Case study Moved in with in-laws, and renting home to save money

B

butty

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Hi,

Was just wondering if anyone has any advice to offer about my situation. Bought a house in 07 for €257,000, had to move out in 08 as I lost my job and we couldn't afford to pay the mortgage. Got a job in Dec 08 on a substantially lower salary. We moved back with her parents and are there since. House is now valued at €140,000. Mortgage with EBS.

Been in 3 times to EBS to try to get a moratorium or interest only, but no joy. Filled out the standard financial thing, manager said he didn't see our situation improving after 12 months so as far as he was concerned we have a roof over our heads and the mortgage is getting paid (seriously, his exact words).

Problem is that this is now causing friction between me and my wife, as I want us to try sell the house (I don't see the point in paying for a house we can never live in) and for us to try get on with our lives. Big question is, would EBS do a deal on the negative equity?? We have no arrears but if we moved back in we'd be in trouble straight away. Would they look at that as strategic defaulting? Selling the house would be pointless if they tried to force us to pay back 100k negative equity....

Anyone have a similar experience?
 
Hi Brendan,
I've added some details below, sorry if some of the figures are vague, my wife knows more detail but i at the minute this conversation will lead to a row. I said that to the manager in EBS, that we were bending over backwards to keep paying but it appears you get nowhere by doing that with them...

Income details
Net (i.e. after tax) Income self: 1800 p/m private sector
Income history: e.g. was on 40k with company car in 08, lost job and started job in dec 08 on 25k
Net income partner/spouse: 1400 p/m public servant
Income history:
Amount of child benefit received: €130 one child
Amount of Mortgage Interest Supplement received: none
Rent from house: 650 p/m

Personal circumstances so we can calculate your reasonable living expenses

One adult family or two adult family: 2 adult family
Do you need a car for work or do you use public transport? need 2 cars
Number of children 0- 2 years old: 1
Monthly childcare costs: 200 p/m
Her mother in law gets approx 700 p/m from us in “rent”, covers food & bills



Home loan
Lender: EBS
Amount outstanding: 235k
Value of home: 140k
Interest rate: 4.3% SVR
Monthly repayment: 1024
Amount in arrears: none

Summary of discussions and agreements with the bank:
met with manager 4 times, filled in the forms but he didn’t submit them as he said he knew by looking at them it wouldn’t be accepted. basically he was of the opinion that as we were living at her parents we had a roof over our heads and that the mortgage was getting paid.


Credit Union
Amount of shares: not sure
Amount of loan outstanding: 10k approx
Monthly repayment
Term left: 2 years


Other loans and creditors - delete those which don't apply to you

Credit Card - 2000
Credit Card - 100
Term loan Amount outstanding: 14k
Term loan term left: 5 years
Term loan - monthly repayment: 550 p/m
Term loan - interest rate


Other savings and investments


How important is retaining the family home to you?
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.


Any other relevant information

What is your preferred realistic outcome?

my preferred outcome is that EBS would agree to let us sell the house and write off the negative equity as we have no arrears (although i’m well aware that this more than likely wont fly with EBS). the alternative is we move back into the house, fall into arrears and have to go through this whole process again in a few years and then they’ll make us sell it anyway, or force us into a solution that doesn’t work for us. i want to go back to college to change career but cant with this hanging over us.
 
Loosing your job is very traumatic, and can be a huge blow to your confidence and your sense of your place in the world. However you have gotten a new job and are back on your feet.

You are receiving €650 rent, but paying your mother in law €700 (including food and bills)

Your income including child benefit is €3,330 per month.

Your mortgage is €1,024 per month.

You should be able to live in the house and pay the mortgage.
 
I agree with cremegg, it seems it can be done, however it will of course be harder than where you are because of the fact that your in-laws are looking after you - 700 pm to cover rent food & bills for 3 ppl is effectively giving it to you so it is always going to be tougher stepping back into the real world from that.

What may be the issues to address are the repayments on your two loans, see could they be restructured to make them more affordable, we don't know what the payment is in your CU loan so it's hard to comment?
 
User Input|
Type of household|Couple
Type of transport|Private Vehicle
No. of infants|1


Reasonable Living Expenses|€
Total Before Deductions|1,778.76

| 1,778.76
Less Child Benefits|(130.00)
Total Set Costs | 1,648.76 Total Costs | 1,648.76

|€
Net Income|1,800.00
Net Income - Partner|1,400.00
Total Net Income | €3,200.00
Reasonable Living Expenses|1,648.76
Available For Repayments | €1,551.24

If you move back into your home, you will have €1,551 per month, which is well in excess of the full mortgage repayment of €1,024.

It seems clear to me that this is what you should do. It's very difficult to get deals on investment properties, especially when you are making the repayments in full. You may be able to get a deal under MARP if it's your home.

Continue letting the property?
Rent received| €650
Interest payable|€851
Loss before other costs| €200

You could continue to stay with her parents, simply reduce the payments to the interest only, but it will still be a drain on your resources.

Term loans
Credit union|€10k
Term loan|€14k
CC|€2k
Total|€26k

I am surprised that you seem to be only concerned about rescheduling your mortgage?

You could switch these to interest only which would be around €200 a month. You can't afford to pay, what must be around €1,000 a month on these.

If EBS agreed to interest only, then you could pay these more expensive loans off much quicker and should do so.

Summary
Move back into your home
Switch to interest only on your home for the time being.
Apply for rescheduling under MARP - Go above your local manager if he is not helpful.
Get rid of the most expensive loans first, but don't be afraid to reschedule them if EBS agrees some reasonable rescheduling
 
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