Hi folks, I’m looking for some help please. We bought principal private residence in late 2004 with mortgage of €390,000 , bought rental investment property in early 2007 with mortgage of €302,000. The latter had a split mortgage on it i.e. €213,000 secured against the property itself and €89,000 equity release from the principal residence. Both are now in serious negitave equity with the investment property worth in the region of €185K.
We’ve managed to keep up with all payments (both capital and interest) and both properties are funded by tracker mortgages. At the peak of interest rates, we were paying roughly €4,000 per month in mortgage repayments and now approximately €2,700 without any restructuring.
The investment property is in a small enough village with poor rental potential, however, we’ve managed to have it rented to the same family for the past 5 years or so at approx €8,000 per year before income tax. Forgive the approximate figures but we’ve pumped approx, €106,000 into repayments on the investment property, with approx €30,000 coming off the capital such that there is approx €270,000 still owing on this property.
The problem is that due to a reduction in both of our incomes, a large tax settlement last year and the increased costs associated with having children we are struggling to make ends meet. Luckily, we both have jobs but cannot entertain the possibility of one of us working less than 5 days a week.
We’ve streamlined our outgoings as best as possible but looking at the next few years when interest rates are only going in one direction and hopefully we’ll have a second child, its plain to see that we’re only fooling ourselves by thinking that the repayments are sustainable. Whether we hit the dead end now or in 3 years time, as far as we can see, it has the same end point and most of our savings have been decimated already.
Trying to be proactive and evaluate our options: Ideally we’d like to sell the investment property, even at a huge loss and pay off the balance over a number of years. We’ve had the house advertised for sale since completion in 2008 but there has been no movement in it. We’ve tried a few different estate agents and even advertised it ourselves.
My questions are:
a) do we need the banks permission to sell?
b) are BOI writing down the amounts owed (e.g.25%) in cases where people sell as this benefits both the Banks as they do not have to incur the losses associated with tracker mortgages and also benefits the individual.
c) if we sell at a loss, given that there is €89,000 secured against our principal provate residence, can we pay off the shortfall on current rates or would that part be transferred to a different type of loan with higher interest rates?
d) are we better off approaching the bank ourselves or getting a professional mediator as I’ve heard unconfirmed reports that the banks are more likely to do deals via a mediator than directly with the customer.
e) any other options that do not just kick the can down the road but that give us a lasting solution?
Any advice would be greatly appreciated.
We’ve managed to keep up with all payments (both capital and interest) and both properties are funded by tracker mortgages. At the peak of interest rates, we were paying roughly €4,000 per month in mortgage repayments and now approximately €2,700 without any restructuring.
The investment property is in a small enough village with poor rental potential, however, we’ve managed to have it rented to the same family for the past 5 years or so at approx €8,000 per year before income tax. Forgive the approximate figures but we’ve pumped approx, €106,000 into repayments on the investment property, with approx €30,000 coming off the capital such that there is approx €270,000 still owing on this property.
The problem is that due to a reduction in both of our incomes, a large tax settlement last year and the increased costs associated with having children we are struggling to make ends meet. Luckily, we both have jobs but cannot entertain the possibility of one of us working less than 5 days a week.
We’ve streamlined our outgoings as best as possible but looking at the next few years when interest rates are only going in one direction and hopefully we’ll have a second child, its plain to see that we’re only fooling ourselves by thinking that the repayments are sustainable. Whether we hit the dead end now or in 3 years time, as far as we can see, it has the same end point and most of our savings have been decimated already.
Trying to be proactive and evaluate our options: Ideally we’d like to sell the investment property, even at a huge loss and pay off the balance over a number of years. We’ve had the house advertised for sale since completion in 2008 but there has been no movement in it. We’ve tried a few different estate agents and even advertised it ourselves.
My questions are:
a) do we need the banks permission to sell?
b) are BOI writing down the amounts owed (e.g.25%) in cases where people sell as this benefits both the Banks as they do not have to incur the losses associated with tracker mortgages and also benefits the individual.
c) if we sell at a loss, given that there is €89,000 secured against our principal provate residence, can we pay off the shortfall on current rates or would that part be transferred to a different type of loan with higher interest rates?
d) are we better off approaching the bank ourselves or getting a professional mediator as I’ve heard unconfirmed reports that the banks are more likely to do deals via a mediator than directly with the customer.
e) any other options that do not just kick the can down the road but that give us a lasting solution?
Any advice would be greatly appreciated.
