPR.

Have you told your house insurance that it's a rental?

The money is not going down the drain, you are paying off your debt but you also paying down capital. You will eventually get to the end of NE and can sell then. Have you an amortisation table and how many years will it be until then. It seems to me you have extra money that are not accounting for, this could be used to speed up the possible sale of the investment ONCE you've paid off your other debt. Then it would make sense to sell the investment and borrow to do the extension. But all figures would have to be decided to see what makes sense.
 
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I have had friends in similar positions that have simply stopped paying and got deals but this is someone I don't want to do, I am keen to keep my credit rating.

I take this kind of story with alarge grain of salt. It is completely a different matter to stop paying if you cannot afford it and it's therefore a strategy to get the banks to 'negotiate' which is what I suspect your friends did. But two people in good jobs are not going to get anywher with that 'stragegy' if they have the means and they will in addition get saddled with big banking or legal bills from the bank if they try it.

Unless you come on here and explain in detail the deals your friends got, in similar positions I simply don't believe it, not without cuggle muggle or underhand stuff or one person on mortgage etc.

My question about the PPR and never seeing it was because you only seem to sleep in it. That's all. Now you've clarified why you bought it it makes sense.

I think Clara your main issue is you want the extension now and you think the investment is blocking you. But you're kids are too young for the extension to yet be urgent. And 20K for new windows, bathroom, extension, converting garage and attic ??

I've double checked the figures so somethign is wrong as you've nearly 2K left over. Have you made a mistake or is there something else going on. Saving for a holiday, xmas, gambling debts?
 
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Hi Clara

Unfortunately, you just made a bad investment. Loads of people have, so don't think you are the only one. As you are not struggling with being able to make the repayments, the bank won't do you a deal to let you get out of something that didn't work out. If you want a deal, you will have to go through the wringer (look at other posts on this site from people in desperate situations). You just have too much debt and it's stopping you from having the life you want to have.

The creche fees will reduce when both are in school and you'll have additional income. As property values increase and debt decreases, you may be able to sell it and clear the debt.

I can't see any reason why KBC would do something for you. And if they find out you're renting it, they will charge you more. I'd say nothing.

Steven
www.bluewaterfp.ie
 
there is no life I want other than work, kids, home. we are not having a fantastic time on anything believe me we are too exhausted with a baby that doesn't sleep. we both work 50+ hours a week, yes jobs are well paid we put in the hours have 2 small kids, since one child started school in sep creche fees are down to 1200 month from 2000, during summer and school holidays I have to pay the extra so July and August will be 2000 month. working full time and having 30 mins with my kids each day isn't the life I want forever I would love to drop to a 4 day week but with 2 mortgages I don't fee comfortable doing that. it's more expensive working full time for food/ laundry having the dryer on its non stop.

I am not looking for debt forgiveness at all, I was hoping to reduce capital payments by x amount and wanting to save that each month towards future plans. hopefully the property can be sold one day, 2 mortgages is not something I want. Friends that got deals believe it or not worked in 2 of the big banks, had apartments next door to me and have walked away owing nothing.......... they earn as couples more than we do but weren't married so pretended to be singled as mortgages were in one name not too. another story for another day....

have contents insured correctly, block policy covers the rest. I have been advised by several people not to tell KBC it is a rental, yes I know they would increase rate but apparently it is not something they strictly enforce.

I haven't increased the rent in 2 years, as we have great tenants. the apartments are renting for €1500 month now we are getting 1200. I could look at a small rent increase and pay it off the capital to help bridge the negative equity and hopefully sell one day sooner. kids savings accounts are so important to me I don't think I would give them up. I will make a plan to clear personal loans in 2016 which I think is a good place to start and part KBC for another year. thank you for all the responses.
 
Friends getting deals

So as suspected there was cuggle muggle with them

KBC not enforcing

That is true currently for all banks as far as I can tell, one day this might change, to be sure you need to check your contract. BUT anyone with your salaries are not going to get anything

Exhaustion

Sounds to me like you need a holiday or a break, it is not easy juggling all you have to but surprisingly you don't want to tell us what happens the other 2K missing from this story, nor it seems do you want advice on how to cut down on things to get you out of the mess faster. There's also another possibility in relation to your rental, if AIB would take it, would that make it cheaper for example.

Increasing rent

Good tenants are great, just be careful with increasing

Plan

You absolutely need a plan, but a full plan, not a bit of a plan, you also urgently need a rainy day fund.
 
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