What can BOI's Neg Equity trade-up/down do for me?

[Graaaaa]

Without personal details, here's my analysis of what BOI's new negative equity trade-up/down would mean for me. Conclusion is that I would have to request a moratorium on mortgage payments of at least 6 months to get a good sale price if this is to be of any benefit. If the house goes on the market, then the tenants will leave and quite frankly I cannot afford a single month without rent coming in.

Principal Residence (PPR)
Min Value 110000
Max 180000
Mortgage 96000
Lender KBC

Other property (NPPR)
Min Value 90000
Max Value 130000
Mortgate 204000
Lender BOI
Equity Release 15000
Lender BOI
Total debt NPPR 219000

Other Debts
Car 450
Visa 580
Overdraft 2950
Total other debts 3980

Income
Net PM 3000
Rental Income 850
Monthly income 3850

Property related costs (monthly)
PPR loan PM 850
NPPR loan PM 940
NPPR Equity Release loan PM 63
Other costs for NPPR PM 187
monthly sub-total 2040

Property related costs (annual)
Property Tax on NPPR 100
NPPR tax 200
annual sub-total 300

Net monthly property related costs 2065

Other (non-property) outgoings
Monthly bills, tax, insurances etc. 1005
Annual bills etc 1800
Net non-property monthly outgoings 1155

Money left over to live on (monthly) 630


What if I can Sell NPPR & put debt on PPR with BOI's new Negative Equity Trade-up/down scheme?

worst case
NPPR House sale (take the first price) 90000
Add say 3 months payments 3570
New PPR mortgage 228570
New payment 1250

Money left over 595

best case
House sale 130000
Add say 6 months payments 7140
New PPR mortgage 192140
New payment 1060

Money left over 785

Sorry about the presentation, this looked so much neater on a spreadsheet

 

[Brendan Burgess]

Hi Graa

I haven't followed the BoI announcement, but I doubt it's for you. I assumed it was for homes only.

Would you not be best selling your home and moving into your Investment Property?

You would have to do the numbers, but it would reduce your overexposure to property.

The alternative would be to sell your investment property but you would be left with a shortfall of €120k. They might agree to this if it's a tracker.

Brendan

 

[angela59]

Hi,

I found this information which was forwarded to me by Financial Architects, it doens't name Bank of Ireland as the bank but apparently it is and it is operating a pilot schme in three cork branches.

"We believe a lender is already piloting a different new scheme where the mortgage repayment is linked to your property value and not the outstanding mortgage balance. So for example if someone owes €450,000 on a house valued at €300,000, they would reschedule the repayments for the €300,000 and "park" the other €150,000 on a long term interest free loan to be dealt with at a later stage.

This will help borrowers as it:

1. Takes the pressure off the home owner to pay the higher repayment.
2. Means the €150k that is "Parked" is not getting larger as it is interest free and inflation will actually reduce this amount over time.
3. Gives a substantial amount of breathing space so when incomes and property prices finally recover, the borrower may be in a better position to deal with the overall debt."


Angela59

 

[Graaaaa]

BOI scheme

Cheers for the replies,

The bank's announcement was in the papers yesterday, cant post the links but was in an article by Conor Pope in the 'Other Stories' section of the Irish Times, and the Property and Mortgages section of the Independent.

The NPPR is in my name, the PPR is in my wifes name (each had a house before we married a few years ago, should have sold straight away, then it was too late). The bank do not officially know that mine is no longer my PPR so from their point of view, taking my wife's mortgage from her provider would be trading-up (based on assumed market value from daft.ie) or trading-down (based on "sale" cost of €96k) the home. At least this is my hope.

Two years ago I approached the bank with this very concept in order to off-load one house and they were quite eager and helpful. Then my salary dropped another 10% and I didn't want so much exposure on the family home so I dropped the idea.

And yes, it is a tracker.

The real problem is that the strain over the last 2 years has taken it's toll and we are separating and need to live in different places. The figures just don't add up to pay two full mortgages, and my house is the biggest burden on affording two independent lives, plus there's a small child involved who will take priority over any other considerations.