Recently Married. Now have Two Mortgages. Need Advice

Hi There,

Myself and my wife recently married. We both have a house each and until recently we used to pay our mortgages separately. We both live in my wife's house.

The combined total of our mortgages is ~€560k. The mortgage on my house is €1,200 a month (Fixed rate of 4.95% due to expire December 2011) and can get rent for €700 a month leaving a shortfall of €500. I owe ~€260k and have 30 years remaining on my mortgage.

My wife's variable rate mortgage has just been increased to €1400 due to interest rate hikes. She has approximately 32 years left on her mortgage. We are both in our early 30's.

My house which I purchased in 2006 was valued at €296k and is now worth approx €140k. My wife's house was purchased in 2008 for €360k and is now worth approx €240k (long story involving builder threatening to sue her when she wanted to withdraw from sale due to devaluing of house value).

We are just about able to cover the mortgages, but due to pay cuts will run into financial difficulty soon. We have not missed any payments yet.

I have a couple of questions for anyone who may be able to offer advice:

1) Will the bank allow me to sell my house and carry the outstanding balance on my wifes house?

2) Now that I am not living in my own house, I presume I will loose the tax relief at source on my mortgage which is worth approx €2.5k a year (€200 a month)?

3) Would it make sense to sell my house and combine the mortgages into one, as I can rent my house out and earn €700 a month on it?

I just need a bit of advice from someone who knows what they are talking about before I approach the mortgage lender and not knowing what questions to ask them.

If anyone needs any clarification blast away

1) Will the bank allow me to sell my house and carry the outstanding balance on my wifes house?

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Your wife is in negative equity, so she does not have any 'spare' equity which can be used as security on your mortgage. This is a non-runner.

2) Now that I am not living in my own house, I presume I will loose the tax relief at source on my mortgage which is worth approx €2.5k a year (€200 a month)?

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Yes, that is correct.

3) Would it make sense to sell my house and combine the mortgages into one, as I can rent my house out and earn €700 a month on it?

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If you sell the house, you'll have to discharge the mortgage fully - which would mean you'd have to find 120k in cash to add to the sale price. If you cant raise this amount in cash, selling is not a realistic option. If you can lay your hands on 120k in spare cash, then you have to make a call on whether renting for a number of years until it gets back into positive equity will lose you more money than 120k.

Thanks csirl for the feedback.

Are the mortgages from the same provider?

If so, you could reason with them that a €420k mortgage on a €240k house is better than €560k of mortgages on two houses worth €380k.

Both situations involve €180k of negative equity but if you offload one of the houses you will at least have paid off 25% of the debt and will have a better chance of servicing the remaining 75%.

If the loans are with different providers it will be a more difficult situation.

One is with EBS and the other is through Haven which is a subsidiary of EBS.

Try explaining the situation to them and see what they think - you've nothing to lose.

The banks are trying to reduce their balance sheets, if that's the right thing to do for them it should be the same for individuals.

Apparently some banks are allowing people to sell for less than the mortgage and pay off the balance over the original term and at the same rate.

Try meeting with the bank manager, explain your situation and see if this could be negotiated.