Investment Property in Negative Equity

Not sure if its the right place to post this, but looking for some advice.

We were one of the unlucky ones who bought an apartment in boom years and then moved on to another property and kept the apartment as investment. Now both the investment and our residential property are in major negative equity.

Investment Property Mortgage : 260,000
Investment Property Value : 120,000 approx
Negative Equity : 140,000

Residential Property Mortgage : 350,000
Residential Property Value : 200,000 approx
Negative Equity : 150,000

On top of this we have personal loans - cr union, cr cards, tax liabilities etc of approx 80K

We were getting a rent of 800Euros per month and paid 1000 towards investment property each month. Now the apartment is vacant and there is no way, that we could afford to pay mortgage on the investment.

Is it possible to discuss with bank to sell off the investment property and get some sort of personal loan of 140K (negative equity)? I dont think bank will agree to that. But I am hoping that they will be happy to get something - approx 100K from the total mortgage of 250K if we were to go down this route. I do not see the apartment to be rented out in the near future as its not in an ideal location and if it does rent out it would be at a lower price.

Our residential home is in negative equity as well and we can just afford to pay interest only at present on that. Both properties are owned by different banks.

What happens in this scenario>? I am already 2 months in arrears with investment property.

We just do not have the means anymore to afford the investment property - We did 5years ago - but a lot has changed since then (financially!).

I just need to know - can I give the keys of the investment property to the bank - let them handle the sale etc.. and whatever they get - they keep it and I can forget about it.

Or will they give me personal loan of some sort to pay up the negative equity? I dont think I will be allowed any personal loan with my income plus all other loans that I have at present... but could they "make me" pay for the amount for next 20-25 years. I am OK to do that - I would like some advice on how to approach the bank to come to either of these solutions.

thanks

If I was in your position, I would foresake one small amount of income/repayment to pay for some advice from an accoutant or solicitor.

I think you should focus your plans on trying to save your house. Concentrate on how to meet that mortgage payment every month.

Go to the bank of the first property (the investment property) and explain that you can't continue. Ask them to take you through everything that will happen when you default. Try to get them to outline any option that might be able to you (would a loan arrangment be available, as it is a large gap and at what cost).

Then take what they have said to a MABs or accountant or solicitor and get some advice about how to proceed.

You can not just hand the keys back. The bank is unlikely to allow you to sell the property and give you a personal loan for the shortfall. You will only know this if you talk to them. In any case with what are you going to finance a personal loan.

Why don't you reduce the rent and get some income in?

Could you do the moneymakeover thread as it looks like you need to sort out a lot more than the mortgages. At the very least you need to talk to your bank, do up a statement of your income and expenditure before you meet then and you definitely need the help of MABS.

I have spoken to the bank and they are not keen on talking about "giving back the keys". They have kindly reduced the payments to 500 Euros per month instead of 1000Euros. The apartment is still not let out - so I am hoping to get the place rented out for cheaper.

However this is only a short term solution - only for 3months. I will still need to make higher payments, which I know are not possible for me at the moment.

I have cut out my credit cards etc and making small payments towards them each month. Its either I keep the credit card people/banks happy or the mortgage lender happy - I cannot keep making payment to everyone.

There must be solution to this problem as I am sure there are a lot of people who bought investment properties during boom years - I am sure banks can give out better interest rate personal loans to finish off these loans or some other solution??

I am not asking to run away from the debt but any helpful advise on how to repay them and still have some sort of normal life! without stressing about it and getting myself ill with the thought of repaying large amount of debt!