Pepper - want to sell investment property in Negative Equity

L

LadyMarmalade

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Would appreciate any advice on how best to deal with Pepper. Similar to another poster, PTSB sold our interest only mortgage to Pepper in 2020. We want to sell the investment property as it’s empty and is in disrepair. This was before the interest rates started going up and we’re now under huge pressure financially. I’ve set out required information below. How do we deal with the balance? Will Pepper write any of it off? Mortgage is €212,000, we have an offer of €150,000.

I fully appreciate we owe the money and I know we chanced our arm asking them to write off the balance so please go easy on me, it was worth asking. Thanks for your time.


Income details

Net monthly (i.e. after tax) Income self: €2,493.39 (was €2239.38 at time of completing SFS for Pepper last month, got pay rise last month). In full time employment.

Income history:

Net monthly income partner/spouse: nature of income. €2,502. Full time employment

Income history:

Amount of child benefit received (Should be €130 per child). None

Amount of Mortgage Interest Supplement received (MIS is the social welfare payment to unemployed people, don't confuse with TRS). Nil



Personal circumstances so we can calculate your reasonable living expenses

The Insolvency Service has published Guidelines for Reasonable Living Expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.

One adult family or two adult family – Two plus a 22 year old daughter working part time. Our SFS included our 25 year daughter too but she moved out very recently.

Do you need a car for work or do you use public transport? We both need cars

Number of children 0- 2 years old:

Number of 3 years old children:

Number of 4 - 11 years old:

Number of 12 - 18 years old:

Monthly childcare costs: Nil

Montly spend on special circumstances: e.g. exceptional healthcare costs




Home loan

Lender: PTSB

Amount outstanding: €92,468.95

Value of home: €380,000

Interest rate: specify whether tracker or SVR or fixed rate: 4.8% Tracker

Monthly repayment: €798.02

Amount in arrears - Nil



Summary of discussions and agreements with the bank.eg. None in relation to our home mortgage. See below for



Investment property - Delete if not applicable

Lender: Pepper (sold by PTSB – repayments started March 2021 with Pepper)

Amount outstanding: €212,000 interest only

Value of home: €150,000

Interest rate: 4.8%

Monthly repayment €850.00 (gone up from €145 since last September)

Amount in arrears: Nil

Monthly rent received: Nil – house empty and in disrepair



Credit Union

Amount of shares: €1500

Amount of loan outstanding €9,000 approx

Monthly repayment - €350

Term left – 3 years





Other loans and creditors - delete those which don't apply to you

Credit Card - amount outstanding - €300 approx

Credit Card - monthly amount you are paying €100



Other savings and investments: €1,300 savings



Do you expect any lump sums in the medium term future?

Redundancy, inheritances, injuries awards.

There will be an inheritance probably before end of mortgage terms in 2033 – around €120,000





How important is retaining the family home to you?

Which of the following best describes your situation?



We want to keep our family home.


We have the investment property on the market and have been offered €150,000 for it. It is in disrepair and we do not have the money to renovate or the wish (in our early/mid fifties) to rent again.



What is your preferred realistic outcome?

The house sold and some sort of deal done if possible on the balance.

We asked Pepper last year would they accept €150,000 and write off balance. (they had done this for someone else that we knew previously). At that time, repayments were only €145.00. They said no. They said to consider any proposals, they would need an SFS. We put the house on the market to see what would happen. The price had to be reduced six months later due to no offers. It got an offer of €150,000 recently. The increases in mortgage payments are putting a lot of pressure on us, we have gone from paying approx. €750 between the two mortgages to paying €1650. We want the investment property gone. Since the rates went up, we again approached Pepper with the offer on the house and asked if they would write off the balance. We sent a full SFS which showed our income basically matching our expenditure with nothing left over. We said we were on the cusp of going into arrears with the constant increase in rates. They said no. They offered no alternatives.


We approached the Credit Union recently to switch our family home mortgage so make some savings and add on the balance that would be due to Pepper (€60,000) after we sold the house. My plan was to clear whatever was left of that amount once I came into inheritance. Credit Union said no, they would only release equity for home renovations and would need proof work was done. They also said they couldn’t take the entire Pepper mortgage from us, allow us sell the house and pay them back them balance as they only deal with owner occupied properties.

I went to a financial advisor last year who negotiates with banks and he suggested getting our offer first, then asking the Credit Union for a small loan, say €15,000 and offer this plus the €150,000 to Pepper. However, my solicitor has said while he is not saying Pepper won’t negotiate, he thinks offering them €15,000 shows affordability of some sort and may make it more difficult to negotiate.

What do we do? There is only 13 years left on the two mortgages and we have only around that same amount of time left in work. The investment property will start to decrease in value shortly. Do we go into arrears to force Pepper to agree some sort of write down? Could I ask them to shelve the balance until 2036? Would interest continue to accrue? At the moment, we are paying €850.00 per month yet our mortgage is not reducing.

I do not want to go into arrears. Should we push Pepper further to agree some sort of write off or are we wasting our time? People are saying oh stop paying them and they'll talk to you then but that doesn't really solve the issue. The stress is huge at a time when we should be enjoying having a bit of spare cash now that our children are out of education!

Any advice would be greatly appreciated, thank you.
 
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May I suggest that the pepper situation is only a part of your finances and not your first priority. You say you want to keep your home, In my opinion you are not anywhere the position where losing your home is a realistic possibility.

With two adults and a net income of €5k per month you should be able to afford to live well. Maybe you need a spending diary.

You have a €9,000 CU loan with €1,500 in shares costing you €350 per month. Put the shares towards the loan, then scrimp and save and clear the remaining €7,500.

You may be able to extend the mortgage on your home to reduce your monthly repayments. Although you may not wish to do so.

I understand that you do not have money to renovate the rental property or wish to get involved in renting again. However, you have this situation and need to motivate yourself to work through it.

Is your 25 year old paying rent elsewhere, could she live in the property as it is and pay enough to cover the mortgage.

Will the CU give you a loan to get the property repaired and rented. I know that is not how you want to go but you are not wealthy enough to simply pay for this issue to go away.

You can make capital repayments each month to reduce the balance, so that the house will be more likely to clear the mortgage in 2033.

Good luck, and a small point maybe change your username, its got connotations ! :):):)
 
Did ptsb sell only one mortgage?

That is unusual. Usually if one mortgage is not performing, they sell both mortgages.

Brendan
 
LadyMarmalade said:
I went to a financial advisor last year who negotiates with banks and he suggested getting our offer first, then asking the Credit Union for a small loan, say €15,000 and offer this plus the €150,000 to Pepper. However, my solicitor has said while he is not saying Pepper won’t negotiate, he thinks offering them €15,000 shows affordability of some sort and may make it more difficult to negotiate.
Click to expand...

With respect to the solicitor, I would go with the advice of the Financial Advisor. If he negotiates with banks, then let him talk to Pepper for you.

I doubt that they would do a deal, but if he said that they might, then give it a try.

Brendan
 
I doubt you will be allowed to sell it without having a plan for the shortfall. But it's worth a try.

Assuming that they say no, then you really should try to get some income from it. How bad is it and how much is required to fix it?

It was probably easy enough to have an empty property when ECB rates were 0% but not now.

Brendan
 
LadyMarmalade said:
Amount outstanding: €92,468.95

Value of home: €380,000

Interest rate: specify whether tracker or SVR or fixed rate: 4.8% Tracker

Monthly repayment: €798.02
Click to expand...

The interest element on this is €368. So you are paying off capital of over €400 a month, or €5k a year.

It would be much easier to deal with your problem if both loans were owned by the same lender.

you could sell the investment and add the shortfall to the home loan.

Brendan
 
cremeegg said:
May I suggest that the pepper situation is only a part of your finances and not your first priority. You say you want to keep your home, In my opinion you are not anywhere the position where losing your home is a realistic possibility.

With two adults and a net income of €5k per month you should be able to afford to live well. Maybe you need a spending diary.

You have a €9,000 CU loan with €1,500 in shares costing you €350 per month. Put the shares towards the loan, then scrimp and save and clear the remaining €7,500.

You may be able to extend the mortgage on your home to reduce your monthly repayments. Although you may not wish to do so.

I understand that you do not have money to renovate the rental property or wish to get involved in renting again. However, you have this situation and need to motivate yourself to work through it.

Is your 25 year old paying rent elsewhere, could she live in the property as it is and pay enough to cover the mortgage.

Will the CU give you a loan to get the property repaired and rented. I know that is not how you want to go but you are not wealthy enough to simply pay for this issue to go away.

You can make capital repayments each month to reduce the balance, so that the house will be more likely to clear the mortgage in 2033.

Good luck, and a small point maybe change your username, its got connotations ! :):):)
Click to expand...
Thanks for your reply Cremeegg, had no idea about the connotations of my username, that's embarrassing!

Reducing the car loan with the Credit Union is something I can work towards. I didn't think they'd let me use my savings towards it, I thought I needed to have some savings with them so I'll definitely do that!

We cannot really extend our mortgage as it's already up to our retirement age (we already extended it when buying the investment property)

The renovation works would cost around €40,000. I know there is a grant for rental properties where they have been empty for over two years which ours has and I think that would cover the cost of the renovation. I just had so much hassle with tenants previously, even through an agency, that the thoughts of dealing with all that again are nearly as bad as dealing with Pepper. We really want it sold and I think the person putting in the offer is actually going to avail of that grant and rent it out himself.

My 25 year old moved into her own home with her partner, she had no interest in buying ours and it needs a lot of work to be done so that wasn't an option for her.

Thank you for taking the time to reply, I will do a proper budget and take Brendan's advice also and see what happens.
 
LadyMarmalade said:
I didn't think they'd let me use my savings towards it, I thought I needed to have some savings with them so I'll definitely do that!
Click to expand...
In my experience they'll bend over backwards to tell you why you can't do this but you can so you may need to be persistent and not take "no" for an answer. You should probably clear the credit card bill first though and stop racking up high cost credit card debt.
 
Hi guys,

I just wanted to give you a little update in case it might help others.

Initially I tried a broker to see if anyone would take on the two mortgages and do the equity release in our own home. They all said no.

In the end, I picked up the phone to Pepper and spoke to someone on the team dealing with the book of business my mortgage fell under. I think I saw Brendan saying it before but it was confirmed to me that this particular book of business (sold by PTSB in 2020) were all performing mortgages and therefore no deals were being done, end of story.

I explained my situation in full with regards to wanting to sell. My panic had been about the leftover €60,000 plus, I would not be able to repay that under the current loan rates. However, what I didn't know was that Pepper will leave the remaining amount on the tracker mortgage rate - it will not become a normal loan on higher rates once the property is sold. I was told to write a letter seeking the following:-

1. to be allowed sell the house at the €150,000 offered;
2. that the balance be restructured over a 20 year period on the tracker rate keeping repayments at approximately €420.00 per month (we are currently paying €850 with the latest increase kicking in next month).

He also told me that rates will reduce and bottom out next year sometime at around 3% which means this €420 will reduce. However we are going to keep paying that amount to get the balance cleared as quickly as possible.

I was surprised that they would restructure over 20 years given our ages (50's) but I was told Pepper are quite happy to make these arrangements as in the long run, they are getting their money. Our plan is to use inheritance to clear whatever balance is left, when the time comes.

I did query why this couldn't have been suggested to me by Pepper instead of them simply writing and saying no to my then proposal. I was told Pepper do not make proposals, we need to do it ourselves! He said they are doing these deals every day of the week with people and we got a letter accepting our proposal in the last week or two.

We have to have the house sold and the proceeds paid over by the end of the year.

The relief already is fantastic as we know we've only a few months left of these high repayments. Also, next year when the repayments start on the balance, it will be reducing for the first time ever - no more interest only. We are also planning on switching our own home mortgage from PTSB to our local Credit Union and this will save us an additional €80 per month.

Thanks everyone for your advice and for the site in general, the work put in to providing fantastic information for all us is amazing.

LM
 
Hi Lady

That is good news.

I am a bit surprised at my earlier comments that they would not allow you to sell it. It's probably in their interest overall for you to sell it as long as you deal with the shortfall.

I would caution that it's not all plain sailing. The telephone discussion was not a binding agreement. So it's possible that the credit committee might yet refuse to allow you to sell.

You will have an unsecured loan of €60k. They might not allow that.

So make sure to reference the call. "Following my conversation on the 21 Sept with Mr X, I would now like to formally set out the proposal made. ..."

There have been numerous reports over the years of sellers losing a sale because the lender was not quick enough in approving it and the buyer moving on.

If there is any messing on Pepper's side, it might be worth reducing the payments to what you can afford. Yes, your credit record will be damaged but they are more likely to do a deal with a loan in arrears.


Brendan
 
Thanks for coming back with an update.

That seems like a solid outcome.

Very interesting for others in a similar situation that Pepper were happy to accept a sensible proposal, but don't make proposals themselves.
 
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