Mortgage Question

LauranceB

Guys, I’d love to hear any input you could give me on the following please: My wife lost her job last February and we’ve been living off my wages ever since. The money I take in per month doesn’t actually leave us with a lot of spare change so we’ve been dipping into my savings to help keep up mortgage payments. We both have 100% credit histories and have never failed to pay a mortgage payment or any other loan for that matter. As you can imagine our savings are starting to run low and within short time they will be gone. I approached our mortgage provider yesterday, to ask them was it possible to get a short term moratorium whilst my wife looked for work or while I looked for a second job. They asked me to drop in our monthly in comings and out goings per month; which I will leave in this afternoon.

So to get to the point; we were both talking to some friends yesterday who told us that we mightn’t stand a chance on getting a moratorium as we have never missed a mortgage payment and might not yet be classified as high risk; they advised us to allow our mortgage to go into one month’s arrears to show the bank that we are struggling. They feel that as we keep paying; the provider will put the moratorium on the long finger.

We’ve always prided ourselves on meeting our commitments so I don’t want anyone to think this is some sort of cop out.

Thanks for any replies.

tHE vAGGABOND

Personally I would not strategically miss payments - that would stay on your credit record for a long time and get in the way of you getting all kinds of credit in future..

I would like to think your bank would be reasonable - but who knows until you actually have jumped thru their hoops?

LauranceB

Thank you for your response. Yes I was worried about what would happen if I missed a payment but also worried that if we kept paying, the provider would somehow ignore our plight. Its basically a last resort on our behalf to get them to take notice.

We approached them back in September but they were wishy-washy in their response and seemed to think that we could keep up payments. I've also had a salary deduction so I dropped in a letter to them this afternoon; from my employer stating same.

For some reason our mortgage doesn't show on our ICB report.

Selling property is not an option as negative equity stands.

drunk_monk

My wife & I are in a simmilar situation. I lost my job last June and our savings are nearly gone. We phoned our bank (PTSB) & they have advised us to go into any local branch and talk to them. He seemed to suggest that a interest only payment would be possible (didn't mention moratorium) but he also said to us NEVER to miss a payment.

Priapus

LauranceB wrote: »

So to get to the point; we were both talking to some friends yesterday who told us that we mightn’t stand a chance on getting a moratorium as we have never missed a mortgage payment and might not yet be classified as high risk; they advised us to allow our mortgage to go into one month’s arrears to show the bank that we are struggling. They feel that as we keep paying; the provider will put the moratorium on the long finger.

I don’t want anyone to think this is some sort of cop out.

Thanks for any replies.

Hi Laurance!

I also do not think missing payments intentionally is the way to go. As the poster mentioned above, this stays with you for a long time. A moratorium is really only offered in extreme cases. You are a long way away from being granted a moratorium. What the bank will be more likely to offer you is what they call an "arrangement". So for instance, they might offer you something like a 6 month interest only option. Or perhaps a 20% monthly payment haircut. So you only pay 80% of your mortgage (principal and interest) for a certain period of time. They can structure these arrangements anywhich way.

Because you have been ticking by with the mortgage repayments up until now they are most likely to enter into an arrangement with you. And you have gone to them early, before getting into trouble and that is a big deal to them. So they will be glad you contacted them and should be able to help you out somehow.

Let us know how it works out. Best of luck with everything.

daithip

Best of luck with this LauranceB, it's as if I'm reading a post I wrote:( In a similar situation and have been advised to speak with my mortgage provider asap with the possibility of extending my mortgage term or going interest only for a short term. But was warned to keep paying as long as I can, without missing any payments(hopefully). With so many people in a similar situation I'm hoping the banks will be understanding. Let us know how you get on, good luck again.

LauranceB

Thanks for all your comments guys. I've issued the bank with all the documents they've requested and now all we can do is sit back and wait and look for another job!:rolleyes:

Will definitely keep you all informed on how the above pans out - should be interesting.

Drunk Monk, Daithip, best of luck also with you similar situations. Its by know means easy.

Cicero

OP ...all I can say is the very best of wishes over the coming months to you all..I really do hope things come together for you..

missing payments is not the way to go...ensure you deal with an experienced (and older..i.e. they have been there in the past bad times) banker of management rank- no-one wants bad/lapsed debt on their books...sounds like the advice you got was from someone who only half knows their job and what to do next...

veryangryman

Agree 1000% with sentiment here.

No bank wants to repossess your house, especially with the negative equity. It means they lose money and, worst case scenario, you could get your ass thrown in jail as it is practically theft if you dont pay what is agreed.

Sort out a payment plan - a mortgage is a marathon, not a sprint. Even if it is interest only, you benefit from keeping head above water, and the bank benefits long term with extra interest accrued. Win-win.

Finally, go easy on the frontline staff (i assume you do already ). Its not them who got the country in this mess. Vast majority are honest people just doing a job like you or me

LauranceB

Thanks guys - all great advise.

I'm keeping in close contact with the bank and informing them of all moves that we are making; which they seem to be happy with. I left a message for one of their managers to contact me today which they did and he albeit told me that I was worrying too much. His words not mine "God love ya - sure it will be grand".

No wonder the country is in the state its in:rolleyes:

3DataModem

LauranceB wrote: »

they advised us to allow our mortgage to go into one month’s arrears to show the bank that we are struggling. They feel that as we keep paying; the provider will put the moratorium on the long finger

Generally VERY bad advice.

LauranceB

Guys thought I'd update you with the latest goings on on this end.

Bank refused moratorium or payment break but decided the best option was to lower our payments. Payments are still very high so we don't know what to do next. I cannot see a sale but see the only option is handing in the keys.

The_Conductor

LauranceB wrote: »

Guys thought I'd update you with the latest goings on on this end.

Bank refused moratorium or payment break but decided the best option was to lower our payments. Payments are still very high so we don't know what to do next. I cannot see a sale but see the only option is handing in the keys.

Handing in the keys is not an option either- as Irish law does not have the same provisions as elsewhere (a la the practice of handing back the keys in the US known as 'Jingle Mail'). If you hand back the keys, and the bank is forced to sell the property- you are still liable for any outstanding balance on the mortgage- so if you sell for 200k but the o/s mortgage is 300k- you end up with a personal debt of 100k that still needs to be satisfied.

Irish law does not favour borrowers.......

kmick

Laurance to be honest you are not providing enough information to be able to help you out properly. I f I were you I would go to the money makeover section of (http://www.askaboutmoney.com/forumdisplay.php?f=62) askaboutmoney.com lay it all out and see what suggestions people come up with. I know you have approached the bank and that is good but the problem is the bank dont want to make a decision so you have to force them to by supplying them with a plan. Also there may be other areas of your expenditure that you may be able to cut back on (2nd car, gym membership, excessive food or utility bills for example). If you dont want to do that then MABS will provide a similar service. Go do either today.

LauranceB

Kmick, I did a plan for the bank right down to what we were spending on electricity. You name it, it was covered. I also got letters from my employer detailing all salary and work projected for the coming years. The best the bank said they could do was reduce payments. We've sold our car, canceled direct debits etc.

kmick

I would still suggest doing the askaboutmoney/MABS thing what Im saying is you need to present a plan to the bank of what you can afford not what they want you to pay and you need to do it fast before the government forced 12 month moratorium on legal action expires. I mean if you have already cut expenses to the bone and you are still dipping in to savings you have a big problem as those savings will run out in time as you know. They may be able to give you some small perspective or avenue you are missing. What is the difference between your current reduced payment and what realistically you could afford to pay? I mean for example if that difference is 200 euro happy days if its 700 euro then its more of an issue.

baaaa

OP it's hard to know what to do.The mantra seems to be not to miss a payment but these are strange times.
If you're going down you're going down,whatever money you have left might be more valuable to you in ways other than buying a few months breathing space.