Selling property for less than Mortgage

A

Angrygirl

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Hi all

My BIL gave me some advise at the weekend but i'm a lil unsure how accurate he is about the info given so maybe someone here can help

I lost my tenants 3 months ago and i'm having a nightmare trying to find new tenants, my BIL advised me to sell my property for what ever i can get for it, for example my mortgage stands at €150k could possibly get €120k and loose the money i put into it, he said the bank will then change the type of payments from a mortgage over 40 years to a loan of €30k on the remainder, my payments will be alot less than the €150k mortgage at the min and i wouldn't then have to worry bout renting the property etc..

I hope this makes sense and someone might be able to clarify if this is realistic, my fixed rate isn't up for another 2 months and the bank wont discuss any options with me until then so i'm kinda in limbo

What do u think?

Thanks
 
I think that the general principle is correct. If the mortgage repayments are too high and you can't rent the property, then try to sell it.

I don't think that the bank will simply settle for an unsecured loan for the €30k over 40 years. I would suspect that they would want an additional mortgage on your home.
 
Yea Brendan to be honest i'm a bit baffled, when i was questioning the €30k he was saying its not a mortgage anymore as i wont have the property

He said that as i haven't missed a payment of the €150k they will take hand and all off me for the €120k and the remainder will be a personal loan

Its very frustrating that the bank wont talk to me until the fixed rate is up
 
One thing to bear in mind is that you will be moving from a mortgage to an unsecured personal loan that will probably have a higher interest rate unless it is secured on another property

Secondly, I would be astounded if the bank allowed the outstanding debt to be paid off over 40 years
 
Your BIL is well meaning but does not really grasp the practicalities. Its the sort of wide, sweeping comments people make having overheard something on the radio.

You owe X amount secured on a property worth less. You will not be able to sell the property without the consent of your lender - the supply of your Title Deeds to your Solicitor for a sale will be conditional on the Solicitor discharging the entirety of the mortgage debt. Which, if there are insufficient funds, patently they cannot do.

So, what BIL is suggesting is that you ask the Bank to agree to release the Deeds for a sale to your solicitor and at the same time come up with a realistic approach to getting rid of the larger debt while at the same time putting another form of loan in place to cover the shortfall. I think Brendan is right and that you will be asked to either make up the shortfall yourself, if you can, or put another form of security in place to cover it.

mf
 
I can see more and more of this. I would keep pressing with the bank and try move up the line until you get someone with decision-making power.

Banks are going to have to deal with this and possibly find away to allow "short sales" with possibly some ongoing unsecurred credit. Ironically, the less you have in other unencumbered assets the better you chances might be.

If you have lno other net worth, the alternatives a mortgage holder are foreclosure and a forcing of you into bankruptcy, which would ensure little or very partial recovery. The other option would be to try give you the slack for you to get back to financial health and repay the outstanding borrowing over time.

But as I said, if you have other significant assets the bank will be more likely to want to take a slice of those up front.
 
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