Massive neg equity, have to move, what to do?

M

Magpie

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Bought in 2006 for 275k.
Outstanding mortgage circa 245k.
Current value somewhere below 80k.

Same old story as so many others, house bought at the height, now worth a fraction of price. 1 income rather than the 2 when bought, and that income is less than it used to be. The house is 2 bedroom with no garden, since buying we have gone from one child to three, soon to be four, so we must absolutely move, and soon.
An opportunity has arisen to rent a 4bed property in same area for a bargain price, but what to do with our house? Currently paying MARP deal of 750e a month instead of full 1200e payment. House should rent for 650 pcm if lucky.

We don't want to lose the opportunity to rent this house for only slightly more than we are currently paying, but we don't know how we can do it. What are the chances of a 3 or 6 month moratorium until we can rent it out?
We have engaged with Ulster Bank all along, they have messed us around, lost paperwork, changed deals without telling us etc.

Any advice?
 
I think you know you are up the creek without a paddle in the short, medium and long term. You need for your families sake sort out your mess now so you will have a future. You have a property that is unsuitable for your needs and a mortgage you are not able to service and you are moving into a rented house. How much worse do you need things to be.
Go bankrupt, or do a DSA, or do a deal with the bank (highly unlikely). But do something.
If it was me I would move in to the rented house and offer to sell your house. The bank will refuse. Stop all payments move your current account to a different bank (if you happen to bank with the mortgage provider). And either go to uk for bankruptcy or get a debt settlement agreement.
You will be able to be debt free in a couple of years
 
A problem is that I believe our house to be practically unsellable. There are lots of bigger, better, nicer and better located properties in the area sitting empty, unsold for years. What impact does this have on any strategy?
 
Hi Magpie, you might get some better advice if you post more about your finances using the tool provided on the money makeover thread.

I'm in a similar postition although we are paying our full mortgage at the moment so I would be interested in hearing what advice you get
 
It makes my strategy the only sensible one to follow. It does not matter if it can't be sold. It will not be your problem it will be your banks problem.
If you keep going you will have a asset, sorry liability for the rest of your days. Because
A:it is a crap house in a crap location so it will take a long long time to be worth more than you paid.
B: You don't have the income to pay down the negative equity.

If you take the bull by the horns you can be debt free in a number of years 1-5yrs depending on how much effort you put in. By that the best outcome comes from the biggest effort which is a relocation to the uk where problems are over in 1 year. Least effort is a DSA which might take 5 years.
Kick the can down the road like you are and it will take a lifetime. And at the end of it you will still not own your house.

Lets say you owe 245 and sell it for 80 you are left with 165k. Can you pay back the 165k over 10 years (which is what your bank would like) and support your family and pay rent on your new house??
Now lets say you cant sell it for 80k and you auction it off at 30k you owe 215k. I think your answer is still the same you cant repay it either.
No one is just going to do a write down to the current market value and let you keep owning it. And anyway it is unsuitable for your family.

What i am trying to get across to you it is really not your problem if it makes 80k or 1 euro. You cant afford it.

Now moving to the uk is a big move. But would you move if you were offered a 1 year job contract for €165-215k after tax. Because that is the offer on the table
 
The short term solution is to stop paying UB and move to rented property. Write to UB and offer to surrender the house. If they say you can't so what. Tell them (not in writing ) that you will leave the country and go bankrupt. Do not fill on any forms about income. When and if they bring you to court the judge will just throw it out or make some order based on your current income which at that stage will be minimal. Prior to going to court hopefully UB will see sense and write off the debt. As stated stop paying now and take that rented house. Be more proactive and stand your ground.
 
The more people who cop on and realise how big a hole they are in and do what is best for themselves the sooner we hit the bottom and then our country will experience growth. Also the banks will start to actually do deals with some people if enough go to uk.
Some people will never be able to get a deal but there are cases where the bank will get more money by doing a deal with the customer for a write off of some unsustainable debt than following there stupid course of action to date where they believe they will never write off any debt.
Its a joke at the moment where they still believe the avg joe will live in unsustainable debt for their lifetime and hope that they will be paid when you die.

No thanks my family comes first
 
I agree with Ladylu's and Elcato's advice.

Magpie stop looking at the cheap dream house and concentrate on getting rid of the totally unsuitable, unsustainable one. Your problems look like they are the banks problems from what you've posted.
 
I do want to get rid of the house, but in the meantime we need somewhere to live, and I can't have another baby in this tiny two bed, I will lose what is left of my mind altogether. I rang the bank this morning and they want us to fill in yet another SFS, which would be the fifth I think, and say a payment break is unlikely to be granted.
Long term the plan will probably be to go to England, but we can't do it right now.
 
Don't fill in the SFS. Write a letter outlining the facts and that you cannot pay. Move into the other house and stop payment immediately.
 
Agree with moving in to the house that suits your needs. And stop all payments. You are mad to keep paying for something you are going to lose one way or the other. It would be different if you both had great jobs. But by the sounds of it you are struggling.
And it would be different if the bank thrashed out a deal but they won't so you shouldn't keep paying.

It will be hard at first and you will get some threats and calls from the bank but engage a solicitor to help if your not up to it. Main thing is to accept that you have already lost your house in your own mind. And its no longer your problem, After that things can only get better.

i saw ben dunne on late late talking about bankruptcy and one of the things he said jokingly was you might win the lotto after bankruptcy which was a little far fetched. But you may be likely to receive an inheritance in the future and if you still owe this debt you can kiss it goodbye. But after bankruptcy a little inheritance or windfall could set yourselves up when you have no debts to worry about. With the price of houses now
 
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