Case study Bank wants to move to interest+part capital payment

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garrybaldi

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Personal and income details 2700 monthly


Net income partner/spouse: 200

number of children 2
Amount of child benefit received 2 children
Amount of Mortgage Interest Supplement received
Home loan 330k
Lender: PTSB
Amount outstanding: 300k
Value of home: 200k
Interest rate: tracker 2.25+ecb
Monthly repayment 1400 full, 589 interest only
Amount in arrears 0

Summary of discussions and agreements with the bank
Had 2 x interest only holidays, bank wants to move onto part capital payment of 1080, cant afford it as have surplus of less than 100 euros every month


Other loans and creditors - none
Overdraft 20 euros charge each month

fuel 500 euros/month


Other savings and investments
5000 savings


How important is retaining the family home to you?

This house is not that important to me, I may move elsewhere taking neg equity with me.
Which of the following best describes your situation?

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?
To keep on interest only until can afford to move or pay more.



At the moment I pay 589 euros interest on a mortgage of 300k. Have been paying this for 1 year (2 x 6 month agreements).

The full capital+interest is approx 1400.

Reasons for paying interest only are that the full amount is half my monthly net income. I have had my salary cut by 10% and my wife who freelances hardly gets any work now. Plus with increases in taxes, just don't have the money anymore.

The bank is PTSB and I have filled out forms outlining ingoings and outgoings.
The last form i sent had a monthly surplus of 95 euros.

The bank now wants to move me onto an interest plus part capital payment.
They have suggested a payment of 1080. This is not possible as it it almost 500 euros more than i can afford and i can't figure out where they got that amount from.
I will be calling them by phone tomorrow to discuss.
What options do I have?
 
OK, let's analyse this using the Insolvency Service's Reasonable Living Expenses

A couple with one primary school child and one seconary school child (assumed) and a car would require €1,900 per month before mortgage repayments and any exceptional costs e.g. exceptional medical bills.

Your income is €2,900 per month

This leaves you with €1,000 per month towards the mortgage.

So the ptsb request for €1,080 is just about right. It's in line with the Insolvency Service Guidelines.

You need to review your budget. Make an appointment with MABS to see how you can live within the guidelines. If your wife's self-employed business is not generating much income, can she apply for a salaried job?

You are in some danger of losing your tracker if you say that you can't afford this. Under the new Mortgage Arrears Code, they could offer you a deal to extend the interest only but take you off your tracker. This would make your situation far worse.

Why have you €5,000 in savings? Why not use this to make your mortgage repayments? That alone, would pay the extra amount required for the next 12 months. Have you disclosed the €5,000 in savings on the SFS?

Overall, it seems that ptsb are being very reasonable.
 
Hi Garry

The Insolvency Service published Reasonable Living Guidelines, so it's not really what you think or what ptsb thinks. They apply those guidelines to you and it's reasonable to expect you live on €1,900 per month.

If you are not able to keep up your mortgage payments from income, then you should be using your savings. That is what they are there for.

You can refuse.
They will commence legal action.
They will eventually get an order for possession.
You will lose your home and your cheap tracker and your savings.
 
Now this is unsustainable so if i went down the road of selling the house and accepting a negative equity unsecured loan would the bank let me pay interest only until it was sold.

I feel this is my best option now.
 
I don't think you should throw the towel in just yet. Remember for 1080 per month you can live in your home and still be reducing the amount outstanding. How much would a similar house cost you to rent? Your savings will keep you going on a full repayment for quite a while.
In that time, things may improve for you and your partner. More income in will ease things considerably and all the time the amount owing keeps falling.
You did not state the amount of childrens allowance received or was it included in the household income?
Are you qualifying for mortgage interest supplement? I see it's on your case study but no figure against it.
Remember, you are not in arrears, and seem to have a reasonable offer from PTSB. You may need to reign in spending a bit, stop the overdraft (€20 could go towards something else) but I think it's worth it to try to keep the house.
Best of luck.
 
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