Unable to pay mortgage for 2 years starting end of this year - what will happen?

S

Sutton1

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Hi all,

I have had a mortgage for 4 years now. I pay 1,200 Euro a month. I have never defaulted on a payment. I have been working in the same fulltime job for 6 years now.

I am going to be returning to full-time education at the end of this year which requires 2 years full-time compulsory attendance in order to acquire my qualification.

I am not familiar with the whole ''banking'' sphere but I am wondering how would I go about putting off paying my mortgage for 2 years? Is it something that can be done? What process will I have to go through?

Please can someone answer me in a simple manner and give me some advice?

Thank you so much.
 
I have not quit my job.

I am not going back to college.

I will be training for circa 2 years in order to become a Barrister but it will be unpaid (9 months classroom work and a little over a year's 'apprenticeship' type work).
 
If you must know, there was a plan in place for me to move back home and rent out my house, but that option has now fallen through.
 
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Then you will have to change your other plan as well, I would suggest. It would seem to me that you cannot afford to take a year without a salary.

You could ask your bank if they will give you an additional mortgage to fund your studies, but I think it's unlikely that they will do so.

Brendan
 
Thank you for your advice but what happens to all these people who have lost their jobs and are unable to pay their mortgage for months on end? I read all the time that arrangements are made in order to facilitate them.

P.S. I don't need funds to fund my training. I just need relief on my mortgage payments until I am qualified!
 
Some people who lose their jobs have mortgage protection insurance in place that continues their mortgage payments temporarily; others may qualify for supplementary SW payments that continues to pay the interest on their mortgage. In both of these cases the people concerned would not be voluntarily ceasing work.

In other cases people may negotiate a mortgage repayment moratorium, or a period of paying interest only on their mortgages, but these would be negotiated with their lender will in advance and would have "catch-up" plans agreed.
 
You need to talk with your bank. In the end if they dont agree to give u some leeway while you try to get the property rented then sadly you have no other option except postpone your studies dont you really ? You might be able to rent out the property before the end of the year though. But what happens if the tenant cant or wont pay ? Maybe you need to stay in work and save up enough money to act as a cushion for your mortgage repayments before you go onto study full time and give up your job.
 
I'm not 100% sure, but I think you will have at least 12 months from going into arrears before the bank would be able to instigate repossession proceedings. You might be able to extend this by doing certain things. For example, you could talk to your bank and go interest-only on your mortgage which might buy you some extra time.

That said, as soon as you go into arrears you will start to ruin your credit rating which could affect you in getting a loan in the future. It takes 6 years for missed payments etc. to clear off your credit report.
 
The Code of Practice is here.

It certainly was not intended for people who make a conscious decision to reduce their income and not pay their mortgage.

Lenders may distinguish between borrowers who are genuinely unable to pay - because of changed circumstances - and those who could pay some/all of the arrears but will not. All genuine cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her obligations.
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They generally will give you a 3 month payment holiday, maybe longer if a bank manager agrees to it. There's nothing in it for them to make it any longer.

There is no way I'd try to rely on the 12 month moratorium, let alone 2 years. Imagine if at the end of the 2 years you got sick... you'd be like the boy who cried wolf, trying to explain to the bank that you didn't really need the moratorium the first time but you do now.

The best option may be to take as long a payment holiday as possible, then ask the bank to change your loan to interest only for a year.
 
What is the market rent for the property?
Would it cover the mortgage and if not what is the anticipated shortfall?
Are you in negative equity? Is selling an option.
 
Sutton1

Firstly, brave step. My hats off to you for attempting something like this in the current environment.

1.If you have not had any periods of Moratoriam on your mortgage I would suggest applying to your bank. Some banks will allow 6 months moratoriam on your mortgage (no payments whatsoever). If they agree, that will buy you some time.

2. You could then request a period of interest only payments. This would significantly reduce your payment amounts (depending on what mortage rate you are on etc)

These are two real options as I have recently done both due to financial situation.

Speak to your bank, they may be able to offer you further deferred payments.

Alternatively could you rent out a room to help with the payments?
 
If you simply stop paying without the banks agreement then you will have interest, penalties and legal fees building up on top of the capital repayments. That will be a huge debt for someone starting out in a very uncertain, self employed ( presumably) career.

You don't need me to point out how difficult a career as a barrister can be starting out, I assume. Unless you have great contacts or a job in a multinational to fall back on, it's a hard road ahead money wise.
 
I'd be rethinking that career path if I were you. There are a lot of junior barristers scraping a living at the moment, and they're a few years in. Most barristers are talking about it taking about 7-8 years to make a living wage. The reality is 30 years ago there were circa 400 baristers in Ireland, now there's about 1400 in Dublin alone. Also, two years devilling is becoming the norm now, not one.

Why not do the 2 year modular degree, and keep your job? At least then you still have an income coming in, can pay the mortgage, and have time to build up money to get you through the lean years.
 
The problem is that the situation is of your own doing, which is not in any way similar to having lost your job. The bank could quite easily say that you foresaw your situation at the time you took out the mortgage, but went ahead regardless. They could also say that you could have saved enough to cover your repayments in the meantime.

The last thing you need to do is default on your mortgage so early on in the term of the loan, or at this early stage in your career, especially when it can be avoided.

You could speak to your bank & explore the possibility of switching to interest only for a set period, although they would need some sort of proof, or at least a proposal of how you plan to meet your interest only repayments as well as how you are going to afford to eat, travel & pay utility & other bills. Could you rent out a couple of rooms & share for the duration?

Is it possible for you to put off your further studies for two years instead of trying to put off paying your mortgage for two years & in the meantime rent a couple of rooms out & save enough money to meet your repayments. At least by doing it that way you can approach the bank with a solid request to switch to interest only, & they will be able to see the extra money going regularly into your savings, & might view your proposal as being a realistic one.
 
could you rent out your property and live in smaller rented accom and perhaps get a part time job to cover the deficit.

I dont see the banks going with your idea.

Also share the concerns of others regarding a carreer as a barrister. Getting assignments is difficult and getting paid is not easy either and i think you are being very optimistic thinking you only need a 24 month mortgage holiday.
 
Could you not have saved the mortgage payments for when you wouldn't have an income coming in?
Is there a possibility that you could agree going interest only and then renting out some rooms to get this money in?
I went back to college 2 yrs ago and intended taking a career break to try out in the new area so had saved 2 yrs worth of mortgage payments guaranteed bills. Can you put off your training until this is done.
 
niceoneted said:
Could you not have saved the mortgage payments for when you wouldn't have an income coming in?
Is there a possibility that you could agree going interest only and then renting out some rooms to get this money in?
I went back to college 2 yrs ago and intended taking a career break to try out in the new area so had saved 2 yrs worth of mortgage payments guaranteed bills. Can you put off your training until this is done.
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+1 . This is the right way to do it.
 
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