Voluntary surrender of a house?

[SarahSmyth32]

Age: 33
Spouse’s/Partner's age: 34

Annual gross income from employment or profession: n/a
Annual gross income of spouse: 35,000

Type of employment: normal employment

In general are you: A
(a) spending more than you earn, or
(b) saving?

Rough estimate of value of home: €150,000
Amount outstanding on your mortgage: €402,000
What interest rate are you paying? 4% (i think)

Other borrowings – car loans/personal loans etc: €2727.54 per month
Car finance : €476.67 Balance: €20,254 (as per last letter)
Aib Loan: : €139.62 Balance: €300 aprox
Mabs: €331.50 (Credit union €21000 aprox, CC x 3 €18000, home shopping€3000)
Personal Loan €281.14 (family member) (€16500)
High interest loan €260 (€3000)
Credit Union €120 (€2600)

Thats €1608.93 the balance €1118.61 was for normal monthly bills, diesel, car tax, insurance house, life, car etc
Mortgage Payment: €1561.00 per month

Savings and investments: n/a

Do you have a pension scheme? no

Do you own any investment or other property? no

Ages of children: 2

Life insurance: yes (€77 pm)



Hiya thanks for taking the time to read our problem!
Ok we are a young couple (34 & 33) with one child he is aged (2)
We have been struggling for the past 2 years with our mortgage and short term debt, so far mabs have helped with the short term debts and I think we are coping with that but we keep falling behind with our mortgage, we have had it interest only for past 4 years (extended as much as they could and restructured once already and are now €3k + in arrears (we actually owe more now to bank than we did at start) the house like all houses these days is in negative equity but by a lot its (-€250,000.00)
Think that’s all the background info you will need!
These are the options I think we have, just need some advice to see are we doing the correct thing!

Option 1: Keep things same and hope I get a job, but where the house is located the jobs are very scarce, I have been trying months to get any kind of job and have not even got a interview and my husband has a job but the salary is not covering our bills.

Option 2: Voluntary surrender, I know this is a last resort but I honestly think this is where we are, my husband has been offered a very good paying job (€55,000 basic with option of overtime) a few hours from where we live now, (its too far to commute) but if we got out of the house we would definitely have a a better quality of life and be able to afford everything and i would have a better chance of getting a job.

What would you do.......

 

[niceoneted]

Can you list out what is included in the 2727.54 is this for one loan or a number of loans.
Can you say what is the balance of the loan is and the remaining term with the interest rate also and then people can advice better. Are they credit cards or loans?

It's also helpful if you list other expenses in the month. as it stands your take home pay doesn't even cover these payments let alone food, utilities car etc.

You mentioned in the other thread about your husband being offered a better paid job. What was the offer as it may give people an idea on how best to advice going forward with that idea too.

 

[SarahSmyth32]

Can you list out what is included in the 2727.54 is this for one loan or a number of loans.
Can you say what is the balance of the loan is and the remaining term with the interest rate also and then people can advice better. Are they credit cards or loans?

It's also helpful if you list other expenses in the month. as it stands your take home pay doesn't even cover these payments let alone food, utilities car etc.

You mentioned in the other thread about your husband being offered a better paid job. What was the offer as it may give people an idea on how best to advice going forward with that idea too.

I have updated them details now i made the mistake of putting utility in total but that it now, (that is not including food) just bills.... thanks

 

[PaddyBloggit]

You have a mortgage of €402k on a €35k wage ....

This isn't sustainable even if you didn't have any other outgoings.

How can your house be now only worth €150k?

Re. the voluntary surrender .... you'd still be liable for the outstanding amount even if the bank managed to sell your house.

They'd come after you for the short fall.

Have you spoken to the bank lately?

This website is worth a visit:

New Beginning

You're not at that stage but it should give you hope that there is help out there.

 

[Brendan Burgess]

Hi Sarah

Not sure that we need the other detail which ted has asked for. The big problem is that you have €250,000 of negative equity which you are unlikely to be able to repay. The other loans probably amount to somewhere in the order of €30,000.

I think that your husband will have to take the better paying job and you can see if you can get work in the new location.

Tell the bank that you are leaving the house and ask them what they want to do with it. Is it possible to let the house? What would the rent be? If the rent covers most of the interest, you could consider keeping the house.

If it doesn't, as I suspect it won't, tell the bank that are prepared to sell the house for as much as you can get. You will still owe the bank the €250,000 shortfall and they will not write it off. You can make an offer to pay them something towards it.

But there is very little the bank can do about it. If they are not happy with the amount you pay them, they may go to court and get a court order for you to pay more. But the judge will be sympathetic if you behave reasonably.

So take the job.
Tell the bank that you will sell the house.
Acknowledge that you owe the shortfall.
Pay something towards it.

Make sure that you follow up each meeting with a letter to them confirming your offer and their response. This will be useful in the event that the lender takes you to court.

Under the EU-IMF agreement, the government has committed to introducing new bankruptcy legislation by the end of March 2012. It is likely that this legislation will contain some form of debt settlement proposals which would allow you a fresh start after 5 years doing your best to pay off your debts.

Brendan

 

[SarahSmyth32]

You have a mortgage of €402k on a €35k wage ....

This isn't sustainable even if you didn't have any other outgoings.

How can your house be now only worth €150k?

Re. the voluntary surrender .... you'd still be liable for the outstanding amount even if the bank managed to sell your house.

They'd come after you for the short fall.

Have you spoken to the bank lately?

I have lost my job and my husband had his wages cut 3 times, and hours reduced. when we took out the mortgage we where well able to aford everything. and believe me we would be doing well to get 150 as there are bank repossion house all over this area. and houses for sale 2.... yes we understand we will still be liable for short fall but that is what im wondering would they come to some sort of agreement on the amount per month, we are not looking to not pay what we owe, just to see what options if any we have, and yes i speak to the bank on a weekly basis, they are very helpfull, they dont want the keys back (what bank does) but at same time they cant get us local jobs..... so what can we do

 

[PaddyBloggit]

Brendan makes good sense.

You can't keep going like this so you've got to reconsider your circumstances.

The website I linked to above offers help to those being brought to court re. arrears but they might be worth a call asking them their advice about voluntary surrender before the bank takes court action.

You can't sustain the debt. You need to reclaim your lives.

Document everything.

 

[SarahSmyth32]

Hi Sarah

Not sure that we need the other detail which ted has asked for. The big problem is that you have €250,000 of negative equity which you are unlikely to be able to repay. The other loans probably amount to somewhere in the order of €30,000.

I think that your husband will have to take the better paying job and you can see if you can get work in the new location.

Tell the bank that you are leaving the house and ask them what they want to do with it. Is it possible to let the house? What would the rent be? If the rent covers most of the interest, you could consider keeping the house.

If it doesn't, as I suspect it won't, tell the bank that are prepared to sell the house for as much as you can get. You will still owe the bank the €250,000 shortfall and they will not write it off. You can make an offer to pay them something towards it.

But there is very little the bank can do about it. If they are not happy with the amount you pay them, they may go to court and get a court order for you to pay more. But the judge will be sympathetic if you behave reasonably.

So take the job.
Tell the bank that you will sell the house.
Acknowledge that you owe the shortfall.
Pay something towards it.

Make sure that you follow up each meeting with a letter to them confirming your offer and their response. This will be useful in the event that the lender takes you to court.

Under the EU-IMF agreement, the government has committed to introducing new bankruptcy legislation by the end of March 2012. It is likely that this legislation will contain some form of debt settlement proposals which would allow you a fresh start after 5 years doing your best to pay off your debts.

Brendan

Thanks Brendan, the rental market up here is aprox €550 for our house but there are a lot of houses as i said for sale and rent, i would say either way will take a while to do, interest only on the mortgage is €850. as i said to prev reply we do agknowledge we will have to pay the balance but where i suppose just a bit worried if we handed back the house, that one we would have rent (say €800 in new location) and bank would be looking similar amount in this case we would be back to square 1 and this time with no house.

 

[fizzelina]

The other loans probably amount to somewhere in the order of €30,000.

Where do you get the 30k from Brendan?
I counted
Car Finance - €20,254
AIB loan - €300
Credit Union -€21,000 approx
Credit cards (3 of them) - €18,000
Home shopping - €3,000
Family member loan - €16,500
High interest loan - €3,000
Credit union (again) - €2,600
That's personal debt on top of the mortgage of €84,654. That is huge!! (OP can correct me if I read her post wrongly)
The problem here is not that it's impossible to repay the mortgage, it is that they also owe almost €85k personal debt and clearly have issues around money management, credit card use and borrowing. Without this personal debt the mortgage would be tough but manageable.
Is there any way to keep paying the mortgage but restructure the personal debt repayments? Realistically to me leaving the house is not a great option - they still have to rent someplace else, the rent they get in won't cover the mortgage interest even, the negative equity follows them.
OP - I presume you have cut up the credit cards and stopped home shopping. Is this calculation correct, you owe €84k personal debt?

 

[Brendan Burgess]

Fizzelina


Sarah updated her post after I had replied

My main point was that the debt had very little relevance.

However, at €80k it is more relevant than I had guessed.

Brendan

 

[SarahSmyth32]

Where do you get the 30k from Brendan?
I counted
Car Finance - €20,254
AIB loan - €300
Credit Union -€21,000 approx
Credit cards (3 of them) - €18,000
Home shopping - €3,000
Family member loan - €16,500
High interest loan - €3,000
Credit union (again) - €2,600
That's personal debt on top of the mortgage of €84,654. That is huge!! (OP can correct me if I read her post wrongly)
The problem here is not that it's impossible to repay the mortgage, it is that they also owe almost €85k personal debt and clearly have issues around money management, credit card use and borrowing. Without this personal debt the mortgage would be tough but manageable.
Is there any way to keep paying the mortgage but restructure the personal debt repayments? Realistically to me leaving the house is not a great option - they still have to rent someplace else, the rent they get in won't cover the mortgage interest even, the negative equity follows them.
OP - I presume you have cut up the credit cards and stopped home shopping. Is this calculation correct, you owe €84k personal debt?

Obviously all spending has stopped, and considering mabs have all our loans they are all as restructured as they can be, we have spoken to all banks/cu's involved and the above is as low as its going to get.

when we took out the cards and loans our circumstances where a lot different we where earning 3 times the amount we are now.

 

[Greta]

when we took out the cards and loans our circumstances where a lot different we where earning 3 times the amount we are now.

And with such high salaries you still needed to borrow so much in unsecured debt? I agree with a previous poster, you do have money management issues.

 

[truthseeker]

I agree there are money management issues. This needs to be considered going forward.

The way I see it, you are trying to sustain repayment of debt that was based (a) earning 3 times as much and (b) continued borrowing.

Even if you were on 3 times as much its still a massive amount of debt to be paying back.

You and your husband need to earn more money, until such a point as you can be made bankrupt in Ireland anyway.

What industry is your husband in? Could he get a job in another european country that was higher paying and fly home on cheap ryanair flights at the weekends?
Could you do something like mind children (seeing as youre already at home with one child yourself and cant get work?). Even if you got work out of the home the cost of childcare would probably be prohibitive - unless you have relations willing to mind your child.
Or could you both leave the country and go somewhere where you are earning 3 times the amount and pay back your debt from there?

What about the car with the finance owing on it - how far are you into that finance agreement? Could you hand the car back and have the finance wiped?

What about the various loanss/credit card debt - did you buy anything of material value that you could sell and wipe any of these debts?
Surely for 80k of unsecured debt there has to be something to show for it that can be sold now?

Its really a mess, Im not sure if its worth it for ye to be breaking your backs trying to pay things off when the amount of debt is so high - you need to reconsider everything, and talk to the people behind the website that PaddyBloggit linked to.

 

[Bronte]

car loans/personal loans and living expenses: €2727.54 per month out of the 35K salary

1.Car finance : €476.67 Balance: €20,254
2. Aib Loan: : €139.62 Balance: €300 aprox
3. Mabs: €331.50 (Credit union €21000 aprox, 3 Credit cards €18000, home shopping€3000)
4. Personal Loan family €281.14 (€16500)
5. High interest loan €260 (€3000)
6. Credit Union €120 (€2600)

Thats €1608.93 made up of items 1 to 6

€1118.61 for normal monthly bills, diesel, car tax, insurance house, life, car etc

Mortgage Payment: €1561.00 per month

I just rejigged your original post as I found it difficult to follow.

Firstly there is no voluntary surrender, your bank has to agree. The total I have is €1608 + €1118 + €1561.00 = 4290 X 12 months €51,480. So 52K is needed

You owe
Mortgage: €402, 000
Other debt: € 85,000

Can your husband earn 52K into his hand?

Could you do out a more exact list of this: €1118.61 for normal monthly bills, diesel, car tax, insurance house, life, car etc

Why does your Mabs payment only cover 3 bills, why did they not amalgamate all your bills?

What advice did Mabs give you, surely you had to do up a fully comprehensive list of all your expenditure.

Are your loans being paid off, as in the balance is reducing, what is the interest rate on them and how many years left to run. Don't change the original post please as it will be too confusing, just 'quote' it and then go down through it adding more detail.

Would the family member agree to no repayments for a couple of years.

Can you work at night/weekends while your other half minds the baby.

Can your husband live in rent or live in digs in order to take the new job. He has to take that job. But he needs to keep living costs to a minimum.

Why is your negative equity so large, did you consolidate debt in the past?

 

[Magpie]

The surprise at the amount of negative equity is something I've seen a lot on this site, I think a lot of people haven't realised just how bad the situation is for a lot of "homeowners" that bought in the last few years. If you have a house that is surrounded by others, often bigger better ones that can't sell and are slashing prices, you're in the mire. Your house is practically unsellable, which makes for 100% negative equity. Even if not, negative equity of 50%+ is the reality for a lot of the >4 year old new builds in particular.

 

[truthseeker]

The surprise at the amount of negative equity is something I've seen a lot on this site, I think a lot of people haven't realised just how bad the situation is for a lot of "homeowners" that bought in the last few years. If you have a house that is surrounded by others, often bigger better ones that can't sell and are slashing prices, you're in the mire. Your house is practically unsellable, which makes for 100% negative equity. Even if not, negative equity of 50%+ is the reality for a lot of the >4 year old new builds in particular.

I agree. It depends when it was bought. Im in an apartment, they were selling for 400k+ at the absolute height of things, now they are selling for 170k (and maybe less).

So if youd bought at the height you could be 50%+ in NE.

 

[fizzelina]

Negative equity is only an issue if you need to sell though. And I am personally finding it is being blamed for a lot of woes on this site when the reality is personal debt is causing people huge problems as well, and who can be blamed for that? Take this thread for example, without the 80 odd thousand euro of personal debt the OP could probably afford the mortgage, live in the house and not need to sell hence no neg equity issue.

 

[truthseeker]

Negative equity is only an issue if you need to sell though. And I am personally finding it is being blamed for a lot of woes on this site when the reality is personal debt is causing people huge problems as well, and who can be blamed for that? Take this thread for example, without the 80 odd thousand euro of personal debt the OP could probably afford the mortgage, live in the house and not need to sell hence no neg equity issue.

I think even without the 80k personal debt the OP is in trouble with a 402k mortgage and a combined income of 35k. Its not sustainable long term.

 

[johnnygman]

Negative equity is only an issue if you need to sell though. And I am personally finding it is being blamed for a lot of woes on this site when the reality is personal debt is causing people huge problems as well, and who can be blamed for that? Take this thread for example, without the 80 odd thousand euro of personal debt the OP could probably afford the mortgage, live in the house and not need to sell hence no neg equity issue.

Not as simple as that.

Vast majority of peoples incomes were much higher when they purchased their property, now that taxation has risen dramatically over last few years and coupled with income drops, many people now find themselves trapped because of this negative equity.
Their quality of life will be affected for many years to come given the long term nature of most of these mortgages this will have long term effects not only on these individuals but on society and our economy as whole.

Nobody is a winner here, massive negative equity like the above poster has suffered coupled with the other changes outside of their control are a tragic consequence of the mess this country is in.
Drive into a ghost estate in the midlands and you will see young couples trapped in these barren estates left to ruin, how long will it take before they are even back to par, labour mobilityis also a major problem because of neg eq.
I find that quite sad, there is no easy fix, but one thing is for sure they wont be getting a bailout, maybe a bailiff more likely.

 

[Wonderer]

I only want to offer these people my moral support. Sounds like a tough situation but I think that you are so right to be approaching MABS, the bank with whom you have your mortgage and indeed picking the brains of the clever people on this site. Sometimes short term loans are the most crippling. As the other poster said newbeginning will be your last resort. What wonderful people. The child-minding idea is a great one - about the only business that continues to thrive in difficult times. Take in 2 children - manageable and would certainly go towards that short term debt. Best wishes