Hello,
My question is a bit of a combination of a financial one and a moral one, but hopefully there is somebody here who can guide me in the right direction....
House bought in 2007 for €330k, very run down and requiring major refurb. 100% tracker mortgage received from AIB for €330k (single applicant, despite having partner, but not married at the time). Spent approx €60k of our own money on doing the house up. Current mortgage approx €322k inc approx €5k arrears, loan expiry date 2042, interest rate 1.85%. Currently worth approx €200k to €220k. Lost my job in 2009 and after looking unsuccessfully for work for 12 months (and maintaining mortgage payments from savings) we decided to move to the UK. Found work in the UK earning a lot less that I had been in Ireland and continued to make mortgage payments using a mixture of UK income and rental income. Following family situation changing in 2010 with the birth of our son, we suddenly found ourselves unable to supplement the rental income in order to maintain the mortgage payments. AIB agreed to interest only payments (approx €500 / month) for 12 months, then extended for an additional 12 months but having recently completed a further SFS and went to the AIB for a meeting to discuss my situation, I have been refused any further reduced payments. At the meeting with AIB I offered to increase payments to €700 / month. The AIB person agreed at the meeting that my SFS paperwork backed up my UK outgoings matching my UK income, meaning the only discussion was regarding my rental income vs my mortgage payments. Rental income is €900 per month, but with insurances, upkeep, tax return, etc. my €700 offer was my absolute upper limit. Yesterday I received a letter from AIB stating that they are "not in a position to offer you an alternative repayment arrangement as significant support has already been made available in your case". The letter goes on to advise me that I may wish to consider the following:
1) Trading Down - "You should ensure that you would have enough funds from the sale to buy another property after paying off the mortgage on your current property"
2) Voluntary Sale - "...you will need the approval of the bank to accept an offer before the sale is finalised....... where the proceeds of the sale do not redeem the balance of your mortgage account, you will remain liable for the outstanding along with any charges, ..........and other costs"
3) Voluntary Surrender - "...the bank takes full ownership of the property in order to sell it. Where the proceeds of the sale do not redeem the balance of your mortgage account, you will remain liable for the outstanding along with any charges, ..........and other costs".
Obviously, none of the above 3 options appeal to us greatly, as we have ploughed all our savings into what we expected to be our home for a long time and feel that these options only suit AIB.
I cannot see any way out of this situation while managing to keep our house so we are now considering another option:
Stop making any payment to AIB, continue receiving €900 / month in rent, wait for the house to be repossessed and in the hope that that will take approx 2 years, we will have recouped circa €15k of our money. With us no longer living in Ireland, any court judgement will have no ill effect but will obviously effect any plans to move back to Ireland.
Can people please advise on the financial and / or legal implications of my possible plan. I would also be interested in hearing if people consider my option to be immoral / wrong, but perhaps this is the wrong forum for this question.
Thanks
My question is a bit of a combination of a financial one and a moral one, but hopefully there is somebody here who can guide me in the right direction....
House bought in 2007 for €330k, very run down and requiring major refurb. 100% tracker mortgage received from AIB for €330k (single applicant, despite having partner, but not married at the time). Spent approx €60k of our own money on doing the house up. Current mortgage approx €322k inc approx €5k arrears, loan expiry date 2042, interest rate 1.85%. Currently worth approx €200k to €220k. Lost my job in 2009 and after looking unsuccessfully for work for 12 months (and maintaining mortgage payments from savings) we decided to move to the UK. Found work in the UK earning a lot less that I had been in Ireland and continued to make mortgage payments using a mixture of UK income and rental income. Following family situation changing in 2010 with the birth of our son, we suddenly found ourselves unable to supplement the rental income in order to maintain the mortgage payments. AIB agreed to interest only payments (approx €500 / month) for 12 months, then extended for an additional 12 months but having recently completed a further SFS and went to the AIB for a meeting to discuss my situation, I have been refused any further reduced payments. At the meeting with AIB I offered to increase payments to €700 / month. The AIB person agreed at the meeting that my SFS paperwork backed up my UK outgoings matching my UK income, meaning the only discussion was regarding my rental income vs my mortgage payments. Rental income is €900 per month, but with insurances, upkeep, tax return, etc. my €700 offer was my absolute upper limit. Yesterday I received a letter from AIB stating that they are "not in a position to offer you an alternative repayment arrangement as significant support has already been made available in your case". The letter goes on to advise me that I may wish to consider the following:
1) Trading Down - "You should ensure that you would have enough funds from the sale to buy another property after paying off the mortgage on your current property"
2) Voluntary Sale - "...you will need the approval of the bank to accept an offer before the sale is finalised....... where the proceeds of the sale do not redeem the balance of your mortgage account, you will remain liable for the outstanding along with any charges, ..........and other costs"
3) Voluntary Surrender - "...the bank takes full ownership of the property in order to sell it. Where the proceeds of the sale do not redeem the balance of your mortgage account, you will remain liable for the outstanding along with any charges, ..........and other costs".
Obviously, none of the above 3 options appeal to us greatly, as we have ploughed all our savings into what we expected to be our home for a long time and feel that these options only suit AIB.
I cannot see any way out of this situation while managing to keep our house so we are now considering another option:
Stop making any payment to AIB, continue receiving €900 / month in rent, wait for the house to be repossessed and in the hope that that will take approx 2 years, we will have recouped circa €15k of our money. With us no longer living in Ireland, any court judgement will have no ill effect but will obviously effect any plans to move back to Ireland.
Can people please advise on the financial and / or legal implications of my possible plan. I would also be interested in hearing if people consider my option to be immoral / wrong, but perhaps this is the wrong forum for this question.
Thanks