Bank threatening to repossess house

T

thebadger

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Personal and income details
Income self: Salary €98k P.A. before tax €52,936 after
Income history: e.g.Working in same company since 1990 full time
Income partner/spouse: €6240 after tax per annum
Income history: self employed
number of children 3 €390 per month child allowance
Amount of Mortgage Interest Supplement received none
Home loan €518,000 was on interest only 28 years left was paying interest up till December but can only afford €1800, due to bills, food etc.
Lender: EBS
Amount outstanding: €521,000
Value of home: €230,000
Interest rate: specify whether tracker or SVR or fixed rate:- SVR 4.33%
Monthly repayment €2908 can only pay €1800 @ present
Amount in arrears €3500 in arrears since December 2012


Summary of discussions and agreements: we have been on interest only for the last 4 years since a business we were involved in failed, we were left with debts totaling approx €60,000 we pay €50 per month towards this, we have been in touch on numerous associations but haven't heard what way they want to deal with us over this yet

Investment property
Lender: Irish Permanent
Amount outstanding: €380,000
Value of home: 200,000
Interest rate: 2.53% buy to let interest only
Monthly repayment €870
Amount in arrears €787 since tax return
Monthly rent received €1150

Other loans and creditors - delete those which don't apply to you
Credit Union loan €9661 left on a €45k loan taken out to keep failed business going should have this cleared in approx 18 months
Credit Card €1302 should have it cleared soon
Car loan e.g. None
Family loan None

Other savings and investments
€4000 in credit union
€4950 in savings account rainy day money
Invested €100k in a land deal in Poland 6 years ago recieved €28k back
still chasing balance still might get something hopefully.
Invested in land in Caribbean €100k could be few years before get anything back


How important is retaining the family home to you?
Very, really dont want to drag us all through the trauma of loosing our home kids are still very young
Which of the following best describes your situation?
if we can pay off the credit union we will have apprx €600 extra per month on top of the €1800 we are currently paying this is still short of the €2908 @ present



Any other relevant information
Am in constant contact with the EBS but was told recently we are in their professional opinion we are definitely going to loose our family house, I asked for a split mortgage but they wont wear it they are looking for me to sell the buy to let and look for a write down from the Permo, this would leave us with approx €180k left to pay the permo if we sold up, have been in touch with MARP and New Era on friday so I'd say it will be a few weeks before I hear anything back, I wish I hadent got the buy to let but Ive made my bed.


What is your preferred realistic outcome? Dont know really my wife in looking for full time employment but with 3 small kids the part time is all that suits and we couldnt afford childcare, We are looking at taking in a lodger to make up more money and we have a big garden, we could build a small 1 bed Apartment if we cleared the credit union and rent it out for approx €600 per month which could pay more off the mortgage. When the kids get older my wife could working full time


For example: "I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall"
 
You have negative equity of €480k but you have a very good income.

Your objective should be a Personal Insolvency Arrangement. This would sell the Buy to Let and pay off the shortfall on the buy to let and the home loan over 6 years. Either the EBS or Ptsb could veto the deal.

Alternatively, I think you should put a proposal to them now to sell of both properties and write off the shortfall. OK, you lose the family home, but you have enough to rent an equivalent property and you won't be paying off the negative equity for years to come.


The rainyay has arrived. You should use your savings to pay off your Credit Union loan. They might be very helpful to you in years to come when you need to borrow again. And they are by the far the most expensive loans you have at the moment.
 
You seem to be paying an awful lot of tax, have you got an accountant to look at this.
 
Im not up to speed on the Personal Insolvency Arrangement if we were to sell both houses the balance €480k would have to be paid over 6 years? Or would this be written off, as regards the tax yes I get an accountant to do our returns because of the buy to let and lasts year I owed then €800...Great county
 
Income is 52936 + 6240 + 4680 = 63856 / 12 is 5321 monthly

Outgoings 1800 mortgage plus 600 CU plus 50 other debt = 2450 leaving 2871 monthly.

What is the breakdown on spending of the 2921 if there are no childcare costs.

I don't see the banks logic in getting you to sell the investment property as the rent more than covers the morgage here. Do you have to subsidise this property in any way? If you did sell it and then had to repay the NE of 180K you'd have no rental income to pay it. You mention a tax bill of 800 Euro but that only works out at 66 Euro monthly and you have a surplus of rent of 280? (realise it's not as simple as that but this is based on what scant details you've posted)

If you used the 4K CU savings plus your 4950 rainy day fund you'd immediately only owe the CU about 700 euro, then you could pay off that in one month and free up the 600 to pay towards your mortgage.

That would be then 2400 available towards the home loan and you need another 508 Euro's. By making savings on your monthly outgoings of 2871 can the 500 Euro's be got there? And is there any excess from the investment property I wonder.

What did you do with the 29K back from Poland? Why don't you cash in the Carribean investment?

Until you post up your outgoings and also clarify the actual tax/profit situation of your investment it is very difficult to advise you further. (and this is why it's very important that people do the money makeover with all details).

What is the actual proposal from the EBS to you currently?
 
Expenditure as Follows Per Month
Mortgage 1800
AIB 50
ESB 125
Gas 162
House Ins 38
Car Ins 33
Petrol 200
House Maint 150
Car Tax 64
Bins 30
Tv Licence 13
UPC 80
Food&Drink 1000
Cloths&Shoes 100
School Books 20
Medical 260
Opti (all Glasses) 25
Schools Fees 40
Extras (KIDS) 120
Credit Union 632
Phones 80
Total 5022 outgoings

Income 4248
Partner 520
Child Allow 390

Total 5158

The bank have said they will consider a split mortgage but only on the sale of the buy to let, they cant guarantee we will get a split mortgage even if we can sell and of course we would need the consent of the Permanent TSB

The Buy to let needs work done on it and the money I have been getting has been sunk into keeping that going I haven't included that here

Your right about the credit union I will sort that straight away, I have already spoken to the bank regarding this extra €600, as regards getting up the extra €500 per month we don't go anywhere bar stay in

As regards the 29k from poland that was put into the business to keep it going which is now gone

The other investment in Caribbean is a wait and see can get nothing back until land is sold which could take years in the current climate
 
1000 euro on food is huge - you can make savings there. UPC is not a necessity - that can go. Your gas bill and electricity bill are quite large also.
 
Ive 3 kids & shop in Lidl so you cant get any cheaper, regards the bills gas and electricity have gone through the roof lately, turn everything off all the time but with 3 kids what can you do
 
thebadger said:
Ive 3 kids & shop in Lidl so you cant get any cheaper, regards the bills gas and electricity have gone through the roof lately, turn everything off all the time but with 3 kids what can you do
Click to expand...

This is a bit defeatest? Just because you shop in a shop that is famous for being cheap doesn't mean that savings cannot be made. I would assume it depends on what you are purchasing. And it's something that ought to be looked at because you can sometimes make surprising savings with a bit of ingenuity. Same with the heating, maybe turn it down a couple of degrees and wear fleeces. I don't know what size house you live in but the ESB and Gas is 3444 annually. Also can the 120 on kids be cancelled for now. What is the 40 Euro school fees? You've not put any amount down for socialising. Also your payments to the credit card is missing - you mentioned you're going to have this cleared soon - how?

Could you tell us the name of the investment vehicle for the Carribean land?
 
thebadger said:
Am in constant contact with the EBS but was told recently we are in their professional opinion we are definitely going to loose our family house,
Click to expand...

It's not up to a bailed out banker to decide if you lose your home it's up to a high court judge. Your arrears are negligible. Interest only repayments on a €518k mortgage at 4.33% is about €1870 per month. You can pay €1800 at the moment and if you clear the CU loan you have an extra €600 per month to play with so you can actually pay something towards the principal as well. ! It makes absolutely no sense for a bank to repossess your house when they are making money out of you as it is! I can't see how an unsecured €300k term loan is a more attractive proposition for them which will be the case if they sell your house.!

I don't see the problem with the investment property as there is a monthly surplus of rent over repayments.
 
What ages are your children? I have three children and don't spend anything like €1000 a month on food, and we get most of our food in Superquinn.
 
It's not up to a bailed out banker to decide if you lose your home it's up to a high court judge. Your arrears are negligible. Interest only repayments on a €518k mortgage at 4.33% is about €1870 per month. You can pay €1800 at the moment and if you clear the CU loan you have an extra €600 per month to play with so you can actually pay something towards the principal as well. ! It makes absolutely no sense for a bank to repossess your house when they are making money out of you as it is! I can't see how an unsecured €300k term loan is a more attractive proposition for them which will be the case if they sell your house.!

I don't see the problem with the investment property as there is a monthly surplus of rent over repayments.


Either do I its makes no sense, but this is the offer they have made, sell the buy to let and we will consider a split mortgage. I have been in touch with someone else in the bank yesterday and they were taken aback by this statement but they are going to get back to me regarding this. Everyone has there own opinion in the bank it seems. As regards the €1000 on food that would include the entertainment, but most of it is on feeding us.

The €518k at 4.33% working out at €1870 is correct but we also pay a life insurance policy which costs us €120 per month on that amount with the bank hence the €1990 paid, I agree about the credit union If I clear that I will be paying some of the capital which would stand to us.
 
In my view you are best suited to a Split Mortgage.
If the bank agrees to this they are likely to require you to make a monthly payment equivalent to 40% of your net disposable income (as per the guidelines in the Keane report)

I agree with the others that your investment property should remain as is, as long as its washing its face.
 
A split mortgage would suit us, 40% net of our disposable income would be €2128pm approx if we were to clear the credit union we would have to add €338 to the €1800 we pay but I'd say the bank will look for us to pay more than 40%. I just dont see the point of having to sell the buy to let, but seemingly the call back says they are insisting on it. Is it because they would be worried we would start paying off more on the the buy to let, now that our mortgage repayments would have dropped and if we sell that we are concentrating solely on our Family home? I dont know what their thinking is.
 
I have made a similar point on other threads but here goes again.

Interest on your home mortgage is €1,870 per month if you clear the CU (and is it possible to cancel the insurance) you are in a position to pay the interest and approx. €500 per month capital repayments.

I don't believe that any judge in Ireland in 2013 is going to sell a family home, with 3 small kids under these circumstances, and no bank is going to expose themselves by asking.

I suggest you write to the bank explain that times are difficult and inform them of what you will be doing, i.e. paying interest and €x capital per month. Then sit back and see how they react.

Long term you are not out of the woods, there are 2 issues increase in interest rates and the IO period on the buy to let. But in the long term your kids will grow up and life will go on.
 
savings and investments 210k, and credit union loan 45k and second mortgaged property 380k and then your current property 521k, how the hell have you being able to get such huge borrowings?? doesn't make sense...

your family home should be your absolute priority, your rainy day has come!!! Such a fortunate position that many of us would love to be in with such a healthy income for this climate yet your in a position that you would rather invest massive amounts of money, retain as much financial status as you can and retain your standard of living. You have nearly 9k between credit union and savings "rainy day" use it. Things cant be that bad if you can save!! Do you smoke or drink??
 
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