Meeting PTSB re extending I/O on RIP

Discussion in 'Mortgage arrears & negative equity case studies' started by shej, Dec 9, 2016.

  1. shej

    shej Frequent Poster

    Posts:
    30
    Age: 44
    Spouse’s/Partner's age: 41

    Annual gross income from employment or profession: 95k
    Annual gross income of spouse: 75k

    Monthly take-home pay 8k

    Type of employment: e.g. Civil Servant

    In general are you:
    (a) spending more than you earn, or
    (b) saving? 1k per month

    Rough estimate of value of home 400k
    Amount outstanding on your mortgage: 125k, 5 yrs remaining paying 2400e per month (slightly overpaying)
    What interest rate are you paying? 3.15 with BOI

    Other borrowings – car loans/personal loans etc 400e per mth on Car PCP

    Do you pay off your full credit card balance each month? Yes
    If not, what is the balance on your credit card? 2K

    Savings and investments.
    c. 60 k in various equities and savings accounts

    Do you have a pension scheme?
    Yes, both public sector

    Do you own any investment or other property?

    2 RIPs
    Combined Mortgage 652k
    Combined Value 400k
    10 yr I/O expiring next June to move to C&I Tracker 0.9%+ECB
    Mortgage 480e, Rent 1400

    Ages of children:
    1, 6, Childcare 1400 per mth

    Life insurance:
    Yes

    My Question
    I'm due to have an initial meeting with PTSB tomorrow to ask can I extend my I/O for another 5 yrs as I estimate next June the RIP mortgage will go to about 3800e, if they would do this, after my PPR has been cleared I can put my current 2400e with the 1400e from the rent (hopefully any increase in in rents may assist with any ECB increase and I'll be able to absorb the regular rental expenses)

    What do you think their response will be?
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    30,299
    You have €60k in investments and you are saving €1k a months and you don't want to pay your mortgage as it becomes due?

    I know what I would tell you if I were ptsb. I would be polite, but I would tell you to pay your mortgage.

    The right strategy some time ago would have been to pay the savings down against your home mortgage which is on a very high rate.

    ptsb should tell you to make your repayments in full and when you are no longer able to do so in a year, to either reschedule your mortgage or sell the family home. You will have about €300k after selling the family home which would be plenty to meet the repayments on the investment mortgage.

    Brendan
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    30,299
  4. Bronte

    Bronte Frequent Poster

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    11,601
    Last edited: Dec 9, 2016
    Income: 8000
    Mortgage: 2,400
    Childcare: 1,400
    Savings: 1,000
    Balance: 2,800

    How much will the morgage on the €625K RIP's cost you in June next year?

    How are you going to pay the home loan of €125K back in 5 years time if you go Interest only?

    That's a neat trick thinking that the actual rent of €1,400 is equal to that amount in real terms. Don't you pay tax on it? Don't you have costs too for those rental properties?
     
    Last edited: Dec 9, 2016
  5. Bronte

    Bronte Frequent Poster

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    11,601
    PRTB are sitting pretty here. Equity of 275K in family home despite the NE of 252K on the investments. And on top of that two very high earners in permanent pensionable employment.

    Big warning to you: interest rate rises.
    Advice: start paying off your home mortgage which has the highest interest rate, I'm not running the number, but with both of you in those type of jobs I'd lob 50K out of your savings into that mortgage.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    30,299
    This would have been the right strategy some time ago, but it is not the right strategy now, unless ptsb agrees to extend the interest only period by 5 years.

    The savings will allow him to make the full capital and interest repayments for another 2 years or so.

    shej

    You need to assume the worst here and prepare for it. Stop your AVCs. Don't put any money into investments which can't be cashed quickly and without penalty.

    If permanent tsb refuses to extend the term, you could offer to pay the full €60k off the tracker mortgage now in exchange for extending the interest only by 5 years.

    Don't forget that if they do agree to extend the I/O by 5 years, the repayments after the 5 years will be much higher as the remaining term will be much lower.

    Brendan
     
  7. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,087
    I wouldn't have thought that there is any realistic possibility that PTSB would agree to extend the IO period on the RIP loans.

    However, I would have thought that there is every possibility that BOI would extend the term of the PDH loan if you think there's going to be a cash flow issue (which isn't entirely clear to me).

    Personally, I wouldn't invest in equities outside a pension vehicle while carrying a mortgage @3.15% - I'd liquidate the equities and use the proceeds to pay down the balance of the PDH loan.

    Incidentally, €1,400pm rent looks a bit on the low side for properties with a combined value of €400k - are both properties rented?
     
  8. shej

    shej Frequent Poster

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    30
    Hi all
    Meeting put back a week so based on replies I've time to consider
    BB yes it's a repeated thread as I'm about to go to bank just looking for some reassurance
    SARENCO
    Rent of 1400e is for both, the tenants in both have been there for over four yrs so I haven't increased it as they are excellent tenants

    What would you think if I didn't proclaim to PTSB about the full 60k savings; 50k savings are split up over an EBS SSIA that I left there and a KBC account that's there since 3or4 yrs ago, can they find these out without me saying so?
    I thought this might help me with my case?
     
  9. Bronte

    Bronte Frequent Poster

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    11,601
    You said earlier you were saving 1k a month, not that it was money left in two accounts.

    So your monthly income after paying your mortgage plus childcare is 3,800

    Does your mortgage amount above mean a repayment of 480 each ie around 1k a month?
     
  10. shej

    shej Frequent Poster

    Posts:
    30
    Bronte
    The c. 1k I'm saving per month (really began as a concerted effort about 3 yrs ago) is going into 300e into a college fund and at the end of yr I put the c.700e (x12) we save as an extra top up to my home mortgage, ( in reality I may need to dip into this for 'living' costs so may not always be 8400e every yr) also any excess from the rental payments after expenses/taxes etc also go towards my home mortgage - 480e is the rental mortgage on the two RIPs
     
  11. shej

    shej Frequent Poster

    Posts:
    30
    Also to explain the other 50 k that I have I built up was around ten yrs ago with the SSIA which I left there ( probably for 10 yrs now) and my wife opened a KBC lump sum account of 20k 4 yrs ago now so there is not a transaction on my PTSB current account on these. Back then income much better - a restructuring of our working and payment as per croke park has led to a c.25% decrease in our combined income since 2011.
     
  12. Bronte

    Bronte Frequent Poster

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    Last edited: Dec 10, 2016
    I'm finding this hard to follow.

    You save 300 a month, which of course is ridiculous given the level of your debt.

    Then there is 700, or 8400 per year that goes where? From what account to where? And somehow goes off your mortgage? BUT you dip into this? So it's an illusion. Or a figment of your imagination. I would suggest.

    I'm guessing this dipping in for lifestyle is what you're going to do this month to pay off your credit card debt. Which is a substantial 2k. I know you'll probably not tell us but I'd love a good look at your credit card bills. You should take them out and have a seriously good look at them yourself.

    What do you mean the extra rental money goes off your home loan, do you mean you use this money to pay your interest only mortgage.

    How much are you making out if the rent after taxes? Tradegy of course being thus isn't going if the capital.

    I will try once again. You are goosed if you continue like this. Bank could do anything. Like make you sell the two investments and put the NE on your home.
     
    Last edited: Dec 10, 2016
  13. Bronte

    Bronte Frequent Poster

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    11,601
    Burgess advised you to use this to pay your mortgage in the future when you are forced by the bank to do so.

    So I don't think you should tell PRSB about this money.

    Finally - interest rate rises! You have been warned.
     
  14. Brendan Burgess

    Brendan Burgess Founder

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    30,299
    You are asking ptsb for special treatment. I think you should be truthful in your dealings with them.

    Brendan