unsustainable mortgage in negativ equity - how best to proceed?

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question12

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property -
Lender: Bank of Ireland
Amount outstanding: 272,000
Value of home: 125,000
Interest rate: tracker,
Monthly repayment 1142 euro
Amount in arrears 0
Monthly rent received 750 (but currently tenant 2,200 in arrears) - trying to currently evict/ clear tenant and 'start again;

Other loans and creditors - delete those which don't apply to you
Credit Card 1,100
Car loan 18000 left at 5.5%

Other savings and investments : one policy due to come to fruition July 2013 - 8,500euro


How important is retaining the family home to you?

It was our family home, but due to economic climate combined with work opportunites relocated to UK two years ago. If there was a way going forward to get rid of it while minimising the shortfall hit (hope to return to Ireland in next 2-3 years but not same area) so I could start focussing on building a deposit for a new home.

Any other relevant information

What is your preferred realistic outcome?
The house will never regain full amount I paid for it and l do not anticipate ever be in a position to repay the loan fully. So I would prefer to sell the house and deal with the shortfall
 
Sorry - current salary is £110,000 GBP. Apart from ongoing bills electric, gas, council tax, etc, No other current commitments
 
Maybe its just too early in the morning for me but i fail to see how with 110k salary your mortgage is unsustainable!
 
peteb said:
Maybe its just too early in the morning for me but i fail to see how with 110k salary your mortgage is unsustainable!
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It's in negative equity and he wants to live somewhere else. How much more unsustainable can you get?
 
dub_nerd said:
It's in negative equity and he wants to live somewhere else. How much more unsustainable can you get?
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Surely an unsustainable mortgage is one you cannot service. Not one you dont want to pay because its in negative equity.

And he's getting rent for the property, so I dont think you are right about him wanting to live somewhere else, or maybe he lives in it and part rents.
 
dub_nerd said:
It's in negative equity and he wants to live somewhere else. How much more unsustainable can you get?
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So anyone in negative equity who decides that they would like to live somewhere else should be free to dump all their debts on the IRISH TAXPAYER even where the have an obvious ability to pay.

Everyone should remember that it is the Irish Taxpayer who will be footing all these bills. There is a mythical notion out there that it is the banks who are paying for all these write offs.

We will be very lucky if we have not to look for another bail out before all these write offs are sorted out and the T & C's might not be too nice.
 
David_Dublin said:
...I dont think you are right about him wanting to live somewhere else...
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That was based on this statement:

question12 said:
If there was a way going forward to get rid of it while minimising the shortfall hit (hope to return to Ireland in next 2-3 years but not same area) so I could start focussing on building a deposit for a new home.
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As I said, it's unsustainable because he is in negative equity, wants to live somewhere else, and would like to start saving for his new home a.s.a.p.
 
Agree "unsustainable" is not the correct word in this case.

Whats the plan:
1. Sell up & transfer the 150k to unsecured debt repay over 20 years at 4.5%. Repayments €950pm.
2. Hang on to it and sub the loan by €950 per month for 20 years and have something to show.
3. Declare bankrupt in the UK?
 
Joe_90 said:
Agree "unsustainable" is not the correct word in this case.

Whats the plan:
1. Sell up & transfer the 150k to unsecured debt repay over 20 years at 4.5%. Repayments €950pm.
2. Hang on to it and sub the loan by €950 per month for 20 years and have something to show.
3. Declare bankrupt in the UK?
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Can you declare yourself bankrupt if you clearly have the means to repay a debt?

There should be no interest or property tax payable on the negative equity portion of the lone but debts should be repaid where possible otherwise society falls apart.
 
This debt isn't at all unsustainable. The op just wants to dump his bad investment on the Irish taxpayer. He can quite clearly manage his debt, just doesn't want to.
 
dub_nerd said:
That was based on this statement:



As I said, it's unsustainable because he is in negative equity, wants to live somewhere else, and would like to start saving for his new home a.s.a.p.
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I'm not sure whether your being sarcastic or for real !!!! if it's the latter, wow...just wow!
 
Does the OP not state that he wants to deal with the shortfall?

He also states that he wants to minimise the financial hit, he can hardly be faulted for that?
 
question12 said:
property -
Lender: Bank of Ireland
Amount outstanding: 272,000
Value of home: 125,000
Interest rate: tracker,
Monthly repayment 1142 euro
Amount in arrears 0
Monthly rent received 750 (but currently tenant 2,200 in arrears) - trying to currently evict/ clear tenant and 'start again;

Other loans and creditors - delete those which don't apply to you
Credit Card 1,100
Car loan 18000 left at 5.5%

Other savings and investments : one policy due to come to fruition July 2013 - 8,500euro


How important is retaining the family home to you?

It was our family home, but due to economic climate combined with work opportunites relocated to UK two years ago. If there was a way going forward to get rid of it while minimising the shortfall hit (hope to return to Ireland in next 2-3 years but not same area) so I could start focussing on building a deposit for a new home.

Any other relevant information

What is your preferred realistic outcome?
The house will never regain full amount I paid for it and l do not anticipate ever be in a position to repay the loan fully. So I would prefer to sell the house and deal with the shortfall
Click to expand...

Unlike some here, I'm going to assume the best case and state that you have my sympathy. Far too many people have been caught out having to move for work. If you sell now and crystalise the nearly 150k loss, you may be able to negotiate different terms of payment as the capital will be reduced and the payment a good deal more affordable. I doubt the bank will let you away with anything else as your means are more than sufficient to pay.

The monthly repayment should be reduced by a good bit and you may be able to get the term shortened down. It should be easier to get a new loan for another house in the UK with a €147k unsecured loan rather than a secured €272k loan. You'll also save yourself a lot of stress brought upon by being an accidental landlord.
 
freeandclear said:
People are not debt machines no matter what the Irish taxpayer , Banks , or Government may like to think , they will make decisions which is in their best interests and if that means walking away and planning for the future so be it .
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Hear hear.......60% to 70% has been knocked of the value of properties and many people think it's perfectly normal to be a prisoner of debt for the rest of your life regardless.....even if it makes no economical sense to do so!

Borrowers need to stand up to banks and ignore the 'moral hazard brigade' who are in cuckoo land!
 
sorry am I the only one who's missing something here, the OP has a salary far in excess of the national wage and the ability to pay the debt. Yes, the house has fallen in value but there's an opportunity to rent it and pay for the shortfall. Either that or sell the house and wrap up the NE into a loan you can pay off. Why do people continually expect to just walk away from their obligations and foist is on the rest of us?
 
quinno said:
sorry am I the only one who's missing something here, the OP has a salary far in excess of the national wage and the ability to pay the debt. Yes, the house has fallen in value but there's an opportunity to rent it and pay for the shortfall. Either that or sell the house and wrap up the NE into a loan you can pay off. Why do people continually expect to just walk away from their obligations and foist is on the rest of us?
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It's called 'incentive'.....that's the reason! In the US borrowers have the option of non recourse loans which effectively mean they can hand the keys back to the bank and move on. It keeps these individuals as a positive contributor to the economy hence why the unemployment rate there is only 7.5% despite having a major recession back in 08/09 and a property crash. They allow debt forgiveness and encourage entrepreneurship.......no moral hazard brigades out there!

And by the way, as long as we keep pressing borrowers to the pin of their collars to squeeze every last cent out of them this economy will never recover meaningfully and that effects 'the rest of us'!
 
Well this house is in Ireland so different rules apply. The OP is wrapping up the shortfall into a NE loan, which is the responsible approach and avoids this lump being further added to our national debt. Some people have suggested declaring bankruptcy, which on a salary of £110k might be a stretch.
 
Negotiator said:
Hear hear.......60% to 70% has been knocked of the value of properties and many people think it's perfectly normal to be a prisoner of debt for the rest of your life regardless.....even if it makes no economical sense to do so!

Borrowers need to stand up to banks and ignore the 'moral hazard brigade' who are in cuckoo land!
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Basically you're saying people should only pay their mortgages if they feel like it. In this case, the OP earns about four times the Irish average wage, pays tax under a lower tax regime, has his house rented out, and has relatively few outgoings. If he really put his mind to it he could be out of negative equity in five years and own his house free and clear in another three.

But you say he'd have nothing to show for those first five years so it doesn't make economic sense. Instead of being "a prisoner of debt" he should "stand up to the banks", which basically means taking the taxpayer for a ride. I'm sure everyone else will appreciate how clever that is when their bank deposits are being taken to pay for the next bailout.
 
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