Case study Home & Investment Property. Im on Social Welfare and partner is Part Time

Personal and income details:
Income self: Social Welfare €328
Nature of income: Social Welfare
Income history: I was made redundant in Feb 2012 and have not had any work since..."
Income partner/spouse: Part time €200 wk
nature of income wife: Part time
Income history: at best 40k
number of children: 3
Amount of Mortgage Interest Supplement received:
Home loan: €120k
Lender: NIB
Amount outstanding: €120k
Value of home: €250k
Interest rate: Tracker 0.5 ecb
specify whether tracker or SVR or fixed rate: Tracker 0.5 ecb
Monthly repayment: €470
Amount in arrears: none

Summary of discussions and agreements with the bank: none yet as have 3 months until due to of interest only

Investment property: On interest only until new year then meant to pay C&I
Lender: UB
Amount outstanding: €330k
Value of home: €120k
Interest rate: 0.85 above ecb
Monthly repayment: €500
Amount in arrears: none
Monthly rent received: €800E ,which repairs,tax etc nothing left

Family: wife, 3 children

Other savings and investments:

How important is retaining the family home to you?: very important
Which of the following best describes your situation?: I think to only have home loan to worry about, don't care about investment but bank does,

I don't care about keeping the family home.
I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it.
I really want to keep the family home even if it means having a large mortgage and negative equity for years to come.


Any other relevant information:

What is your preferred realistic outcome? Never be able pay Investment Capital plus interest,
For example: "I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall

Hi Dodo

You need to edit your post.

It is unclear.

State n/a or none if any question doesn't apply.

You also need to clarify what you would like to do with your family home. You have contradictory statements. Did you mean you wish to get rid of your investment property?


It would also be a good idea to edit the title. What is your case study about?

What advice do you wish to receive?

Marion

Offer the bank the monthly rent less expenses & tax on the investment property (€560pm).

It's more than the interest (€440pm).

You're €80k in negative equity over the two properties at the moment. That feels bad but trust me it's not really.

If the bank accept what I've laid out above (and I didn't take into account increases in rent) you'll be out of negative equity by 2020 assuming a modest annual house price increase of 2%.

Hell, if you kept going until 2023 you'd be €44k up!

Remember, you're not in arrears. To date you've kept up your end of the bargain you made with the banks. Now you need some modest help, they have no desire to become landlords.

Lets assume you did take the nuclear route and go bankrupt. Where would you be in 7 years time? You'd just about have the bankrupt flag taken off your credit record, you'd still be paying rent, which would be more than the mortgage payments you're currently making.

You have a problem here. Your investment is 210 K in negative equity. But you have equity of 130K in your home. From the banks point of view if you are not able to pay off the investment they could put a judgment mortgage on your home.

So the more you pay off your home loan, and the more you get into trouble with the investment, the likelyhood is that you are actually getting nowhere.

Do you not get help from the government with the mortgage payments on your home?

Now is a good time to talk to the bank to ask them what is sustainable going forward. A sale of the investment would be good, with the bank writing off the NE. Don't think they'll do it though because of the equity in your home.