Hi minnie
Assuming that your current home meets your needs, then you should see what can be done within reason to hold onto it.
You are currently paying €150 per month for your accommodation. If you hand back the keys, you will be assigned somewhere by the local authority which might not be as good. You will be required to pay around the same in rent anyway, so there is no immediate advantage in handing back the keys.
The long-term problem is that the amount you owe is increasing by around €9,000 a year. This is more a problem for the bank than it is for you, as you are unlikely to be able to repay it ever.
You should look at the mortgage to rent scheme. If you meet the qualification conditions, a housing association will buy your house from you for €80,000 and you will get to continue living in it.
You will then have an unsecured loan of €163,000.
As you are both on low incomes, you should then apply for a Debt Settlement Arrangement under the new Personal Insolvency Act. You won't be able to start this process until around May.
You will be left with a reasonable standard of living, but any surplus income will go towards repaying the loan over 6 years. After that, the balance will be written off.
An alternative approach would be to put a proposal to your lender now. I would suggest something along the following lines.
You will split your mortgage into
- An active mortgage of €100,000 repayable over 30 years
- a deferred mortgage of €143,000 with no interest on it.
The active part of the mortgage could be increased in three years when your partner has a job.
A variation of the above would be that you will stay as you are. You will pay €150 per month until your incomes improve. Within the year, the taxpayer will start paying you Mortgage Interest Supplement. This is the best outcome for the bank as they will get more in MIS than they can get on a repossessed house.
Brendan