Case study MARP agreement, options open when it ends?

[katiealice]

Income details
Net monthly (i.e. after tax) Income self: €4,000 net PAYE employee
Income history: e.g. Was self-employed but due to ill health had to stop work in 2010, only went back to work in Aug 2013 in a PAYE role, made permanent last month.


Net monthly income partner/spouse: €1,600
business went bust, only started this job in the last month

Amount of child benefit received €260


Personal circumstances so we can calculate your reasonable living expenses

One adult family or two adult family - 2 adult
Do you need a car for work or do you use public transport? both need cars
Number of children 0- 2 years old: 0
Number of 3 years old children: 0
Number of 4 - 11 years old: 2
Number of 12 - 18 years old:0
Monthly childcare costs: €850 per month
Montly spend on special circumstances: Meds €50 per month



Home loan
Lender: Ulster Bank
Amount outstanding: €326,000
Value of home: circa €220,000
Interest rate: specify whether tracker or SVR or fixed rate - tracker current rate 1%
Monthly repayment €835, MARP agreed payment
Term remaining 17 years

MARP since Mar 2011, have had various agreements, 6 month holiday, 1/2 payment and have been paying an agreed €835 since Mar 2013, agreement was for 18mnths due to expire in Sept 2014

Investment property - Delete if not applicable
Lender: BNP Paribas
Amount outstanding: 60,000
Value of home: 85,000
Interest rate: 2.2%
Monthly repayment €666
Amount in arrears
Monthly rent received €300

We are trying to sell this property and any net proceeds would be paid off the UB mortgage.


Other loans and creditors - delete those which don't apply to you
No other loans or creditors

Other savings and investments
None, used lived off savings for last number of years - thankfully.

Do you expect any lump sums in the medium term future?
Redundancy, inheritances, injuries awards. - NO


How important is retaining the family home to you?
Which of the following best describes your situation?


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?

Ulster Bank have been very understanding but I am concerned that we won't be able to manage to make capital & interest payments over the remaining term once the current agreement comes to an end.

I'm not sure what options if any we have

Could we ask to extend the term, split the mortgage etc?

Any advice would be appreciated.

 

[44brendan]

Full mortgage repayments over 17 year term would amount to circa 1,800pm (exc TRS). Net monthly income after childcare costs is 5K. No other loans & running 2 cars. Standard living expenses for family size and 2 cars would be 2,900pm. This should leave c2,100 to cover loan repayments. From the bank's perspective you should be able to afford your full mortgage payment. You are supplementing the BTL loan by 300pm. Given that this property is for sale & assuming that the expected sale price is correct, a sale would pay off your loan in full and give you a lump sum. You should firstly approach BNP and look for IO payments subject to your co-operation in selling the BTL property. At face value your financial position appears to be good!!

 

[Bronte]

Why do you have to pay the UB out of the sale proceeds of the investment property?

What is the full mortgage payment on the home?

What age are you and your partner.

Make sure out of the sale proceeds you pay your auctioneer, solicitor, NPPR, and all taxes before you even consider giving anything to UB. If you are not up to date on your rental income taxes, once you have the lump sum that is the time to sort it out. I presume you have signed nothing with UB in relation to this amount as the mortgage is with BNP.

 

[katiealice]

Why do you have to pay the UB out of the sale proceeds of the investment property?

We don't have too, but we would like to reduce the balance on the UB mortgage

What is the full mortgage payment on the home?

circa €1,800 per month

What age are you and your partner.

45 & 44

Make sure out of the sale proceeds you pay your auctioneer, solicitor, NPPR, and all taxes before you even consider giving anything to UB. If you are not up to date on your rental income taxes, once you have the lump sum that is the time to sort it out. I presume you have signed nothing with UB in relation to this amount as the mortgage is with BNP.

Tax affairs up to date. CGT shouldn't arise as value of property is worth less than cost. the lump sum available would only be after all costs of sale are paid.

The BTL is in France.

At face value your financial position appears to be good!!

Is it? it doesn't feel like it is.

But that's probably more to do with our lack of savings. Before I became ill we were saving a lot, which was great as it meant I could take the time I needed to get better. While my illness shouldn't return, you never know and I think I feel we are vunerable as I can't see us being able to build up any savings to cover us in the same way.

Can't afford to pay the premiums on a PHI policy as the loading is crazy.

Probably should stop worrying about it and just get on with things

 

[Bronte]

You are paying a minimum 366 towards the French mortgage, (should have coped that when you mentioned the bank !).

Are you sure on the CGT not being an issue in France, any clawbacks on VAT for this, it's not one of those leasebacks etc.

In addition to the 366, how much did you subsidise this property by? I want to see how much you'll be saving by not having it.

Your ages mean there is a possibility of mortgage extension to maybe 70 if bank allows it. This would drive down the repayment. Something to think about.

Don't worry about the PHI, too late now and most of them wouldn't have paid out in any case.

Good to worry, good to sort out and then good not to worry.

 

[katiealice]

You are paying a minimum 366 towards the French mortgage, (should have coped that when you mentioned the bank !).

Are you sure on the CGT not being an issue in France, any clawbacks on VAT for this, it's not one of those leasebacks etc.

Have checked the CGT & VAT position and we are fine.

In addition to the 366, how much did you subsidise this property by? I want to see how much you'll be saving by not having it.

The monthly outlay on the property - mortgage,tax returns, property tax etc - is €500 per month, so €134 per month on top of the net mortage payment of €366.

Your ages mean there is a possibility of mortgage extension to maybe 70 if bank allows it. This would drive down the repayment. Something to think about.

That would be great if UB allow us to do that.

Don't worry about the PHI, too late now and most of them wouldn't have paid out in any case.

you are probably right.

Thanks