Owe €700k...can't repay!

BillyBobWinters

Hi all,

Myself and my partner owe €700k regarding my house, an apartment, another house and a small place abroad (my house debt is 40% of the total owed)

These were bought in the good times and although are manageable when working, my partner has fallen pregant and struggling to get employment at the best of times.

It is likely we will not be able to pay half of these mortgages in a few months.

We could go interest only on all the debt (we are currently interest only on €500k) but even that will be tough when interest rates rise.

We are considering handing back the keys and my partner will look for rent assistance when unemployed. We are curious to what the implications of these actions are. Paying back the debt over the next 30-40 yrs is not something I would like to sign up to especially with people owing 10 times more than even paying interest.

- disgruntled -

rugbyman

hello Billy.
i do not have any specific advice for you. But i am fairly sure that if you are in arrears now to any degree ,your credit rating is shattered. I think you are doing the right thing and standing back and look at your situation.

i know there are goodaorganisations like MABS, there is some government protection on non eviction for a time but i think a lot of people are in an unretrievable situation and should consider walking away, even bankruptcy to ensure an end to it.

you do not say if any of the properties are stand alone, i.e. is the appartment secured only on itself, is it worth as much as is owed on it.
same question for the other properties,.

i hope someone comes on with more specific advice. one thing is certain, dont continue paying anything in a hopeless case. Dont hide either, ask will vacating a property absolve you of debt or ask for that to be part of the deal.
Regards, Rugbyman

Imposter

my partner has fallen pregant and struggling to get employment at the best of times.
What are you doing with 4 mortgages when this is the case? How the hell did you get them in the first place! One mortgage would be bad enough given the above, but 4!

We are considering handing back the keys and my partner will look for rent assistance when unemployed. We are curious to what the implications of these actions are.
Talk to your bank(s) and/or mabs - they will know what your options are and what they are willing to accept.

Paying back the debt over the next 30-40 yrs is not something I would like to sign up to especially with people owing 10 times more than even paying interest.
Like it or not but i'm guessing that is what you signed up for in the first place! Why did you take out these mortgages? Did you think that you would never have to pay them back or what?

Toots

OP my advice would be to contact the banks to whom you owe money, and also get in touch with MABS, if your properties were bought during the boom, there's a good chance you're in negative equity now. If you 'hand back the keys' its possible that the proceeds from their sale wouldn't cover your debts, so you would still be liable for the remainder.

amdublin

Unfortunately "giving back the keys" does not rid you of the liability for the money you owe.

OP I would suggest you talk to all the banks involved asap about restructuring the loans and reducing repayment amounts etc.

Also talk to MABS

Best of luck to you and your partner. You will get through this. We all will. It may take years and it will take alot of work but you will get there.

Dempo1

Firstly having 4 mortgages and only owing €700k is not as bad as it would appear. In reality your primary focus will have to be on your Main Home, this is the only one you can avail of any protection. Its probably easy for me to say sell the remaining properties but i know this may not be an option right now. Bottom line, you need to sit down with your Lender/s ASAP.

Forget about handing keys back, its not an option as your still liable for the debts and worse still if the bank sell the properties at a loss, you have to pick up the balance. Rent allowance/benefits etc will not be applicable on anything other than you Home mortgage and rest assured the first questioned asked is "Could you afford the original mortgage", all additional investment properties will not be considered.

A solution many investors are taking is "with the agreement of the lenders, put properties on the market and during the process agree a manageable payment", this approach allows you some control on prices agreed a repossed house will be sold at the best offer, but again the price achieved may be less than the actual mortgage. In reality i fear you may have to accept some liability but when additional properties are sold, even at a loss, you may then be able to combine outstanding mortgages into a manageable monthly payment.

First and foremost is talk immediately to the Bank.

BillyBobWinters

Firstly many thanks for your responses etc above, I appreciate you spending time to help me out.

Secondly my responses to Imposter below:


“What are you doing with 4 mortgages when this is the case? How the hell did you get them in the first place! One mortgage would be bad enough given the above, but 4!”

My last mortgage (a 3 bed apartment) was over two years ago and she is only 20 weeks pregnant. I got the first mortgage on 92% LTV. Mortgage of €172k when I was earning over 60k p.a. Second mortgage was an equity release on the same property of €35k for a place in Bulgaria (put 15 to 20k of my own money against that so it was a LTV of 63%.

Third mortgage was a buy to let mortgage which was a 100% loan but we knew the builder and could delay the contract for 18 months. At the time of buying a similar property was going for €210k but we bought at €185k. Now worth around €160k.

Last mortgage was my home which cost €350k and I got a 95% LTV mortgage. At the time of buying, our combined income was around €140k per annum.

Explain your problem with the above?

We have two cars with a combined debt of €5k.

No credit card debt.

No terms loans.
Before you set out your judgement on others, place be aware of the facts.

“Like it or not but i'm guessing that is what you signed up for in the first place! Why did you take out these mortgages? Did you think that you would never have to pay them back or what?”

The terms on our mortgages are quite okay to be honest:

Apartment (originally 25 yrs, now 20 left)
Foreign property (originally 25yrs, now 23 left)
Buy to let (originally 30 yrs, now 29 and on interest-only)
Home (originally 25 yrs, now 23 left)

All the above is okay when two people are working but really tough when rents are dropping and one person is out of work and that is why I am disillusioned. I own the Apartment, the Foreign Property and half of the house. Was thinking of acquiring the home from my partner and she can default on the buy to let property?

Otherwise we are just paying back loans which could someday fall into arrears and lose the houses anyway?

Imposter

BillyBobWinters wrote: »

My last mortgage (a 3 bed apartment) was over two years ago and she is only 20 weeks pregnant.
.....
Explain your problem with the above?

My problem is in your first post you said: my partner has fallen pregant and struggling to get employment at the best of times. Now unless you never planned on having kids then well you should have known you would have to manage the loans on just your income eventually.

Before you set out your judgement on others, place be aware of the facts.
....
Apartment (originally 25 yrs, now 20 left)
Foreign property (originally 25yrs, now 23 left)
Buy to let (originally 30 yrs, now 29 and on interest-only)
Home (originally 25 yrs, now 23 left)
....
Otherwise we are just paying back loans which could someday fall into arrears and lose the houses anyway?

My 'jugdement' of you is only based on what you wrote! You signed up to multiple mortgages agreeing to pay back those mortgages in a certain timeframe. Now that your circumstances have changed you find yourself completely overstretched. A kid arriving at some stage in the 20+ years of your mortgages is not something that's totally unforeseen (unless you decided not to have kids beforehand)! Now that you are overstretched you think you can just renege on the promises you made by just handing back the keys.

As for the last part of what is above - that can happen on any loan at any time.. again something you should know before you take out a loan! If you have that opinion to loans why take them out in the first place?

Blackjack

I'm not going to try to calculate the values of what you have given the figures, however you need to establish the following:

What you can sell the following for, and what exactly do you owe on these properties?.

Apartment (originally 25 yrs, now 20 left)
Foreign property (originally 25yrs, now 23 left)
Buy to let (originally 30 yrs, now 29 and on interest-only)

There's a chance you may be able to get away with only a smaller hit than you think on all of the above combined - but you need to talk to your bank.

Any equity you had is gone, or needs to be used to pay off the Negative equity elsewhere.

You need to act now, especially if you are already feeling the pinch.

Best of luck with all of this.

AARRRGH

You need to talk to your bank. The sooner the better.

There is no such thing as declaring bankruptcy in Ireland, so if you "hand back the keys" you will be liable for whatever the bank sells the properties for minus your mortgage. So it's likely you will still owe a couple of hundred thousand after handing back the keys.

Basically you're in a bad situation.

My one piece of advice for you is to continue paying your mortgage on your family home so at least you can keep a roof over your head.

BillyBobWinters

Again, thanks for the help on this.

Imposter, you your mentality is that of a civil servant but others in the private sector experience job losses and pay cuts etc so projecting income for the next 20 yrs is not as easy for a young professional couple versus some dope in the civil service.

The plan was to sell the buy to let in 5 yrs and use the gain to reduce the home loan. The other properties are manageable if I retain employment, even on a 3 day week for the other half.

When you need to pay €350k for your home, the options are to pay it back over 30 yrs and pay the same amount in interest or have another investment which can be cashed in later to help reduce the main loan. That was the plan, nothing greedy or ill concieved about it.

Also factor in that i have no pension and rental income is a tangible form of pension provision.

BESman

BillyBobWinters wrote: »

Again, thanks for the help on this.

Imposter, you your mentality is that of a civil servant but others in the private sector experience job losses and pay cuts etc so projecting income for the next 20 yrs is not as easy for a young professional couple versus some dope in the civil service.

The plan was to sell the buy to let in 5 yrs and use the gain to reduce the home loan. The other properties are manageable if I retain employment, even on a 3 day week for the other half.

When you need to pay €350k for your home, the options are to pay it back over 30 yrs and pay the same amount in interest or have another investment which can be cashed in later to help reduce the main loan. That was the plan, nothing greedy or ill concieved about it.

Also factor in that i have no pension and rental income is a tangible form of pension provision.

Why are you suddenly attacking the civil service? (Not that I'm their biggest fan either) Bit off topic. And where does Imposter say he is a civil servant?

You are a typical example of the sheep culture in Ireland that existed at the time, "oh my friend in the office is buying a place in Bulgaria, I'll do it too and become a millionaire tycoon with a sh1tty flat in a country I cant find on the map" and "oh my God I make €60k p.a., I'm definitly one of the wealthiest people in Ireland, I'll take out not two, but THREE mortgages"

You're clearly the dope here and I have no sympathy for you or others in your situation.

How well off would you be had you decided not to get ahead of yourself and start taking out mortgages all sides? You'd be on a nice salary with little or no debt. Greed clearly did have a part to play.

Rulmeq

There a lot of vitriol on here for someone who was living "the dream" that was espoused by pretty much everyone during the boom. He doesn't deserve it, I'm sure he has beaten himself up over this more than anyone else has.

On the advice front, I believe the worst thing you can do is to try and default on the properties (even in your wife/partner's name... Actually especially in her name - What will she do if you die, or are incapacitated), so stop thinking along those lines immediately. You need to talk to your bank, and the sooner the better, and perhaps contact MABS as well. They are really the only people who can give you proper advice, based on your situation.

BillyBobWinters

Not sure what makes [URL="dhtmled87:member.php?u=306784"]BESman[/URL] the know-it-all he/she apparantly is - even somehow quoting me for things that he/she believes I may have said or thought?

Obviously the Bulgarian place is a sticking point with you but if you, for example, are happy to rent a house in Kinsale, Tramore, Salthill (or some other crap Irish destination) for a week and pay what I pay PER ANNUM in mortgage repayments, well be happy to do so but respect that buying abroad makes sense long term when you intend on using the place (Sunny Beach has a blue flag beach which is 7km long with some of safest sea you can find for kids).

I also never suggested or implied that I was wealthy. The mortgages are my only vice, I don’t smoke, rarely drink and drive a seven year old car. Property is a long term investment especially when you don’t have the government to rely on for a pension when (or if!) I ever hit retirement age. The only problem I have now is in the immediate term as I would be happy to stick with four properties being worth more than €700k in 20 yrs time, for example.

I also don’t need your sympathy and to be referred to as “greedy” because I tried to show some initiative in reducing my debts long term (i.e. sell properties in 5 or 10 yrs time to reduce home loan) is nonsense. Maybe you live a sheltered live, the kind that works in Daddy’s business and built a house on Daddy’s land but can freely criticise “greedy” “dopes” you have to borrow to sustain a living and buy a home.

To others: thanks for the advice and comments etc.

BESman

BillyBobWinters wrote: »

I also don’t need your sympathy and to be referred to as “greedy” because I tried to show some initiative in reducing my debts long term (i.e. sell properties in 5 or 10 yrs time to reduce home loan) is nonsense. Maybe you live a sheltered live, the kind that works in Daddy’s business and built a house on Daddy’s land but can freely criticise “greedy” “dopes” you have to borrow to sustain a living and buy a home.

I love your assumptions. I am on a training contract at the moment, making little more than the dole. My parents own no land or property or business. I rent accommodation. I have no debts.

Wow, you must be the first person to ever have the bright idea of buying property with the intention of selling it to pay off your original mortgage. Where do you find your financial wizadry? Some initiative there.

Mr. Presentable

OP, to be fair to your critics, what you have done is a long way from "...sustain a living and buy a home". What you did was speculate on property. You went in just before the crash and lost. You were unlucky. But you were speculating and need to admit that and resist having a go at other posters for their opinion.

Advice? Get what you can for the three extra properties. You might even be better selling the three houses and moving into the apartment. You will hardly get what you paid, but will reduce what you owe to something more manageable.

dudara

Posters, I think that tempers are flaring a little here, so dial it back down please

dudara

jor el

This thread is getting a little heated. I suggest people calm down before posting again.

To the question at hand, there's not a lot you can do except try and negotiate some new terms with the bank, to help you through this time. Handing over the keys is not going to be an option. This is something that has come from the US, where this is an option, but banks won't take the house off you like that. Even if they did, you'd still be liable for any excess on the mortgage that isn't covered by the house sale (when it sells) and you'd be liable for payments until it sells too. This would not be any better of a situation for you than you're currently in.

You need proper help, from people in a position to actually help you. Try and organise an appointment with MABS (can take several weeks now) and also a meeting with the bank manager or mortgage officer.

BillyBobWinters

Speculating on property is different to retaining your previous home to rent long term when purchasing another house - which is what I did.

The bulgarian place is in lieu of spending thousands in spain, portugal and (heaven forbid) Ireland on summer holidays. Bulgaria is really cheap, has a lovely beach and my 5 year old loves it. The cost there outweight money which would have been spent on 2 week holidays each year. Fair point?

To all those critising me for investing in property as a pension tool and/or to reduce debt, please review the value of your pension funds now v 24 months ago and see how much it has dropped.

Nipplenuts I am not having a go at others for their opinion, re-read the posts as I was only answering BESman and his wisecracks.

BESman, get back to the books so please and delight yourself in knowing that when you go to get a mortgage you will be paying the bank penal interest rates to cover their necessary margins at that time to allow for their previous losses. I will stick to my .80% over tracker and you have have your +3% (over base) mortgage anyday.

Imposter

Billybob, why do you have to resort to abuse or oneupmanship in almost every post aimed at anyone who criticises you?

Have you talked to your bank(s) or MABS yet (as many posters have advised)? ...or are you waiting for someone to tell you to drop in the keys for whatever you don't want to pay back and you can forget completely about any bits of paper you may have put your signature on or debts that you owe?

Mr Ed

Rulmeq wrote: »

There a lot of vitriol on here for someone who was living "the dream" that was espoused by pretty much everyone during the boom. He doesn't deserve it, I'm sure he has beaten himself up over this more than anyone else has.

In fairness now, not everyone was able to live the dream during the boom times. It really bugs me when people come out with this drivel. Some of us did not and were not able to live beyond our means and have kept our debt levels to a reasonable level.

I haven't any debt as I'm saving to buy a house at the moment, something many people did not do

5Aces

I was having a go and decided no point in joining the mob. If you don't gamble you cant lose.

Toots

Ok, there's already been two moderator warnings on this thread. Everyone needs to keep their tempers in check here. No more sniping/arguing/oneupmanship etc. Helpful advice only from here on out. Next person to post something argumentative or off topic is getting a ban.

mickdw

This is a pretty rough situation to be in. The best thing I can think of in this case is to move into the property with the least rental value at the minute & rent out everything else except for the Bulgarian apartment which you should sell if you are still finding it impossible to meet the repayments. IS the sale price of this apartment likely to cover the 60% mortgage?

Following this plan, you will be maximising your rental income.

zuroph

Are any of the properties rented out?

BillyBobWinters

The buy to let is rented and has been with the same tenant for 18 months. We get €650 per month the repayment to the bank is only €350 (interest only)

My apartment was let for 14 months at €700 per month but has been unoccupied for 2 months but is only going on market now (had to tidy it up a little). The mortgage on that property is €650 per month capital plus interest... management fees are €100 per month also which cant be ignored.


Bulgaria is let during the summer for 13 weeks and i come out with a whopping €350. That is after the management charge and withholding tax has been deducted though.

It could be a lot worse to be honest.

If I have to go interest only or get a favour from the bank will they review my interest rate? I have tracker mortgages on all of the above, worse one being 1.2% over ECB (wow!) and don't want to lose those deals that I have.

zuroph

how much tidying to do was there that it took you two months to get it set to rent out? You need to be a bit more urgent with these things IMO, thats income you're losing. I've never seen an apartment that couldnt be fixed up in a weekend, and i've dealt with a LOT of rental properties.

What would be the total payment on the buy to let, if you went back to full payment from the interest only? and what would be the full payment on the apartment? €750? in which case its costing you 50euro a month to own?
Have you checked market value of these properties? You will have to look at selling one anyway, I know its seen as a pension fund, but if you don't cut the slack now, you'll be left with no properties.
Finally, Bulgaria, how much is it costing you a year? i mean totally, factor in the flights, food and expenses while there, plus the payments, versus the money made back on rent. when you have that sum, you need to compare it to the fact that its possibly the only properties in positive equity at the moment, and cut your losses. if you only get rent of €350 a year out of it, surely you could rent there instead of owning, and still travel there.

BillyBobWinters

Re the flat, I had to wait one month from when the tenant left because he disappeared and I didnt want to take occupancy before the 1 month's deposit had lapsed.

The rest of the delay relates to waiting on tradesmen to do their work, etc.

Yeah it could have been faster but it wasn't.

I note the comments below on Bulgaria and you make a valid point. However what is being ignored is the possibility of the properties regaining value over the next ten years or so.

If i can manage to repay the loans as they are for the next ten years the loans will be down to €519k... that will be for a 3 bed apartment, 3 bed semi in village outside city, 600 square foot apartment in Sunny Beach and my home which is a 3 bed on a large corner site in one of the nicest estates in the city... surely not game over on that basis?

Mr. Presentable

Glad to read you have achieved some optimism You should reread your OP!

Blackjack

BillyBobWinters wrote: »

Re the flat, I had to wait one month from when the tenant left because he disappeared and I didnt want to take occupancy before the 1 month's deposit had lapsed.

The rest of the delay relates to waiting on tradesmen to do their work, etc.

Yeah it could have been faster but it wasn't.

I note the comments below on Bulgaria and you make a valid point. However what is being ignored is the possibility of the properties regaining value over the next ten years or so.

If i can manage to repay the loans as they are for the next ten years the loans will be down to €519k... that will be for a 3 bed apartment, 3 bed semi in village outside city, 600 square foot apartment in Sunny Beach and my home which is a 3 bed on a large corner site in one of the nicest estates in the city... surely not game over on that basis?

If you are having issues with trying to pay the monthly payments on these loans now, then the least you should really look at is to offload one or 2, at least to try to reduce what you are paying Monthly. Its probably hard to accept, but you may just have to bite the bullet on this.

Kinetic^

BillyBobWinters wrote: »

I note the comments below on Bulgaria and you make a valid point. However what is being ignored is the possibility of the properties regaining value over the next ten years or so.

Can you ask the banks to put your payments on hold till then? No. Go talk to your banks before they come talking to you. Quit thinking about 10 years in the future when there are payments due on them now.

Ste.phen

If ANY of the properties are not in negative equity dispose of them RIGHT NOW and use the money to pay some of the mortgage on those that are.

NewDirection

I fail to see the problem.

You have four properties, and debt you can't manage.

Sell, sell, sell.

SophieX

[QUOTESell, sell, sell.[/QUOTE]

Exactly.

OP, your probably going to say there's not a hope in selling in this market but you have no choice but to find a buyer.

I'm also swamped in debt to put it mildly and I've had to put a house up for sale. I've found a buyer after knocking 100k off the asking price.

You need to contact the bank who you have these mortgages with and ask them for some sort of settlement figure. Whatever they come up with try and sell the house for that.

I had three estate agents trying to sell for me. After a long time I got a buyer with full mortgage approval. The bank are happy now because they know they are getting most of the money back and the relief that's off my shoulders is immense.

Best of luck.

ocokev

Where does your partner live at the moment, and how do you intend for her to be getting rent assistance?

gramach

You see, this is the trouble, If you were a bank or property developer, you could of load into NAMA. But we poor Joe Soaps just go under.
Best advice. Go to MABS urgently, sell the property abroad or lease it out for the summer and get some return on it.
Also go see the city council and see can you get some local authority tenants to let some of the property to. GO TO MABS they know best.

soden12

gramach wrote: »

You see, this is the trouble, If you were a bank or property developer, you could of load into NAMA. But we poor Joe Soaps just go under.
Best advice. Go to MABS urgently, sell the property abroad or lease it out for the summer and get some return on it.
Also go see the city council and see can you get some local authority tenants to let some of the property to. GO TO MABS they know best.

Someone with interests in 4 properties is hardly a "Joe Soap".

eth0_

ocokev wrote: »

Where does your partner live at the moment, and how do you intend for her to be getting rent assistance?

Why would she even get rent assistance considering the OP doesn't appear to be unemployed? I presume they're living together as he said they have young child.

krankykitty

I don't know OP, you seem to be going on as if your holiday home in Bulgaria is saving you thousands on these foreign hols you'd be taking every year. When you're in as much debt as you, are holidays not a luxury rather than a necessity?

My mind is boggling that in your OP you're considering handing back keys to your home so your missus can get rent allowance yet don't want to sell a holiday home that is in positive equity just so you can save yourself from "spending thousands in spain, portugal and (heaven forbid) Ireland on summer holidays"

Many people are worried about keeping a roof over their heads and food on the table yet you seem more concerned about being able to have a cheap holiday.

chris85

krankykitty wrote: »

I don't know OP, you seem to be going on as if your holiday home in Bulgaria is saving you thousands on these foreign hols you'd be taking every year. When you're in as much debt as you, are holidays not a luxury rather than a necessity?

My mind is boggling that in your OP you're considering handing back keys to your home so your missus can get rent allowance yet don't want to sell a holiday home that is in positive equity just so you can save yourself from "spending thousands in spain, portugal and (heaven forbid) Ireland on summer holidays"

Many people are worried about keeping a roof over their heads and food on the table yet you seem more concerned about being able to have a cheap holiday.

+1

OP. this drop in joint income was obviously expected at some stage also so you have got yourself into this problem, I would advise seeking some very good financial advice. I doubt handing back the keys will remove your liability unless its an equity based loan which i doubt it is as not that common here. You may have to try sell the properties and then arrange to pay the remaining balance to the bank.

StupidLikeAFox

have you talked to your bank and how are they in dealing with your problem?