140 K personal loan...?! what to do?

S

strongtom

Registered User
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6
Hi All,

first time poster. long time lurker.
need a bit of advice...

About 4 years ago.. in the midst of the glorious celtic tiger days I got persuaded to purchase a piece of land to build on. It cost 130K. I borrowed 140k to cover the stamp duty and solicters fees. It was during the days of 2006-2007. Now at the time i didnt have the money or the intention to build on it.
I got in touch with a friend who works in the finiacial sector who offered to give me a interest only personal loan of 140K. Because i didnt know any different i accepted and taught i would sort out a mortgage at a later date.
Anyhow ..long story short...I having being payin this loan for 4 years now. Interest only 900euro per month.( i know this is special!) I have a reasonable job so have been able to cover. Now though i need to sort this out. Have been unable to save. Its begining to criple me.

How can i restructure this? I have spoke to bank and they wont give me a mortgage. No deposit. flatly denied a few times. Would Any other bank take on this over 10-15 years. ?? i dont know really?

cant sell as site really is only worth half of purchase price! I have made a mistake. I was badly advised. I dont have any debts. I also pay rent! but i need to sort out my finances!

Any Advice?!
 
That's a fairly high rate of interest - 7.7%. Is that what you agreed?

It's not unreasonable given the fact that it was an unsecured(?) personal loan.

Is the loan from the person himself or from the institution he works for?

First, ask him to reduce the rate on the loan.

Second, I think you have to sell the site for its current value if you can. This will reduce your repayments considerably.

Third, you could ask the Credit Unions for a loan, but make sure that it is actually cheaper than you are paying at the moment.

Brendan
 
Hi Brendan,
thanks.

Ya its a high level of interest. 7.7%

It was with the bank. Not sure if im meant to mention. its with one of the big 2 irish(that narrows it down!) I asked for a reduced rate I was told No. I asked for mortgage ..told no. it feels like there just fleecing me.

Selling it really is last resort. I could maintain the payments. I just would like to pay off some capital. Its all interest at moment. Just not sure any other banks would be interested. I mean surely its money generated for them as i havent missed a payment in 4 years.

Would the credit union look at a loan this big?? I dont have a credit union account?

Regards
strongtom

p.s. the site was secured againest it. im fairly sure.
 
go for planning on the site, get that secured sell it with the planning attached youll just make your money back..
 
First of all condolences on a tough situation, and I admire your attitude "I need to sort out my finances"

You say you spoke to the bank and they wont give you a mortgage. I assume that this is the same bank that gave you the personal loan.

Of course they won't give you a mortgage, what advantage would that be for them. At the moment they have a performing loan at 7.7% (rough caln). Why give you a mortgage at 4.5% or less.

Suggestion 1. Try other banks, have you a banking relationship with them. Where is the salary going from you job. If it is the original bank I suggest you change now. If you can prove that you have been servicing a loan at €900 a month and paying rent for four years, you must a reasonable prospect for another bank. Although the valuation of the site will be an issue.

My advice on how to approach another bank, is to walk in off the street and discuss with a mortgage advisor or manager in a bank. If you get negative feedback walk away, and try another bank or even another branch of the same bank. If no file is sent to the underwriter you can start from fresh with a different person from the same bank. Youwill learn from their questions and attitude what you need to get them to offer a mortgage.

Suggestion 2. Stop paying the repayments on the loan. Now instead of having a performing loan at 7.7%, the bank has a problem. Their first response will be to threaten you, and you will need to be prepared to live with that. You could counter threaten with an accusation of miss-selling. Eventually they will have to make some kind of offer. There is little benefit to them in taking you to court unless the can get something from you. Remember though it will cost them little to threaten. Keep putting the money aside as of course interest will keep clocking up.

I have personal experience of suggestion 2. The circumstances were a little different but they made me an offer that I could meet and in just a few more years I will have put it behind me.

While I was dealing with a manager from the bank a friend a bank employee was advising me privately. I was told that the managers dealing with problem loans have much bigger issues than mine (€200k). If he gets a half decent proposal he can call that a success and move on.

I hadn't made any payments on the loan for nearly two years and my file had been moved from the original relationship manager to someone dealing with problem loans. In fairness they didn't threaten, just kept ringing me up and asking "what are we going to do about this", to which I would reply "I don't know, moneys tight". I never paid anything until I received a revised loan offer which I could cope with.

Suggestion 3 Sell the site. You wont be able to get a mortgage of course because you wont have any security, but your problem will be halved.

Good luck and don't let this cripple your spirit, all this is only a small part of who you are. While it is trite it is also true to say, its only money. Your health is more important
 
Thanks Cremeegg... Some wise words.

Yes they have me over a barrell here. I was very naive but i just want now to put some money aside for that rainy day and for future but i cant. They wont deal with me at all. I have learnt to deal with it. No point letting it upset you.


Anyhow... thanks again.
 
Strongtom, you have a loan of €140,000, the security is worth €70,000 - you can walk the streets all day and try every broker and bank in the country but unfortunately there is no chance of getting a mortgage offer, it would be a 200% mortgage after all against land without planning permission.

As attractive as it sounds, if you stop making the repayments then this will be recorded on you Irish Credit Bureau messing up your credit rating for the next 5 years at least.

As cremeegg says try and renegotiate a settlement by all means, hopefully it will not fall on deaf ears. Otherwise as bluemac suggests, could you get planning permission?
 
I have planning permission on it. Although with a clause. condition. local housing need thingy on it.
 
Next year pansy. July. i have to apply for an extension fairly soon.it shouldnt be much of an issue.
 
How far is your site from your job? Is there any possibility that you could live there in a caravan, thus saving on rent? I heard of other people doing it, not ideal, of course, but it could help to reduce the amount of the loan.
 
I don't get the buyer forced into buying land, and then being naive in getting an interest only what looks like 100% interest only personal loan. Nor the thought that one is being fleeced at 7.7% for a personal loan. Isn't 7.7% normal for a personal loan?

You will not get a mortgage. You cannot save so you cannot get a loan from a credit union. Presumable you have no 'right' to a continuation of the interest only loan either so the sooner you cut your losses the better. Unless your 'friend' in the financial sector can get you better terms this means you have to sell the land. You're lucky in many regards, the land is worth 50% so you will owe 70K and that is the extent of your indebtedness (presumably). Secondly you have a salary that gives you the freedom of 900 euro a month to pay down that debt. Thirdly because it is a personal loan rather than a mortgage and therefore unsecured you have the freedom without the banks permission to sell the land. So sell as high as you can, as quickly as you can, and throw every penny you have at it and there's your solution.
 
hi bronte,

Not forced..persuaded i said. I couldnt get a mortgage at the time to build. I had an option to get this interest only loan. Anyhow whats done is done.

I guess i will have to sell and cut my losses.. I would love to build and bring up a family there. I just wanted to see if anyone had any advice on re-structuring or if any bank would take on the loan\combine into a mortgage.

Not sure about a caravan greta.. my missus would not be 'down' with that idea.


strong tom
 
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