Advice needed re finances please.

E

emma09

Guest
First Income - 46K
Spouse - Currently Unemployed (was self employed) - No entitlement to soc. welfare! - Earned approx 3000 last year.. and expecting same this year. Roughly 1400 so far!!!

Other Income

Rental Prop 1 - 800 p/month
Rental Prop 2 - 1000 p/month

Estimated Value of Investment Property

Property 1 Value - 180000 - Mortgage - 260000
Property 2 Value - 210000 - Mortgage - 245000

Residential Property
Property Value - 250000 - Mortgage 370000

Total Approx Negative Equity - 235000

Other borrowings
Cr Card 1 - 20,000
Cr Card 2 - 9,000
Cr Card 3 - 9,000
Cr Union - 30,000

A lot of these loans to pay off mortgage / each other - spouse unemployed for almost 2 years -

Currently Paying
Invest Prop 1 - 800 ea month ( arranged with bank)
Invest Prop 2 - 420 ea month ( tracker - interest only)
Residential - 1400 ea month ( trying to get them to interest only - should be appox 800 - still waiting to hear from them)

Other loan Payments
Cr Card 1 - 500 ea month
Cr Card 2 - 50 ( arranged with bank)
Cr Card 3 - MBNA paying minimum 20euros - as they won't agree on payment reduction plan
Cr Union - 1100 - ( trying to get them to reduce payment to 700 euros - still waiting )

Savings - NONE

Children - 2 under 10 years

Life / Health Insurance /home insurance
Approx 500-600 ea month

Approx expenses each month

Food300
Petrol200
Kids/Leisure200
Misc100
School100
Utility180including cable/internet/2 mobiles

NPPR 400 Each Year

2 Cars -
2 Insurances - approx 900 each
2 car tax - approx 300 each

Need the car - No direct buses to my work. Spouse Gets work randomly for few days - usually needs to travel far. 1 baby and 1 child . school trips etc - not an option to sell cars - old .. wont get much out of them anyway!

I have asked 2 cr cards to be cancelled - 1 has agreed - still fighting with MBNA and they keep charging me interest/late fees/
Have been to MABS and they advised to make very small pymt to MBNA 10/20Euros - but they still keep on adding more interest .. !

What I want to know is -

If I do not make Full Payment towards my Investment Property - can they - will they take the property ? I am in 1 month arrears and because they have reduced payment of 800 for me for 3 months - they are telling me until I get back to "normal" payments - I will be in arrears for next 3 months? I had asked them to put me on Interest Only but my int. only period has expired? What will happen if I am in arrears for more than 12 months?
I would sell the property - but like many others, mine is in negative equity?

Only 1 investment property is in arrears. The other one is on good tracker rate so, dont want to mess that one up!

Currently living in 2bed apt - very small with young kids. Need to plan for future - Already bad credit rating because missed few cr card payments .. and now in mortgage arrears... Not sure if will ever be able to afford a bigger place ...

Any ideas.. please... I am sure there is a way out..Currently spouse minding the kids - as creche costs nearly 2000 for kids! checked already - few different places
 
Are you making or loosing money on the investment properties i.e. after tax etc does the money cover the mortgage payments?
 
Investment Property 1 Yearly Income - 800 * 12 = 9600 Euros

Expenses Per Annum
Approx 600 Estate Agent
200 NPPR
Approx 1000 (2 Life Insurance )
1000 Property management
Approx 200 Per annum maintenance (washing machine / boiler repair)
Total 2900 per annum
My normal mortgage is 1400 - currently on reduced - 800 per month - so in arrears at the moment.

Investment Property 2 Yearly Income - 1000 *12 = 12000
200 Estate Agent (renewal fees)
200 NPPR
1000 Life insrances
200 Maintenance - misc. expenses
Total 1600 per annum

Interest only tracker mortgage - so basically any extra left over is paying for the other property mortgage/maintenance
To date I havent paid any taxes - no money left over. I have asked Accountant to do tax returns for last 2 years ( no idea how much its going to be!!.. dont even want to think about that at the moment. I will pay when I have the money!)
 
Have you talked to MABs?

I am not sure what the best direction is for you. Based on the income it looks like you have about 3k net a month but your outgoings are higher.

You have over 900k in debt with 235k in negative equity. I think you need some proper advice on your options as this will only get worse over time unless you can seriously increase total income.
 
Yes, I have been to MABS - and to be honest they havent adviced anything useful except to say to cut your credit cards!!

I only have 1 credit card which is maxed out at 20K - but I do not want to get rid of it. As I said before, my credit rating is gone very bad in the last 3-4 months and I know for the next 5 years atleast - both of us wont be able to get any credit . we have 2 young children and at times we have to use the card - (go over limit!) if we need to do some grocery / baby shopping!

I am trying to get rid of Cunion loan - hopefully it will clear in 2 years time and we will get more cash in hand.

I am concerned about the investment property. I do not want to keep them. I just wanted to know, if we made reduced payment for next 12months or longer - depending on our situation, can the banks re-possess that from us? If yes, how will they recover the remaining amount from us? Can they force us to sell our own residential home? Even though it is in negative equity too!
 
Its a long process for a property to get repossed, usually a year or two. If that happens the bank will eventually sell off the property and will register a judgement against you for the remaining loan (i.e. the difference between the sale price and remaining mortgage).

If you don't pay your residential mortgage then yes the bank can go the same route and try to reposses it. But again its a very long process and if you engage with the bank and agree some sort of payment plan it probably won't happen. If it went to court and you have been paying what you can no judge will throw you out onto the street.

Are the 3 mortgages with the same bank? What do they say?
 
I thought different rules with investment property. I knew it would take longer to re-posses family home, but wasnt sure about investment property.
1 property with KBC - the one with arrears
the other two - all payments up to date with BOS

Both banks dont do any consolidation / top up loans.
 
emma09 said:
Yes, I have been to MABS - and to be honest they havent adviced anything useful except to say to cut your credit cards!!
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I think it is a bit unreasonable to be expecting MABS to advise on how to manage property investments gone bad. You are running a small business here. MABS are there to advise you on your personal finances, but not there to support your investment approaches.
 
I wish I had a business mind - would have planned better!

In anycase, if you wish to call it a business, MABS are there to help self-employed people who have personal loans, over-draft facilities etc. I dont think MABS was created to help people on PAYE system only!

I would prefer if anyone has any constructive opinion here.
 
Complainer said:
I think it is a bit unreasonable to be expecting MABS to advise on how to manage property investments gone bad. You are running a small business here. MABS are there to advise you on your personal finances, but not there to support your investment approaches.
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Its not a small business, there is no company of any type here. This is individual and its about personal finances.
 
Your credit union payment per month seems very high. Was the loan for a much larger amount to beging with? I would think that the credit union would be somewhat helpful as they offer very low % loans in conjunction with mabs. Would they be willing to either reduce your payment ot incorporate some of the cc debt?

You probably need some serious financial help as at the moment you have 875,000 in mortgages and 68,000 in unserured debt on a modest income. Have any of the banks with whom you have the mortgages any solution for you?
 
Thanks aristotle.

A thought just occured to me while I was reading someone else's post. I got a "reminder" from Revenue to complete Self Assessment form for tax purposes. does this mean that "rental income" is like having a "small business", like the other poster mentioned.

If it is, even though, I have no company, is there any possibility of declaring bankruptcy - with that I mean, could I give up 2 investment properties? and clear my credit cards etc...

They could not take my home as its in massive negative equity?

I dont think it would be as easy as that.. but wouldn't it be wonderful, if I could start all over again!! just wishful thinking on my part!
 
Fobs, just read your reply.

yes, I agree my cr union payments are very high at present. I have asked them to reduce to 700 each month. My original loan was much higher.. around 50k. It was to help out a family member - now family member not in a position to pay back as he is worse off financially than me! So, around 15K still owed by family member, but could take 3-4 or longer to get back!
If Cr Union accept lower payment and if I could have my residential mortgage on interest only that should give me enough space to sort my credit cards etc... .so, I am still waiting to hear back from them!
 
My credit union have always been very helpful if you show you have a good history with them so hopefully they will help you out.

Have you ever applied for a payment holiday on your mortgage? This might give you 6 months of payments to use to help reduce your other debt thus giving you some breathing space.
 
Payment holiday.. hmm.. never thought of that. I have never missed payment on my residential mortgage and 1 investment property both with BOS.

I have sent in Income&Expenditure form to them looking for Interest Only mortgage on Residential Mortgage and waiting to see what they say...

If I ask for payment holiday.. will they put my name in "bad records"? or "in arrears"?
 
Life / Health Insurance /home insurance
Approx 500-600 ea month

This seems a huge amount, €6000/€7000 per year. Can you break it down?
 
Actually it is.. never thought of the cost per annum... ok these are rough figures, I have at the moment with me.
3 Life Insurances 2854 Health Insurances1801 Home Insurance65totals530

I need 3 life insurances for 3 mortgages.. Health insurance very important.. as we have used it in the past and I would like the security of it with 2 young kids.

1 home insurace... is for 1 rental property.. as we were advised to have it 2 years ago, when we first rented out.. so, we renewed it again, coz. again "just in case we need it"...

Having said all that.. I have to say.. I never thought it costed us so much.. all payments go by Direct Debit different dates each month, and I am too busy thinking of having enough funds on each day that I never realised how much were we paying each year...

I can see.. it needs serious looking into!!!!
 
Take a hit and sell investment property 1. It can be hard to deal with NE but selling this would be a good option. Try and drop it to beat the market around the area with similar propertys. With the cash you can clear Credit card and Credit Union debts. Also have some emergency cash left behind and less exposure to property debt. Keep investment property 2 as there is a good tracker rate on it and your making profit. It will also give your spouse time to find a new job and less stress.
 
emma09 said:
Actually it is.. never thought of the cost per annum... ok these are rough figures, I have at the moment with me.
3 Life Insurances 2854 Health Insurances1801 Home Insurance65totals530

I need 3 life insurances for 3 mortgages.. Health insurance very important.. as we have used it in the past and I would like the security of it with 2 young kids.

1 home insurace... is for 1 rental property.. as we were advised to have it 2 years ago, when we first rented out.. so, we renewed it again, coz. again "just in case we need it"...

Having said all that.. I have to say.. I never thought it costed us so much.. all payments go by Direct Debit different dates each month, and I am too busy thinking of having enough funds on each day that I never realised how much were we paying each year...

I can see.. it needs serious looking into!!!!
Click to expand...


something is wrong with the level of life insurance you have - there must be some element of payment protection in these policies, have you checked if you can claim against this?


you already can't pay your mortgages - do you need to have these insurance policies in case you doubly can't pay them at some time in the future?
 
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