Mortgage Default

shay123

Hi, We have a very large mortgage, five year fixed for one more year. Am having serious problems meeting the payments and even on interest only with the interest rates due to go up over the next twelve months its going to get even worse. Negative equity to the tune of around 140K. What exactly are the consequences of handing the keys back. I appriciate that we will not get anymore credit for a long time but to what extent would we be liable for the 140k, can this be taken out of our wage packet etc.

later12

Moved to Banking & Insurance & Pensions.

fricatus

shay123 wrote: »

What exactly are the consequences of handing the keys back.

There's no such thing as "handing the keys back" unfortunately, as for example in the USA.

shay123 wrote: »

I appriciate that we will not get anymore credit for a long time but to what extent would we be liable for the 140k,

You'll be completely liable for it - that's how mortgages work in this country. I don't know what options are open to you, but running away is not one of them. The best thing to do is to contact MABS, and also keep the lines of communication open with the bank. They may be happy to do some sort of deal with you.

If you're lucky, this could involve selling the house, and then owing the balance as some sort of personal loan.

Sorry to be the bearer of bad news, but you're not alone in having this problem, so don't let it affect you psychologically.

shay123

Thanks for that, I take it then that the banks would go for a court order or similar to recover the outstanding dept at source, ie out of wages etc

fricatus

shay123 wrote: »

Thanks for that, I take it then that the banks would go for a court order or similar to recover the outstanding dept at source, ie out of wages etc

I don't know the ins and outs (you'd need to talk to a solicitor here), but AFAIK, the bank can simply not allow the sale to proceed. Remember they hold the deeds, and they need to release them for any sale to take place.

Also the loan is secured on the property. If the property is sold, and you're left with a loan, that loan would be unsecured (which the banks do not like, or at any rate like less).

You've also got to consider that the bank would probably charge you a higher interest rate on the unsecured loan. If you're on a tracker, that could mean that you'd end up paying twice the interest rate that you currently are.

Ultimately though, you need to talk to an expert on this, and probably also contact your bank to see what your options are.

cookie1977

Contact your bank immediately. Talk to them about your problems and see if they can work out a way to help you. Dont sit on this. Be proactive about it. You can get an agreement to defer capital for 5 years and pay only 66% of interest payments under the code of conduct for mortgage arrears:

http://keepingyourhome.ie/mortgage_debt.html.en

In order to benefit from this though you must be dealing with your bank and not avoiding them.

ontheedge

Hi all , Im in this boat as well , im looking to find sombody working within a bank or an accountant / lawyer that can advise me.

I want to pay for advise in this area.

If you know people in this area can you please forward there details.

Thanks

MagicMarker

ontheedge wrote: »

Hi all , Im in this boat as well , im looking to find sombody working within a bank or an accountant / lawyer that can advise me.

I want to pay for advise in this area.

If you know people in this area can you please forward there details.

Thanks

Call your bank, the advice is free.

cookie1977

Under the code of conduct for mortgage arrears the banks have agreed to work with customers working with them so do talk to your bank and also contact mabs who may be able to help you with budgeting.
www.mabs.ie

If you're still worried or are in more trouble then you feel you can handle contact FLAC
http://www.flac.ie/
They are busy but can offer advice.

catbear

I think the government are reducing the liability length for personal bankruptcy from 12 yrs to 5. Like others said talk to your bank, most banks are in hock to you as a citizen of the state.

If the rules were changed to one year personal bankruptcy there'd be a stampede!

cookie1977

catbear wrote: »

I think the government are reducing the liability length for personal bankruptcy from 12 yrs to 5. Like others said talk to your bank, most banks are in hock to you as a citizen of the state.

If the rules were changed to one year personal bankruptcy there'd be a stampede!

They so badly need to be changed. They're penal in the republic. It's possible to die of old age and still be bankrupt. Thats why so many people go to Northern Ireland to declare under their jurisdiction. The sooner the better the laws are changed

ontheedge

Thanks for your comment guys, it always amazes me that people just want to give random advise ? I REALY NEED AN EXPERT .....anybody know of one?

cookie1977

onthedge, you interjected on someone elses thread who had asked for some opinions. If you want specific help on your case start a new thread

tinofapples

cookie1977 wrote: »

Contact your bank immediately. Talk to them about your problems and see if they can work out a way to help you. Dont sit on this. Be proactive about it. You can get an agreement to defer capital for 5 years and pay only 66% of interest payments under the code of conduct for mortgage arrears:

http://keepingyourhome.ie/mortgage_debt.html.en

In order to benefit from this though you must be dealing with your bank and not avoiding them.

OP as mentioned you will be liable for any difference between what you pay back and what the outstanding balance on the loan is. In the US I believe the difference can be forgotten about if it is a particular kind of mortgage, I forget the name.

I would have thought being proactive would be the way to go too but it seems not. My wife is expecting our 2nd in Sept, I contacted out provider yesterday to talk about a "holiday" from the mortgage or at least interest only as we are just about meeting repayments as it is and she won't be paid a cent from her employer while shes off. I was told they (KBC) do not offer holiday as such only in extreme circumstances and that we would have to fill out an income and expenditure form and submit it. I don't wanna default on our mortgage and realise that by taking a holiday we would be extending our loan or increasing future payments.

That's the answer I got to trying to be proactive. I will of course follow through with the form and take it from there.

phormium

But they are going to help you out provided you can show you need it. There has to be a paper trail for them and they can't just switch you to interest only cos you asked for it in a phone call. All banks have loads of applications for this and have to prioritise for the most needy applicants. Not talking about you in particular here but a mortgage on your home is a priority debt and needs to be paid before other debt, however you would be amazed at the number of people who contact their bank wanting to take a break from the mortgage so they can pay car loan/credit card/credit union/catalogue etc, banks don't like that. They don't want to give breaks so that some other bank can be repaid at the expense of their bottom line. Not standing up for the banks here but just explaining how it works.

onthedge - what type of advice are you looking for? There are lots of experts on here, or you could contact MABS who are the experts in the field of debt management and are a free service, admittedly with a long waiting list. Why not post exactly what questions you have and you might get some good answers.

tinofapples

phormium wrote: »

But they are going to help you out provided you can show you need it. There has to be a paper trail for them and they can't just switch you to interest only cos you asked for it in a phone call. All banks have loads of applications for this and have to prioritise for the most needy applicants. Not talking about you in particular here but a mortgage on your home is a priority debt and needs to be paid before other debt, however you would be amazed at the number of people who contact their bank wanting to take a break from the mortgage so they can pay car loan/credit card/credit union/catalogue etc, banks don't like that. They don't want to give breaks so that some other bank can be repaid at the expense of their bottom line. Not standing up for the banks here but just explaining how it works.

onthedge - what type of advice are you looking for? There are lots of experts on here, or you could contact MABS who are the experts in the field of debt management and are a free service, admittedly with a long waiting list. Why not post exactly what questions you have and you might get some good answers.

AH ya I am hopeful that when we do submit the form they work something off for us cause we just don't wanna have the stress of not being able to make the payments. I was just at little put back by her initial chat of not really offering these temporary reliefs but I guess they don't wanna be promoting them.