Can't pay mortgage while selling house - how best to deal with Pepper?

Discussion in 'Mortgages and buying and selling homes' started by Queenmaeve, Apr 18, 2017.

  1. Queenmaeve

    Queenmaeve New Member

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    I'm looking for some advice on what to do while selling 1-bedroom cottage bought in 2004. Remaining Danske (Pepper) mortgage = 142,000. Approx value now = 200,000-215,000. It has been rented out for 6 years as we rented elsewhere with growing family. Recently bought a new family home with partner. Used up every cent of savings and borrowed from family to renovate the new home.

    Now need to sell cottage as it's costing me money every month with tax, etc and it's stressful worrying if it will need things fixed and the like. Need to simplify life. The tenants are moving out this month and I intend to put it up for sale straightaway. However, I can't afford to pay the mortgage on it as well as the mortgage on the new house while it is being sold. Completely skint.

    I rang Pepper and no hope of reduced payments or a payment "holiday" even though the mortgage would be redeemed soon. What would happen if I couldn't make the mortgage payments for a few months? Apart from scary letters and a black mark on my credit rating? I would be able to pay €200 or so of the €850 amount due but that would be the extent of it.

    I'm worried as I've never been in such a position before and was really surprised at Pepper attitude. Essentially "Don't care, just pay up". I can't pay up while it's vacant.

    Any advice gratefully received.
     
  2. Thirsty

    Thirsty Frequent Poster

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    This is one of the few time I would say don't bother re payments - **provided** you are very confident you will get a quick sale.
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    Agree with Thirsty, I wouldn't even pay them the €200. Even if you are not confident about getting a quick sale, there isn't much that they can do.

    The only caveat is that you should read your mortgage agreement and make sure that they do not have the right to appoint a Receiver. Banks have this in buy to let investment mortgages, but there shouldn't be one in yours.

    Send a nice letter to them summarising the telephone call and asking them to reconsider the decision.

    If you get no answer, send another letter telling them what you are doing. Give them an estimated time line for the sale of the house.

    Ask your solicitor to write to them confirming that the house is on the market.

    Brendan
     
  4. elcato

    elcato Moderator

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    Sorry for possible;e spanner in the works but is it not the case that the bank have the title deeds so they may either not release these for the sale or play hardball ? Just a thought as the delay will increase the interest they will get and may scupper a quick sale.
     
  5. Queenmaeve

    Queenmaeve New Member

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    Thanks everyone for the replies. Very much appreciated. My gut is to brazen it out for the few months, although being a pathetically compliant citizen in most regards, this is uncomfortable! I'm reasonably confident it will sell quickly. Another cottage on the row of 14 sold recently within 6 weeks for €225,000. I'm not particularly holding out for top dollar. I need shot of it -- accepting I was one of the many who were burned in the crash, but thankful that I'm not still in negative equity like many others. However, no money is no money and even trying to put the €200 a month to it would be a challenge. Just thought it might slow down the onslaught from Pepper if they thought I was making an effort to pay. But you are probably right, Brendan, it's unlikely to make much of a difference. I'll sharpen my pencil and get cracking on the letter writing.

    @elcato this mortgage is a tracker at 0.25 or 0.5% above the ECB (can't exactly remember) so I imagine they'd been keen enough to hand the deeds over for a quick sale. I'm costing them money on an interest rate like that.
     
  6. Mauritius

    Mauritius Frequent Poster

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    I think you should get new tenants and rent the cottage out. (You haven't indicated where it is.) You're money for nothing with that incredible rate. Once it's paid off and it's hit 300,000, you'll be in for a windfall.
     
  7. Brendan Burgess

    Brendan Burgess Founder

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    Keeping it may be the correct thing to do financially. But Maeve has put a price on stress and worry and simplifying life, so she is right to sell it.

    Brendan
     
  8. jjm

    jjm Frequent Poster

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    Last edited: Apr 19, 2017
    Can any of the posters who think it is all right to stop paying one Mortgage and not the other Explain there logic. Queenmaeve may be slowing down the closing of sale and have some explaining .Did lender know house was let for last 6 years
     
    Last edited: Apr 19, 2017
  9. Thirsty

    Thirsty Frequent Poster

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    very much doubt that.

    Soltr will ask for redemption figure from bank; that figure will include the unpaid amounts, so once house is sold all debt is cleared.

    Bank wants their money back so they won't be interested in acting the maggot.

    Edit to add: logic is pretty simple,

    Pepper won't accept a short term moratorium pending the house sale.
    Without rental income OP does not have funds to pay mtge.
    Assuming the OP is genuine in wanting to sell (and there's no reason to believe otherwise), best course of action is to not pay monthly mtge and clear all debt when house is sold.
     
  10. Queenmaeve

    Queenmaeve New Member

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    @Thirsty That's my logic on the matter too. Just wasn't sure if there is a big bad metaphorical stick Pepper can beat me with that I didn't know about.

    Cottage is in Glasnevin, near Harts Corner, 25 mins walk to the Spire, v handy area, so thinking it will sell.

    @Niall Morris While I understand there is financial logic in keeping it and continuing to rent it out, if anything at all goes wrong with it (boiler, roof, whatever) I'd be in a pickle trying to find the cash to do repairs. We have absolutely no cash since buying the new house. And not likely to accumulate any for a few years given CU loan. That's a stress. Cottage is over 100 years old and although cute and bijoux, it could do with investment. So Brendan's summary reflection nails my sentiments on the matter. I was always a reluctant landlord and can see I'd likely be a rubbish financial trader too given unwillingness to play a long-term game on this one.

    @jjm2016 Danske did know it was rented but as it was the only property I owned it was deemed ok and the tracker was unaffected.
     
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  11. SBarrett

    SBarrett Frequent Poster

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    As long as you are alright with a few missed payments on your ICB record ie won't be apply for another mortgage anytime soon, don't worry about it. The loan will be paid off in full in a few months. Pepper will get all their money and you can get on with things. You'll also have a few quid over to reduce the strain on cashflows


    Steven
    www.bluewaterfp.ie
     
  12. Brendan Burgess

    Brendan Burgess Founder

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    They are very different mortgages.

    One is with Danske. Danske is a dead bank in Ireland. He won't be using them again. They have been totally inflexible with him.

    The other is with an active lender. He may well want to borrow more from them in future.

    There really is no comparison.

    And just to clarify - he will be clearing his mortgage including any arrears in full. Danske is not losing any money through his behaviour.

    Brendan
     
  13. sellornot

    sellornot Frequent Poster

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    By not paying your mortgage, the payments you should have paid will be just be added on as arrears, but if you haven't
    the money to pay you can't pay. if your happy to mess up your credit rating don't pay.

    But as i see it you went on to purchase another house with a mortgage outstanding on your present house

    don't know why you think you would be entitled to reduced payments or a payment holiday for that matter
    wish you luck selling

    Sellornot
     
  14. Queenmaeve

    Queenmaeve New Member

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    I don't think I'm entitled to it. I was just thinking I could let the arrears accumulate with permission during the selling process, as they'd be fully paid off once the sale goes through.
     
  15. Brendan Burgess

    Brendan Burgess Founder

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    I don't think you have. I don't think anyone has.

    Anyone can put their property up for sale.

    If the mortgage exceeds the sales proceeds, they will need the bank's permission to conclude the sale.

    Are you referring to this case:

    Mortgage in arrears and negative equity, but 69 year old joint borrower

    You were in deep negative equity.

    Queenmaeve is not in negative equity. Like Sunshine, she is free to sell her house as long as she pays off her mortgage.

    Brendan


     
  16. Queenmaeve

    Queenmaeve New Member

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    Hi Brendan,
    I thought I'd post a final update on this situation as you (and others) were all so helpful to me back in April when I originally posted my question and it allows people to see how it concluded. I took the advice several people posted here and it was the right thing for me to do.
    • The house went up for sale on 31 May.
    • I did not have to ask the bank for permission (as you correctly pointed out because the value exceeded the balance of the mortgage).
    • I paid about €200 each month towards the mortgage for June and July.
    • Pepper rang me within one week of a late payment. The continued to ring me every week. This was stressful. I had to develop a brass neck and dial down the "care factor".
    • They did not offer any incentives to sell despite me being on a tracker.
    • One week they rang me 6 days in a row as I hadn't picked up. Note: I had advised them the house was being sold at that point.
    • Even when I accepted a bid of €230,000 at the end of June and told them so they continued to ring me. They only stopped when my solicitor asked them for a redemption figure.
    • The house sale is closing tomorrow. I don't know if Danske/Pepper will submit the 3 months arrears situation to the credit rating bureau but it's likely, so I'll have a tarnished credit rating. It was worth it. With our new house, we won't be buying/borrowing much for quite a while!
    • I purchased the house for €240,000 in 2004 well before the height of the boom and it's selling for €230,000 in 2017.
    Your advice around doing what's right with regard to continuing to rent it out versus selling it was spot on. It might have made financial/investment sense to keep it and continue renting it given the buoyant rental market, but this was not the right thing for me. It's been a trial with the last tenants and what with managing repairs, tax affairs, having our own house mortgage, working fulltime, managing kids, school, etc. I'd be dead or in a home for the bewildered long before I could realise the profit of a second property investment!

    Thanks again for everything.
     
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  17. Brendan Burgess

    Brendan Burgess Founder

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    Hi Maeve

    That's great. And thanks for the update.

    It's great that you did the right thing. It's great that you are happy with what you have done.

    It's obviously too late now, but for others in a similar position, it's probably worth getting their solicitors to write to the lender once the contracts have been exchanged.

    I imagine a lot of defaulting borrowers tell the lenders that they are going to sell. Some even put the house on the market but have no intention of selling.

    Brendan

    Mods' note: To tidy up the thread, I have deleted the multiple posts where one poster insisted that you would need the permission of Danske to sell the property even though it was in positive equity.
     
    finny likes this.
  18. finny

    finny Registered User

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    Really helpful thread.