Case study consolidating debt

T

The Bride

Registered User
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Personal and income details
Net (i.e. after tax) Public Servant. Permanent position. €1550 fortnightly
Income history: Never been unemployed
Net income partner/spouse: Permanent contract with multinational. €1500 fortnightly
number of children: 2
Amount of Mortgage Interest Supplement received €230 due to end very soon.
Home loan
Lender: kbc
Amount outstanding: €240k
Value of home: €150-199k
Interest rate: variable
Payment of €1500 monthly before trs
Amount in arrears 0

Summary of discussions and agreements with the bank: none

Other loans and creditors
Overdraft€1000
Credit Card €6000
Credit Union Loan of €5,000 against shares of €2,000
Car loan none


Other savings andinvestments
Husband has stock options

How important is retaining the family home to you?

I don't care about keeping the family home.

Any other relevant information
We rent out our property for €1050 monthly.
We pay €1500 rent to live in a house in a better area. Moving back to our property is not an option. We pay €1000 childcare monthly. We are frequently left with no money at the end of the month. We pay huge fees to the bank every time they take out a standing order for gas etc and there's nothing in the account to cover it. We are living totally beyond our means but cant see how to rectify it. Rents in the area we are living in are €1300+. We need a 4 bed, hence we are paying €1500.
What is your preferred realistic outcome?
That we could sell our house and carry over the debt to a new mortgage. That instead of paying out nearly €2000 monthly on rent (including the shortfall on our own property) we would pay a bit less than that into a mortgage. Would any bank entertain us? We have zero savings. Would there be any point in keeping the house and continuing to rent it and buy again?
 
A short summary of your monthly budget:
Income 6600
Child Benefit 260
Total Income 6860 per month

Rent 1500
Top Up 450
Childcare 1000

Surplus 6860-2950=3910
So,after your rent/childcare/mortgage you have nearly 1000 a week to live on.I suggest you need to write down everything you spend money on in the month,because you are certainly in a much better position than most who post here.
 
I think that might kind of simplify the figures. We do have a lot of expenditure with running two cars, a credit union loan, a €6k credit card debt and having two kids. I certainly wouldn't say we have €1000 a week to live on! I wish! Anyway I was kind of looking for more advice on the mortgage situation.
I appreciate that others have bigger problems than we do but at the moment we're living permanently in our overdraft so it is difficult.
 
The Bride said:
We pay €1500 rent to live in a house in a better area. Moving back to our property is not an option. We pay €1000 childcare monthly. We are frequently left with no money at the end of the month. We pay huge fees to the bank every time they take out a standing order for gas etc and there's nothing in the account to cover it. We are living totally beyond our means but cant see how to rectify it. Rents in the area we are living in are €1300+. We need a 4 bed, hence we are paying €1500.
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There is a lot of expertise on this forum but I think the key information for people to help you is to understand how your disposable income is spent each month. Vandriver's figures are based on the information supplied, from what I can see, so I don't know how much you know about your other expenses that would reduce your income each month to nil (or there abouts). Have you been tracking your other expenditure recently - have you been reducing you CU loan and credit card recently, have there been other significant/costly events recently? How disciplined would you say you both are?
 
You have a house that you dont live in, you don't need and you don't want - Sell it.
To do that you will need your lenders permission and you will need to enter some agreement on how the negative equity portion is paid off. I think its worth your while, asking your bank about a negative equity mortgage.Your income is strong and that would be one way of dealing with current NE and also getting your own home

If you're not able to get a negative equity mortgage, you will need to start saving for a deposit on a new home. You will need to cut corners on your day to day spending to achieve that.
 
Dr.Debt said:
You have a house that you dont live in, you don't need and you don't want - Sell it.
To do that you will need your lenders permission and you will need to enter some agreement on how the negative equity portion is paid off. I think its worth your while, asking your bank about a negative equity mortgage.Your income is strong and that would be one way of dealing with current NE and also getting your own home

If you're not able to get a negative equity mortgage, you will need to start saving for a deposit on a new home. You will need to cut corners on your day to day spending to achieve that.
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This is heartening I have to say. I wasn't sure was there a point talking to the bank seeing as we have no savings behind us.
I know we could cut down on spending. We have cut it significantly to date.Our biggest outlay is travel. My husband is Spanish and we have to visit the family 3\4 times a year. We've agreed that if we were to try get another mortgage they'll have to start coming to us!
 
Why do you need a 4 bedroomed house? Do you have someone else living with you?

Cancel direct debit for your utility bills if you can't pay them and switch to prepay meters.

You really need to track your spending to understand where your money is going. You cannot make informed decisions without this information.
 
The Bride said:
My husband is Spanish and we have to visit the family 3\4 times a year. We've agreed that if we were to try get another mortgage they'll have to start coming to us!
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Really?? I think they should start coming already. I cant afford to bring my kids to the cinema as a treat, I would consider visits to spain 3/4 times a year a bit extreme. Could your husband go by himself or you all go maybe once during the summer and his family travel to you.
 
Toodles said:
Really?? I think they should start coming already. I cant afford to bring my kids to the cinema as a treat, I would consider visits to spain 3/4 times a year a bit extreme. Could your husband go by himself or you all go maybe once during the summer and his family travel to you.
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My kids need to see their grandparents. They're not jolliers holidays. We don't all go 3/4 times. I might go once a year with one child. He goes another time with one of them. Xmas is the only time we all go together.

We like to have a spare room in the house for the family abroad. Extended family do visit quite often and really there isn't a huge difference in price between a 3 and 4 bed.
 
Quote " We are living totally beyond our means but cant see how to rectify it",yet when people quite reasonably suggest that 4 holidays a year are excessive when direct debits are bouncing from your account,and that you don't need a 4 bedroom house,and indeed could save on your own figures €2400 a year,you get defensive.No-one is on this forum to get at you,just to offer a different perspective.
 
vandriver said:
Quote " We are living totally beyond our means but cant see how to rectify it",yet when people quite reasonably suggest that 4 holidays a year are excessive when direct debits are bouncing from your account,and that you don't need a 4 bedroom house,and indeed could save on your own figures €2400 a year,you get defensive.No-one is on this forum to get at you,just to offer a different perspective.
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Where did I get defensive? I just answered questions put to me I thought! I actually really appreciate any advice given.
 
The advice to look at everything you are spending your money on is really beneficial. To address the mortgage issue you must look at all spending.

This should include;
-renting a 4 bed house
-all expenses associated with property
-childcare-could you get it cheaper locally, elsewhere
-shoppping -can you cut back? Buy own brand?
-phones-land and mobile
-cars, how many? value, running costs etc
-holidays-can you afford to travel as often as you do ( sacrafice is required-here seems obvious)
-husbands grandparents travelling to you more?
-not staying with you? ( paying for a spare room 52 weeks a year seems a luxury you can't afford)
-clubs? Gyms? Etc
-clothes?
-socialising?

Now some questions:
Are you registered with the PRTB?
How come you are claiming TRS on a property that's not your PPR, and worse is rented?
How long is it rented?
Are you paying income tax on rent/making tax returns?
(these could all cost you a lot of money if you are not compliant/or not due the TRS)
Why do you have to live in a better area than the property you own is in-I thought it was a size issue?
 
The Bride said:
What is your preferred realistic outcome?
That we could sell our house and carry over the debt to a new mortgage. . Would any bank entertain us? We have zero savings. Would there be any point in keeping the house and continuing to rent it and buy again?
Click to expand...

How can you get any mortgage never mind a NE mortgage if you have no savings. How could you pay a new mortgage and still subsidise the rental?
 
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