Negative Equity and Judgement Mortgage WWYD

[Newhorizons]

After a turbulent number of years we are slowly coming to a point where we have some hope on the horizon. Our situation is as follows:

Our family home mortgage outstanding: €350,000
Value of Home: €320,000 approx
Interest Rate: 2.1% tracker
Monthly payment: €1500

We have been in arrears for some time due to redundancy in the past but have maintained our current payments for 2 years and the bank have agreed to capitalise the arrears.

Due to work commitments we need to move home and have decided in the short term to rent out our home (rental income of €1200 pcm) and have the option to live with family rent free for as long as we need to. While this is very generous it wouldn't be ideal long term as we have 3 children who will be in cramped accommodation until we get on our feet.

Ideally we would like to sell our home and buy in our new area. However we have a few obstacles.

1. We need to wait until the value of the house matches the mortgage outstanding. I imagine that would take about 2 years taking into account mortgage payments and hopefully some increase in the value of our home.

2. Deposit rules for new house. Am I right that we'd need 20%? So that's approx 70K needed

3. Judgement. After a liquidated business we had a judgement for the personal guarantee of 40K. We agreed for this to a charge on our house for this amount. The bank have not asked for any payments against this and seem happy to have the judgement secured on the house. That has been in place for 8 years.

So i'd love some advice regarding what to do next. Our children are growing up fast (eldest is in college now) so we'd love a plan for the future. It feels like the stress of redundancy, mortgage arrears and a failed business is starting to lift a little and even if it takes some time i'd feel better about having a firm plan for the future.

Many thanks for reading.

 

[Brendan Burgess]

You will not be able to buy a house until at least 5 years after you have paid off the judgement mortgage.

You should speak to a Personal Insolvency Practitioner as you are insolvent.

They might be able to negotiate something on the judgement mortgage. If you can raise some cash from the family, the creditor may accept a much lower figure in settlement.

If not, you are in Negative Equity of €70k so you are a long way away from buying a house.

However, you have a very good investment.

The rent is €14,000 per year
The interest is only €6,000
So you are making a profit before other costs and taxes of €8,000.

So hold onto the property.
Avail of the free accommodation and use the money saved to pay off the judgement mortgage.

Brendan

 

[Newhorizons]

Thanks Brendan

The thought hadn't crossed my mind to actually contact a PIP as we now have a good income and are paying our mortgage as agreed. We have no other debts and are getting by fine for the moment. If the need to move home hadn't cropped up then I wouldn't even have considered ourselves insolvent, though obviously on paper it looks that way. Advice appreciated.