Case study Split Mortg offer by BOI !! Take or Leave

[DMcGowan]

Hi Brendan,
I was offered a split Mortg by my bank yesterday. My Case is as follows:

. Separated Mother of one
. Husbands name still on the mortgage
equity loan attached to mortg of 60k
Mortgage o/s 165k
house in negative equity of around 60k
Im working partime and also recieving FIS supplement

BOI offered me the following :
increase term by 10 years
repayments to be 696 on mortgage and 63 on equity instead of 1300 and 250
balance or warehouse lump 77k
Initally I thought this was a great offer but after reading your forum Im beginning to think a PIA might be better? But I am worried about the living term and conditions attached to the PIA, and the implications. they also said the would make an arrangement with my personal debt, if i kept to the split for 5 years and missed no payments they would write off 60% of my loan.

Plus my ex has to agree to this aswell, as we cant take his name off due to the equity loan and negative equity, also he cant buy us out no money.

what would you advise i have to make my mind up by 9th Sept plus I havent contacted a PIP yet as there are none in Connacht.

many thanks

 

[DMcGowan]

Personal and income details
Net (i.e. after tax) 1500 Income self: nature of income e.g. part time office job 20 hours a week 3 year contract , weekend work in restaurant
Income history: e.g. I was made reduandant from my permanent job in 2011, started my new office job this year in April. also doing weekend work in a restaurant to supplement income.
Net income partner/spouse: NIL Living on my own
Income history:
number of children: 1 age 6
Amount of child benefit received (Should be €130 per child) 130
Amount of Mortgage Interest Supplement received (MIS is the social welfare payment to unemployed people, don't confuse with TRS) NIL dont qualify. Recieve 100 week for maintainence and 150 for lone parent.
Home loan
Lender: BOI
Amount outstanding: 165k
Value of home: 150
Interest rate: SVR 4.5%
Monthly repayment €894
Amount in arrears €5000

Equity Loan:
BOI
50k
Tracker Staff rate ( as i was previously BOI Staff)
240
2000 arrears


Summary of discussions and agreements with the bank: on interest only since 2011, paying 600 a month on mortg and 75 on equity. Offered a Split mortg yesterday.


Other loans and creditors - delete those which don't apply to you
Overdraft 1000
Credit Card x 2 : 800 Mbna And 900 BOI
Credit Union e.g. Loan of 11 againist shares of 1000
personal loan : 17,000 left at ??
Family

Other savings and investments
Credit union 1000 ( separate credit union than above) AIB Savings 500


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
House is also in my ex husbands name. He is not contributing to the mortg, He is paying half of the equity loan.
I cannot take his name off unless he clears half the the equity loan.
He cannot do this as he hasnt the money.
BOI offered me a split mortg yesterday.
repayments at 696 mortg and 63 equity
term extended to 35 years ( + 10 )
warehouse lump 77 parked till after term of mortgage
means of clearing the lump : Inheritance

Also BOI have said if i keep to this arrangement they will consider clearing my personal loan @ 60% details to be finalised if i take up the Split.

thank you for your help .

What is your preferred realistic outcome?
For example: to be able to keep the house and repay the mortgage.

 

[DMcGowan]

Brendan

The clear message coming from the banks is that they will simply not entertain a PIA or DSA from a borrower who is only exposed to one bank. They have no wish to pay the fees of a PIP, and to comply with the cumbersome Procedures of a PIA/DSA. In such cases the bank's clear preference is to negotiate directly with the borrower. Accordingly, many people will not have the option of choosing between a split mortgage and a PIA/DSA.

Jim Stafford

thats exactly the message I got from BOI yesterday at my meeting, he was insistent there would be no write offs on mortgages. They prefer the borrower to deal directly with them and NOT through a PIP

 

[DMcGowan]

Separated living in House got offer from BOI re arrears

Hi ALL,

Ive already posted in the Case Study Arrears forum but wanted advice on my situation re joint mortgage.

Im separtated nearly 6 years now and have been living in the house on my own with my daughter and paying the full mortgage.
Ex pays nothing but name remains on the Loan.
I want to stay in the house and pay the mortgage but after I lost my job i went into the MARP process and yesterday was offered a split mortgage which I prob will accept.
However can my ex object to this offer?
As the term was increased by 10 years his name will still remain on loan, he cannot buy me out, Neg equity .
My main fear is he will force the house to be sold? can he do this?
thanks

 

[Brendan Burgess]

Hi D

When I saw this initially, I couldn't get my head around your figures, and planned to come back to it.

It's still very unclear and it will not be possible to help you , unless you explain things clearly.

net salary|€1,500
Maintenance|€400
Lone parents|€600
Total income|€2,500
Reasonable Living Expenses|€1,300
Available for creditors|€1,200

Before split

|Total| mortgage| equity release
Loan amount|€225k|€165k|€60k
Interest rate||4.5%| 1.5% (guess)
Term||25 years|25 years
Repayments| €1,550|€894|€250

Split mortgage offer

| total after split| Main|Warehouse
Mortgage|€225|€148k|€77k
Interest rate||4.5%|?
Term remaining ||35 years |
Repayments||€696 +€63||

 

[Brendan Burgess]

Value of home|€150k
Home mortgage| €165k
Equity release|€60k
BoI personal loan|€17k
Net CU|€10k
Other |€3k
Total loans|€255k
Net debt|€105k

This is a difficult one to analyse.

Leaving your ex out of it for the moment...

Let's assume you accept this offer

You get to stay in your home which is worth €150k for €750 per month.

What would it cost you to rent a similar home? I presume more than €750?

Bank of Ireland charge interest on the warehoused part, so I estimate your monthly interest will be
€700 [ (€165k @4.5% ) + (€60k @1.5%) ]/12

So you are paying only €50 a month off the capital. After 5 years, you will still owe €222k on your mortgage. Unless house prices rise by 50%, you will still be in negative equity.

If they write €10k off your personal loan, that would great.

The only path to solvency is for house prices to increase by 50%.

 

[Brendan Burgess]

The alternatives are
Personal Insolvency Arrangement - BoI will probably veto
Voluntary sale followed by Debt Settlement Arrangement - could work

Voluntary sale/Bankruptcy
You would lose the house but you would be debt-free after 3 years.

I think that the split is a better option.

You could apply for the mortgage to rent scheme
This is worth condsidering
A Housing Association would take ownership of your home and let it back to you.
You could then go bankrupt and get the unsecured debts written off.


As the Split Mortgage leaves you in your home at a level of repayments less than you would pay for rent and you may become solvent over time, I think that this is the best for you.