DublinBroke
Registered User
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- 16
Hi, My wife and I purchased a 2 bedroom apartment in 2006 in Dublin 18. Price was €475k and we had a downpayment of €50k, so with a Mortgage of €425k. We were provided with a low "introduction" type variable interest rate for the first year and by the time this was up for review, my wife had taken leave from work with (initially) stress and exhaustion, which actually turned out to be Cancer. At the time of this rate review trackers were not on offer, so some security with a fixed rate mortgage seemed like a reasonable idea (we were up to end of 2007 now).
We didn't know it at the time but my wife would, after first brilliantly getting her health back, not return to work until 6 years later (earlier this year in fact) and in a part-time capacity. Due to an erosion of income during these intervening years, and of course high taxation, we had been on the back foot trying to cover our mortgage during this time. Interest only was offered to us as a "short term" option and we availed of this option until middle of 2013 (5 years of I.O. payments), until the bank stopped this, which is when the arrears started to begin pile-up. They then offered us a split-loan arrangement, which brought our monthly mortgage payments down from approx. €2,200 down to €1,550 euros. Of course, a caveat to this agreement was that we would be accumulating of a portion of our mortgage into a "warehouse", which would be due following the final payment of the mortgage (28 years later). We estimated this amount would finally be upwards of €200k.
As we felt this was an unworkable solution, we got some advice from two qualified financial advisers and, as the QFA's advised us to, our solicitor. Following the legal advice and some reflection on our part, we decided to request a voluntary sales for loss on the property. We did this in conjunction with our solicitor and pro-actvily marketed the property and took it to the bank as a finalised option for them to make a decision on (i.e. by the time we approached them we had a buyer and could explain exactly how much the final proceeds of the sale would be for them). All they needed to do was grant permission.
** One of the points I was adamant about during this process was to gain agreement re: the shortfall amount, in respect of the mortgage, with the bank PRIOR to the sale being completed. We got this in writing and it constituted a monthly amount paid by ourselves to the bank for the next 7 years following the sale. They took a while to decide on the first offer (late 2013) and as a result, we lost our first buyer, but in early 2014 we put it back on the market and got new buyers and an extra €5k on the asking price.
When the sale went through, I was curious as to what our ICB report would look like so I requested this and noticed that the shortfall had not been written down following the sale of the property. In fact to would be written down, as agreed in the contract, but what they didn't specify, was that they would do this only after final payment of the compromise payment (i.e. 7 years after sale of property. For those who do not know, a bad credit score on your ICB report actually stays in place for 5 years and, adding 7 years to this, would mean 13 years in the financial dog house.
As fortune would have it, We were in a position to completely pay the outstanding amount, (which had been due over the 7 years), in one final payment and, following another contract, we finalised payment of the shortfall in early 2015. So in effect, from this stage we no longer had a property , a mortgage, owed anything against any mortgage, and had no further bad credit scores being sent against our ICB report (but of course this will take a min. of 5 years from this date to be sanitised).
I wrote this post to explain what we have been through and how it played out for my family and I. As recent figures and statistics suggest, this may be a journey that some other families and people are also embarking on. If this is you reading my post, I hope it helps in some small way and may I please wish you the very best of luck.
But I also wanted to check if there was any advice from any experts out there for us in terms of next steps and options in getting another shot at home ownership? I've done some research recently on this and I'm not exactly seeing any options. We are of course in the Dublin rental market presently, have some savings (we maybe could scrape together a 10% deposit but 20% will take much longer), and with a compromised ICB for foreseeable future.
Upon reading the Central Banks guidance on new lending recently I noticed that there wasn't really anything which would be pertinent to cases like ours, but I think there must be thousands of people affected similarly like us. That's a lot of people to effectively take out of the property market. Negative equity cases are mentioned in the report but only in respect of these cases looking for access to credit in the future etc.
We didn't know it at the time but my wife would, after first brilliantly getting her health back, not return to work until 6 years later (earlier this year in fact) and in a part-time capacity. Due to an erosion of income during these intervening years, and of course high taxation, we had been on the back foot trying to cover our mortgage during this time. Interest only was offered to us as a "short term" option and we availed of this option until middle of 2013 (5 years of I.O. payments), until the bank stopped this, which is when the arrears started to begin pile-up. They then offered us a split-loan arrangement, which brought our monthly mortgage payments down from approx. €2,200 down to €1,550 euros. Of course, a caveat to this agreement was that we would be accumulating of a portion of our mortgage into a "warehouse", which would be due following the final payment of the mortgage (28 years later). We estimated this amount would finally be upwards of €200k.
As we felt this was an unworkable solution, we got some advice from two qualified financial advisers and, as the QFA's advised us to, our solicitor. Following the legal advice and some reflection on our part, we decided to request a voluntary sales for loss on the property. We did this in conjunction with our solicitor and pro-actvily marketed the property and took it to the bank as a finalised option for them to make a decision on (i.e. by the time we approached them we had a buyer and could explain exactly how much the final proceeds of the sale would be for them). All they needed to do was grant permission.
** One of the points I was adamant about during this process was to gain agreement re: the shortfall amount, in respect of the mortgage, with the bank PRIOR to the sale being completed. We got this in writing and it constituted a monthly amount paid by ourselves to the bank for the next 7 years following the sale. They took a while to decide on the first offer (late 2013) and as a result, we lost our first buyer, but in early 2014 we put it back on the market and got new buyers and an extra €5k on the asking price.
When the sale went through, I was curious as to what our ICB report would look like so I requested this and noticed that the shortfall had not been written down following the sale of the property. In fact to would be written down, as agreed in the contract, but what they didn't specify, was that they would do this only after final payment of the compromise payment (i.e. 7 years after sale of property. For those who do not know, a bad credit score on your ICB report actually stays in place for 5 years and, adding 7 years to this, would mean 13 years in the financial dog house.
As fortune would have it, We were in a position to completely pay the outstanding amount, (which had been due over the 7 years), in one final payment and, following another contract, we finalised payment of the shortfall in early 2015. So in effect, from this stage we no longer had a property , a mortgage, owed anything against any mortgage, and had no further bad credit scores being sent against our ICB report (but of course this will take a min. of 5 years from this date to be sanitised).
I wrote this post to explain what we have been through and how it played out for my family and I. As recent figures and statistics suggest, this may be a journey that some other families and people are also embarking on. If this is you reading my post, I hope it helps in some small way and may I please wish you the very best of luck.
But I also wanted to check if there was any advice from any experts out there for us in terms of next steps and options in getting another shot at home ownership? I've done some research recently on this and I'm not exactly seeing any options. We are of course in the Dublin rental market presently, have some savings (we maybe could scrape together a 10% deposit but 20% will take much longer), and with a compromised ICB for foreseeable future.
Upon reading the Central Banks guidance on new lending recently I noticed that there wasn't really anything which would be pertinent to cases like ours, but I think there must be thousands of people affected similarly like us. That's a lot of people to effectively take out of the property market. Negative equity cases are mentioned in the report but only in respect of these cases looking for access to credit in the future etc.
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