Case study PTSB - Part Capital and Interest Arrangement

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CarryOn

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Income details
Net monthly (i.e. after tax) Income self: Employed Fulltime 2700
Income history: Changed jobs a few years ago for stability, writing was on the wall, drop of 1200 p/m since 2008
Net monthly income partner/spouse: 1800
Income history: Stable
Amount of child benefit received: 3 children
Amount of Mortgage Interest Supplement received (MIS is the social welfare payment to unemployed people, don't confuse with TRS): 0

Personal circumstances so we can calculate your reasonable living expenses
The Insolvency Service has published Guidelines for reasonable living expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.
One adult family or two adult family

Do you need a car for work or do you use public transport? 2 cars a public transport not available
Number of children 0- 2 years old: 1
Number of 3 years old children: 0
Number of 4 - 11 years old: 2
Number of 12 - 18 years old: 0
Monthly childcare costs: 700
Monthly spend on special circumstances: 100
SRS consistently shows 400-600 shortfall in monthly income vs full mortgage payment.

Home loan
Lender: PTSB
Amount outstanding: 320k
Value of home: 200k
Interest rate: SVR 4.34%
Monthly repayment: 1190
Amount in arrears: 0

In constant communications with the bank, interest only for the last 3 years. Have handed back my HP car on 50:50 rule and reduce all non-essential expenditures.

We have been offered the "Part Capital and Interest Arrangement" with the following detail:
Lender: PTSB
Amount outstanding: 320k
Value of home: 200k
Interest rate: SRV 4.34%
Monthly repayment: 1230
Amount in arrears: 0
Term extended by: 24 months
Amount outstanding at the end of the Mortgage Term: 290k

Credit Union
Amount of shares - 800
Amount of loan outstanding - 900
Monthly repayment - 50
Term left - 18 months

Other loans and creditors - delete those which don't apply to you
Credit Card - 600
Credit Card - 50 but will clear when extra comes in
Term loan Amount - 2100
Term loan term left - 6 months
Term loan - 333
Term loan - not sure
Family loan - 2750
Family loan - when I have it

Other savings and investments

Do you expect any lump sums in the medium term future?
3000 bonus due in next 6 months

How important is retaining the family home to you?
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.
- I don't feel tied to the house itself but don't want the disruption to my family

Any other relevant information

What is your preferred realistic outcome?
I understand we are liable for the outstanding amount but am concerned that I don't know if other avenues are available. Is this a good deal for both parties or is it just good for the bank?
I'm paying extra (was 1400 which I could meet but it went to nearly 2000 and is currently 1700 on full payment) to meet the losses the bank is making on trackers.

I know we are not in the worst position, and while some advised us to strategically fall into arrears, it now appears it may have been the right thing to do, as some of those people seem to be getting better deals. I don't want my good citizen routine to result in our getting a bad deal.
We did apply for a loan recently as we had to change a car, we were refused which could be seen as unsurprising, but felt our diligence in paying as per our agreements with the bank, and having never fallen into arrears that it would count for something.

Do I have an option to argue for a better SVR?
Is my credit rating shot until I go back to full payments, whenever that is?
Is this a good deal, given that it gives me an affordable repayment for the foreseeable future?
Do I have a better option?
 
just a quick overview of your situation! Based on family size (including 2 kids under 12 and runnning costs of 2 cars) + childcare costs plus the 100pm, your average monthly living expenses should be in the region of 3,700 ( this is based on an average family spend, which could be cut back somewhat). i.e. leaving a balance of c800pm to meet loan repayments.
I don't understand the rationale of the PTSB repayment. Int only on 320K would amount to 1,160pm. You are likely to be living a pretty frugal lifestyle if you are meeting the stated repayments up to now. Childcare costs are a large outlay. are these likely to be cut back in the near future? Clear the CU loan. Net amount owed is €100. Realistically the mortgage will only be sustainable based on a significant write-off or extensive deferral of the capital sum due. Assuming the bonus payment is net, this can give you some small flexibility in the future, but I still don't understand what the terms of the PTSB agreement are. Realistically if they are only requiring a monthly payment of 1,230 and postponing any payment?interest roll up on a significant element of the capital sum due you might have an achievable deal going.
 
Thanks 44brendan, was beginning to wonder if there was anyone out there on this interweb thing :)

Child care will increase in the near future due to the maternity leave ending soon. We are and have cut our cloth, and will continue to do so. Am I being to nice to the bank?

I think the deal is achievable on my end because I will make it so, just that I don't want for my family to suffer based on this deal, if a better one was available. This "Part Capital and Interest Arrangement" seems to me to be the Split-Mortgage's ugly sister, in that the interest is paid on the full capital, as opposed to the remaining capital separate to the warehoused capital (or at a lower rate).

Am I not being offered the split due to no arrears and the willingness and (stretched) ability to repay?
 
Am I being to nice to the bank?
Click to expand...
You really haven't given us any broad detail on what the bank are agreeing to do. Being nice to them is not really the point. They appear to be offering you a payment that you can afford, but the question is how long is this deal and what happens to the balance of the capital owing at the end of it/ No point in arguing over the interest rate. This is the SVR and they are not going to amend it (or are unlikely to!).
The alternative option is to stop paying the mortgage and risk both losing the house and the Bank pursuing you for the shortfall..
 
We were given a similar deal by PTSB recently, with a review in 2017. Nearly all of CarryOn's circumstances are the same as ours (3 kids as well), other than the fact that we built up arrears of €8.5K after a year of casual work and unemployment.

We took the PC&IA deal we were offered in February, as this is going to be the only show in town for us. We have no choice, no-one else is going to give us a mortgage, and we want to stay in our home. We were exhausted after nearly 3 years of SFA's and 6 month reviews. PTSB is in a worse state than we are, and we are going to use the time given under the PC& IA to build up some savings that we will need to have a safety net in the future. We love our home, so selling it is not an option for us. We are paying €1430 each month in fortnightly payments, which leaves us with extra funds in July and December, the months that I get paid 3 times.

Our childcare costs are coming to an end soon, and by 2016, we anticipate that we will go back to full repayments, and reduce the arrears with the savings we will build up over the time, and by continuing to make fortnightly rather than monthly payments.

The one good thing about all of this is that we felt PTSB were very fair with us throughout the process. They did not set the bar so high that we could not afford it, and other than a few computer generated arrears letter, did not threaten us or try to strong-arm us into something we did not feel comfortable with. In fact it was the opposite; now I feel that we are paying what we can afford, rather than what I aspired to, and would have had to make huge sacrifices to my health and well-being to afford. We still find it tough to meet the other commitments, such as running a house and two cars, but the light at the end of this tunnel gets brighter with each month.

If you feel it is achievable, go for it. The arrangement is the worst of both worlds from the Split-Mortgage product, but this is just not available to people like us.....
 
We have been offered the "Part Capital and Interest Arrangement" with the following detail:
Lender: PTSB
Amount outstanding: 320k
Value of home: 200k
Interest rate: SRV 4.34%
Monthly repayment: 1230
Amount in arrears: 0
Term extended by: 24 months
Amount outstanding at the end of the Mortgage Term: 290k
 
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