Case Study Updated

BrokeGuy

Registered User
Messages
62
Hi there,

I have posted before but my circumstances have materially changed so a fresh perspective is required. I have got married in the last few months (financially this means we have no medical card for the three kids come November) and I have lost my €52k pay job but been lucky enough to get a job with the civil service on €30k… lucky referring to the fact that I am not based in Dublin so jobs in my area are limited so at least I am not on the dole.

I have last night completed the Financial Statement Form for Bank of Scotland so the figures etc are fresh in my mind but first lets look at the overview:

Overview

Home: Value €150,000, debt with BOS €286,000 (paying reduced payments of €700 per month, the full payment would be circa €1,350 per month I’d say) - this is jointly owned -

Rental 1: Value €50,000, debt with BOS €135,000 (this is rented for €350 per month after letting agent fees but the management charge is €100 per month. The reduced payments on the mortgage are €350 per month but would be circa €680 per month) - this is owned by husband -

Rental 2: Value €100,000, debt with BOI €196,000 (this is rented for €600 per month and the mortgage repayment is circa €300 interest only – we have never paid capital on this loan) - this is owned by wife -

Rental 3: Value €25,000, debt with BOS €40,000 (this is a foreign property so probably rented without us knowing! – either way we don’t get a penny but don’t pay the management fees for same. The reduced payments are €150 per month and were circa €250 per month on full capital and interest) - this is owned by husband –

**all tracker mortgages

Other debts: Combined AIB credit card debts totalling €20,000 which the husband has agreed with AIB to pay €20 per month (the debt is frozen) and the wife will probably be doing the same

Current Income

Husband salary: €1,950 per month net
Wife salary: €1,300 per month net
Child Benefit: €260 per month
Rent: €950 per month (€600 + €350 above)

Total: €4,460 per month

Expenses (including loan repayments)

Childcare: €375 per month
Maintenance: €310 per month (for one of the three children)
School costs: €30 per month (average)
Kid’s clubs, e.g. swimming, scouts, etc: €50 per month

Phone: €70 per month (both of us)
Health insurance: €28 per month [for the kids, crap policy but…]
Electricity: €100 per month
Gas: €60 per month
TV/Landline/Internet: €130 per month
LPT costs (all): €30 per month
Service charges: €25 per month
Management Fee (rental 2): €100 per month
House repairs/Rental repairs: €100 per month (est)
Water rates: €40 per month
Mortgage protection (3 policies): €50 per month (I think), €29 for home loan and €21 for others
House Insurance (2 properties): €60 per month (circa €400 for PPR and €300 for rental 2)
Credit Card payments (2 cards): €40 per month

Petrol (for 2 cars): €230 per month
Parking (1 car) : €15 per month
Repairs/NCT/Insurance/Car Tax (for 2 cars) : €200 per month

*no loans on cars, they are both >11 years old

Food/Household: €1,100 per month
Clothes: €75 per month
Health expenses: €75-€100 per month (hard to know with 5 people)
Xmas/Birthdays etc: €50 per month (which I think is allowed under ISI)
Social: €50 per month

Total: €3,418 per month


ð €1,042 surplus for loan repayments of which €700 is being paid on PPR, the balance should be paid to AIB (€300 on rental 2) and BOS (€500 for rental 1 & 3)

The €700 per month is being paid on the PPR but the others aren’t because some other monies were owed (since repaid) and we lost almost €1,500 in income in the period between losing employment and gaining employment. Furthermore BOI have put the gun to our head and asked for the property to be surrendered and that will happen but in the meantime the loan repayments have not been met. Also the BOS other loans haven’t been met since June when word of my loss of employment broke but something could be paid towards them but it is very much a short-term token payment as long term the loans can’t be repaid, e.g. who will pay for any repairs on the rentals if needed when I don’t have the capital?

We have been compliant with all dealings with the banks and in my last correspondence to Certus I said I would open to discussing a way out of this. I have discussed this with a PIP but been unimpressed and “all I want” is to lose the rentals and commit to paying something back on them over the next 6 years. On the homeloan, of course I’d love to have a slice of the loan taken off because that is a lot of debt but I would be open to a split-term mortgage and if not I think we can make the loan work because it is a tracker mortgage so worth retaining despite the negative equity.

If I went bankrupt how long do you have to wait before getting a mortgage...?

Finally, if possible I’d like to deal with the banks without being published as my job is in finance and any slurs of bankruptcy of PIA and I can kiss any chance of promotion goodbye. In fact, in theory I can lose my job if they believe my financial position is detrimental to my job!

Ideas/comments welcome please... :(
 
I might be missing something

But you seem to be using the rental income to finance your lifestyle?

Should you not be paying the rent in full to the lenders on those investment properties?

Brendan
 
"Should you not be paying the rent in full to the lenders on those investment properties?"

I did and always did so until losing work and hence the arrears - losing €900 net per month is hard to adjust to.

If you mean paying for bills etc is financing my lifestyle, well yes that is the case as utilities etc supercede the bank in my book, surely?
 
The point is you are diverting income away from your rented properties to pay your cost of living. Lots of families would be delighted to be receiving €3, 500 net per month.

What you are doing is commonplace, which is why there are such high arrears on buy to lets. I am amazed that the lenders tolerate it. They should appoint rent receivers immediately.

Brendan
 
Sorry but I dont like being associated with the likes you are referring to, e.g. the poor teachers I know on €130k per week and going to New York on mid-term but not paying anything on their buy-to-lets. Sickening.

We paid interest on one loan until BOI said we have to sell it (3 months ago) and the other loans were being paid until I lost my job when we will behind because of the adjustment to the pay cut. I am not sure who that is the typical situation. Going forward I should be able to pay the €500 per month on the two rentals but my point is that it is all short-term and I'd like to move on.
 
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