Case study Double Negative Equity but father has guaranteed

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manninp2

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Personal and income details
Income self: €1300pm net.

I'm employed by a company that's 50% owned by my wife. I don't have a shareholding in the company. Thankfully the company is starting to take off, it'll be no Google but it'll pay a decent wage going forward.

Income partner/spouse: Full-time employed, €2400pm

Income history:
number of children = One on the way!
Amount of Mortgage Interest Supplement received = 0

The important point to note is that myself and my wife bought houses independently of each other before we met. Her house is solely in her name. I have nothing to do with the house legally.

We live in her house and it's fine for our needs when we have children in the near future. She's paying the mortgage on that with a help from a lodger and has never missed a payment. The house is deeply in negative equity.

Our issue is my house. The deeds are solely in my name but my father is jointly liable for the mortgage. The house is rented out but there's a large shortfall on the mortgage. Sadly my father's health is failing, his doctors don't expect him to last 12 months.

Home loan (On my house)
Lender: NIB
Amount outstanding: 345,000
Value of home: 120,000
Interest rate: 4.5% fixed until 2016
Monthly repayment 1907
Amount in arrears 5600
Monthly rent received 1000

Bank have agreed to a 6 month moratorium on my house, during which the rent from the house will pay back the arrears.

Home loan (On her house)
Lender: UB
Amount outstanding: 365,000
Value of home: 180,000
Interest rate: 4.95% fixed until 2013
Monthly repayment 1830
Amount in arrears 0
Monthly rent received 500

Other loans and creditors -
Credit Card 2800
Loan 19000

Other savings and investments 0


How important is retaining the family home to you?
I have no qualms about giving up my house and would happily continue living in my wifes house.

My query is. We have two houses in negative equity. We only need one. What options do we have on getting rid of my house?

As it stands we're ok, once the child arrives we move into not being ok. 2013 is going to be an emotional roller coaster
 
Those much more able to advise will come along, will your wife get full maternity pay or just statutory?

Do you anticipate the lodger moving out when baby arrives?

I would say the house trouble pales into insignificance in the bitter sweet year you have ahead. You just need to keep the bank at bay over the next year, and that should be easily enough done for 12-18 months once they get something and you keep them informed.
 
What we're contemplating is once my father has passed away, I goto the UK and go bankrupt. I could continue working for my wife's company as there are UK customers and she could establish a UK subsidiary to employ me.

In our relationship I'm NAMA!
 
Your post is sad which it's better not to get into.

Did your father take out life insurance when you took out the mortgage?

Forgot to add welcome to AAM Manninp2
 
Thanks.

My father was over 50 when he thought he went guarantor on my mortgage. It was only in March of this year that we discovered it was a joint mortgage. A harsh lesson in ensuring that all parties to any legal document should seek separate and independent advice.

So there's no mortgage protection policy covering him on this mortgage. The debt will fall completely to me in it's entirety.

My thinking is to keep any assets out of my name as best as can be done. Hence, why my wife owns the company and my name has never been attached except as an employee.

Then when my father passes I could do a deal with the bank on the shortfall between the outstanding balance and the current sale price. Failing that I go bankrupt in the UK.

What I'd like to know is can the bank pursue my wife for anything?

What would the difference be in cost to the bank between me agreeing to sell the house and doing a deal on the balance versus the OR in the UK selling it in a firesale?
 
No the bank cannot pursue your wife. If your father dies then indeed the debt will rest with you. I wonder though, because you are in arrears would the bank go after your father's estate to pay up. Have to think this thru, bit tired at the moment.

Is your father going to leave you anything, it might be better that if he is that he gives it to your child. Or stipulates it's for the child's education. A good solicitor is what is needed.
 
I have sympathy for the situation you and your father are in.

However, the bank would not have lent you the money without your father's involvement. You are unable to repay the money, so your father or his estate should repay the money

If your father can dispose of his assets while living, rather than allowing them to become part of his estate, this may be the best option for protecting your father's assets.
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This is what we criticise the property developers for. Putting their assets beyond the reach of NAMA. Your father owes this money, and should repay it if he has it.

You could sit down with NIB and seek to come to an arrangement with them. If your father has assets, offer to sell the house and he will pay off half the shortfall. They might or might not accept this.

it would be better for you and your wife to go to the UK and declare bankruptcy there.
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I don't understand this. Your wife is not involved in this. If, after your father pays what he can, and there is still a shortfall, you could go bankrupt in the UK. Of course, your wife could accompany you there, but she is not bankrupt.
 
Brendan Burgess said:
I have sympathy for the situation you and your father are in.

However, the bank would not have lent you the money without your father's involvement. You are unable to repay the money, so your father or his estate should repay the money

This is what we criticise the property developers for. Putting their assets beyond the reach of NAMA. Your father owes this money, and should repay it if he has it.
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I don't necessarily agree with your moral view on the relationship with NIB. It is secondary to my father's relationship to his family. He has a choice to, legally, afford his son and grandchild a better standard of living or pay money he's not obliged to to a bank to benefit shareholders (Note: NIB is not in hock for any taxpayer money) that took an investment risk.

You could sit down with NIB and seek to come to an arrangement with them. If your father has assets, offer to sell the house and he will pay off half the shortfall. They might or might not accept this.
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I'd begin my offer at 0% of the shortfall and calculate at what % it becomes more worth my while to go bankrupt. Bear in mind I'll miss the majority of a year of my child's early life to do so.

I don't understand this. Your wife is not involved in this. If, after your father pays what he can, and there is still a shortfall, you could go bankrupt in the UK. Of course, your wife could accompany you there, but she is not bankrupt.
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My wife has no intention of going bankrupt.
 
I'm confused, why is your father not obliged to pay back the bank. He took out the loan.

Also don't understand why either you or your father didn't realise he was going on the morgage. It would be clear from the letters the bank would have sent you and your solicitors.
 
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