Do you personally know anyone who.

JustAThought

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

swampgas

JustAThought wrote: »

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

That's making the assumption that rent is "dead money" and that everyone should aspire to having a mortgage. There's no reason why a renter cannot save or build a pension, in fact it may well be better in the long run than having a property as your nest egg.

However I do think that the rental market in Ireland is under-developed and inadequately regulated, this might improve if more people see renting as a valid alternative to a mortgage.

I also think that someone who was bankrupt 10 years ago but has a solid financial record since then is just as likely to get a mortgage as anyone else, especially if the bankruptcy dated from the bubble. (I have nothing to back that up though, could well be wishful thinking on my part.)

Delancey

swampgas wrote: »

If their debt is really so unmanageable, the best thing for them - considering they are relatively young - would be some kind of reformed bankruptcy process where they lose their assets, wipe their debts and start again after some small number of years with a clean sheet.

Trying to fix the problem by paying off their debts while allowing them to keep their house is completely wrong - for them and everyone else, IMO.

The media seem to be obsessed with debt forgiveness while ignoring bankruptcy reform, despite the latter being far more suitable as an effective and fair solution.

No question about it , Irish bankruptcy laws are punitive and utterly Dickensian - the idea of people being branded as financially untouchable for the next 12 years is very counter-productive.
One further reform I would like to see is a move toward non recourse lending - had mortgage lending been on such a basis I suggest we would not have half the problems we now do.

Godge

JustAThought wrote: »

Re " better off losing the house and being declared bankrupt"
...You would never get a mortgage again and would be in the same situation with rent only left with no asset at the end of it, and possibly reliant on the state then in old age to pay rent for you. Another set of social probs for he next generation to fork out for.

no, not true, after the period of bankruptcy and the discharge of debts, a person can build up a good credit record and get a new mortgage or long-term debt.

If you are young enough to start again, bankruptcy is a viable option. If they changed the rules, it might be easier.

swampgas

Delancey wrote: »

One further reform I would like to see is a move toward non recourse lending - had mortgage lending been on such a basis I suggest we would not have half the problems we now do.

This came up a while back - the US experience seems to be that non-recourse mortgages are no magic bullet. Banks were lending recklessly regardless - maybe because they were selling on the dodgy mortgages as securitised products - and borrowers were walking away from loans they could easily pay because they simply didn't want to. I think it needs to be considered all the same though, but only pursued if it would actually work.

dashboard_hula

I have the opposite actually, thank God.

When my father retired at the height of the boom, my parents made the decision to pay off their mortgage in it's entirety. This was against the advice of pretty much everyone they knew, as they did incur fees for paying off early. But they're the ones laughing now, as economic uncertainty did strike my family a couple of years later, but through it all they were able to manage it because there was no big monthly payment to fear.

I myself carry an amount of personal debt. It's not nearly as big as some, mostly because I never had the collateral or the huge salary to make it possible for me to incur more. But it is personally a big challenge for me. A few years ago it was suggested that if I apply for a mortgage and ask for extra to cover my debt, it would be a handy way to get shot of it and have a house. I did go so far as to make enquiries, and I was horrified at some banks willingness to advance mortgages and doing up money to someone like me, so I ran a mile, again against the advice of people around me. Now again, like my parents, I feel like I've dodged a massive bullet because I was made redundant recently, I struggle to budget and pay off my debts but I'm managing it, and the thoughts of what I'd have to deal with if I got a mortgage make me shudder.

c_man

Was working for a right pair of tryants a few years back. They bought, and built, two doors up from their existing house. Put in an extra few rooms (the original house was massive already!). Refused an offer on the original place in the summer of '08 in the e600,000 range. Last I heard, the place is still unsold and unlet. They had dabbled in Dubai and Bulgaria as well.

Tbh most of those I know in mortgage difficulty are around my own age (mid to late twenties), they took a gamble and lost. The cases were it was a couple looking a place together are a minority, most were bought as investments/getting on the ladder.

murphaph

Any idiot that topped up their mortgage to buy an asset known to depreciate (like a car or dream holiday etc.) has zero sympathy. Mortgages are not meant for that sort of expenditure.

There are countless examples of this sort of person and they are less obvious to spot as it doesn't involve property on the surface.

Bannasidhe

Sister - who worked as an office manager in the construction industry - released the equity in her home at least 3 times as property prices increased. She, her husband, adult son and his girlfriend all went on 5* holidays to Thailand, Sri Lanka etc. She had an extension built on her house as bathroom wasn't big enough (for 3 adults tho as her son was in mid 20s and earning loads as a carpenter he could be expected to leave home soon) and she needed a walk-in wardrobe. The estimated cost of the extension was 70k - it cost 150k due in no small part to the 5k spent on tiles and the spa/jacuzzi bath big enough to fit all 3 ...best not to comment on that I felt...plus the separate wet room with multi-jet shower.
Within a year of completion of extension the firm she worked for had gone to the wall - she now works 1 day a week for another company - son has moved out and MABS told her to she didn't need sky multiroom with sports, movies etc - her husband is refusing to cut the sky subscription. She has had to renegotiate her mortgage so it's interest only but has not considered that as she is only 10 years short of retirement age she has just kicked the can down a not very long road.
So despite huge debts she is still in one room watching The Good Wife on a 52 inch flat screen, hubby is watching soccer in another room on similar size screen. Two cars sit on the driveway, They shop in Marks and she has a wardrobe of designer clothes and shoes.

donegal11

murphaph wrote: »

Any idiot that topped up their mortgage to buy an asset known to depreciate (like a car or dream holiday etc.) has zero sympathy. Mortgages are not meant for that sort of expenditure.

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

thebman

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

In a regular car loan, the bank can't take your house though. You might sell it to pay the debt but they can't take your house and probably won't try.

If you re-mortgage your house becomes fair game for them. You probably wouldn't go bankrupt for an unpaid car loan given what other say about the cost of bankruptcy proceedings. Far more likely the bank would try to work out something with you.

The_Honeybadger

None of my immediate family indulged too much, I have a sibling who likes the finer things in life but can afford to even now. Best example I can think of is an old schoolfriend who left school before the leaving cert to work on the sites around 1998 or so. He then went on to set up his own building company, bought multiple foreign as well as Irish properties, built a mansion for himself, new 4 x 4's etc, and wasn't shy about showing off his new toys as most of his friends struggled through college. Haven't seen him in ages but last I heard he was well and truly buried financially, with no hope of ever paying back a fraction of what he owes. I have also heard of lots of people in my local area whose savings were wiped out in bank shares, but that's a little different to borrowing to fund a lifestyle you never deserved in the first place. My impression is that the vast majority of people who are now in trouble bought a massively inflated family home believing they had to get on the ladder before it is too late, and their circumstances have now changed dramatically (i.e. unemploment, paycuts, new arrival etc.), of course the prudent plan for these things but I still have sympathy for these people.

Head The Wall

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

What happens when they want to change the car 5 years into the 35 year mortgage. More finance will be needed and they'll be paying for two cars.

Anyone doing this is super thick

amacachi

looky loo wrote: »

The only solution I see for the average joe soap who bought say a 250k upwards house, with these huge mortgages is maybe to let the mortgage go over a longer period of time, with smaller repayments, granted not an ideal solution but if it eases the paying back each month it would help.

Some people got mortgages of 100 per cent, even doctoring their salary figures and incomes....thats deception.

Trouble for people who took out mortgages recently is that 90% or more of what they're paying is interest so extending the repayment time will reduce their monthly payments by very little.

meditraitor

Not exactly on topic but a mate of mine put an offer of €890,000 for a 4 bed in a great area in 2006 but was told he would have to come up with 920k by the EA... the bank wouldnt go any higher than 900k....Same houses are going for 400K now....

He gave up on the gaff and not long after things started to go pear shaped so he decided to stay in his old house which he bought for 80K and had only 8 years mortgage left on (nearly paid for now)



He dodged a serious bullet there.

ninty9er

My parents did it do renovate the house, upgrade the car and clear some other loans.

That being said the total release was less than €30k and the total mortgage after that was still under 6 figures and a quarter of the value of the house at the time.

donegal11

Head The Wall wrote: »

What happens when they want to change the car 5 years into the 35 year mortgage. More finance will be needed and they'll be paying for two cars.

Anyone doing this is super thick

Don't get your point. The same thing that happens to people who want to change cars with personal finance from a bank? only at a lower rate. My point was that if you can afford to pay back a personal loan you would be better getting an equity release. The problem is when you can't pay the loan back and whether the bank would bankrupt you for a personal loan vs mortgage debt, and under the current situation banks are alot more amicable towards mortgage holders then personal debt(interest only and 1 year hold on repossessions etc).

swampgas

donegal11 wrote: »

Don't get your point. The same thing that happens to people who want to change cars with personal finance from a bank? only at a lower rate. My point was that if you can afford to pay back a personal loan you would be better getting an equity release. The problem is when you can't pay the loan back and whether the bank would bankrupt you for a personal loan vs mortgage debt, and under the current situation banks are alot more amicable towards mortgage holders then personal debt(interest only and 1 year hold on repossessions etc).

Hmmm... is the benefit of the lower rate not negated somewhat by the fact that the loan is being repaid over a much longer period than a typical personal loan would be? Say 25 years compared to 3 or 5 years?

So while the monthly repayment will be lower, the total interest paid over the lifetime of the loan could still be quite high?

* Looks for calculator *

donegal11

The time value of money and inflation would negate the effect of increased borrowing term. There is nothing stopping you increasing mortgage repayments(money that would have been paid on personal loan) to reduce the outstanding debt.

murphaph

donegal11 wrote: »

While they're not meant for that expenditure, if you where going to get a loan a re-mortgage will have a far better interest rate then any personal loan. You could argue that anyone who didn't get an equity release were idiots for buying cars on personal finance. Whether the loan was on your house or not it still has to be repaid no matter what(unless bankruptcy).

You remortgage your house to buy a car for say 15 grand but instead of taking out a 3 or 5 year loan (or shock horror, saving up to buy the blasted thing) you add on the 15 grand to your mortgage and pay interest on that car for another 30 years. You will end up paying a lot more for the car in the long run than if you'd either saved up or taken out a short term personal loan. Also remember that a personal loan usually comes with a fixed rate for the 3 or 5 years....a mortgage usually has a variable/tracker rate which could go any way over 30 years. You could end up paying a heck of a lot more for that car after all.

Head The Wall

donegal11 wrote: »

Don't get your point. The same thing that happens to people who want to change cars with personal finance from a bank? only at a lower rate.

You don't get my point? OK in 5 years time if someone wants to change the car they will have to get new finance for the car. Just because the cost of the original car was subsumed into the mortgage it doesn't mean you're not paying for the car.

So for the remainder of the mortgage you will be paying for the car, that's technically not a problem if you're going to keep the car for the duration of the mortgage but I doubt many will be doing that.

It is a stupid and ridiculous idea and anyone that went down that road is a shortsighted idiot.

OMD

Head The Wall wrote: »

You don't get my point? OK in 5 years time if someone wants to change the car they will have to get new finance for the car. Just because the cost of the original car was subsumed into the mortgage it doesn't mean you're not paying for the car.

So for the remainder of the mortgage you will be paying for the car, that's technically not a problem if you're going to keep the car for the duration of the mortgage but I doubt many will be doing that.

It is a stupid and ridiculous idea and anyone that went down that road is a shortsighted idiot.

it is actually a great idea if you are disciplined. You increase the mortgage by the price of the car. now instead of paying it off over 5 years at 11% you pay it off over 5 years at 4% by simply increasing your mortgage payments. It takes only a small amount of discipline. You simply increase your direct debit. Frankly only an idiot would get a loan for 11% when they could get it for 4%. Most people who get a mortgage do not keep that mortgage for the entire term.

kelle

One work colleague got a mortgage based on 6x (her salary+overtime+her husband's salary+children's allowance+pension entitlement) to buy a 3 bed semi. (I was :eek: as 7 years earlier my mortgage was calculated at 2.5x my husband's basic wage + 1x my basic wage - our overtime was not entertained).

Her husband was in construction and hasn't worked in 4 years. She has developed serious health problems and cannot work alone, so she can't do overtime. Her basic wage has reduced, as well as her children's allowance. She is in serious financial difficulty, at the moment she is paying interest-only on her mortgage. We all try to help her out whatever way we can. I don't know where it's all going to end for her.

Another colleague bought a house in 2004, then re-mortgaged in 2007 to build a house in his native country and buy a BMW! Like the rest of us his wages have taken a tumble, and he is finding it difficult to meet his repayments. He asked for a mortgage break but the bank refused.

wingnut

A lot of people are still away with the faries. Liveline this week had a woman bemoaning that she used to shop in branded supermarkets but now she "has to shop in Aldi" she also has to "make sandwiches and bring youghurts to work" and "had to cancel sky".

I would be very annoyed if the sensible among us end up paying for the reckless. When we got our house we were offered a mortgage of twice the value of the house we bought. At all times we were planning for the day when something might go wrong so kept everything manageable.

I am happy watching freesat and driving my 00 car but really don't want to subsidise those who feel an entitlement to sky and two cars etc.

RichardAnd

wingnut wrote: »

A lot of people are still away with the faries. Liveline this week had a woman bemoaning that she used to shop in branded supermarkets but now she "has to shop in Aldi" she also has to "make sandwiches and bring youghurts to work" and "had to cancel sky".

Personally, I have always made my own lunches virtually every working day since I got my first real job 7 years ago. Consider that if one spends 5 euro a day on lunches, they will end up spending over a grand a year...

swampgas

wingnut wrote: »

A lot of people are still away with the faries. Liveline this week had a woman bemoaning that she used to shop in branded supermarkets but now she "has to shop in Aldi" she also has to "make sandwiches and bring youghurts to work" and "had to cancel sky".

+1

For most people, those still employed anyway, the "draconian austerity measures" that the media love to bang on about boil down to reducing the Sky package, shopping more carefully, running a cheaper car and making a few lunches during the week.

It's hardly the end of the world.

Permabear had it right that austerity here is normal life everywhere else.

Gumbo

RichardAnd wrote: »

Personally, I have always made my own lunches virtually every working day since I got my first real job 7 years ago. Consider that if one spends 5 euro a day on lunches, they will end up spending over a grand a year...

Same here, i have made my lunch since i entered full time employment save for the odd day here or there as a treat, sometimes you just need something handed to you

then i get looks off people in work when i tell them im buying a new kitchen table or buying new items for the kitchen etc etc from the people who buy a cup of coffee at 2.00e every morning on the way to work

byhookorbycrook

We bought a small house just before the boom, moved in when it only had a fridge and a telly and did it bit by bit. People I know bought/built huge houses and urged us to do the same. Moved into their houses with even the garden professionally landscaped and had all of the costs of the American style frides, ranges, wooden floors and even lighbulbs put on the mortgage. They then went on exotic holidays and city breaks, trips to New York for shopping etc.
Why should my taxes bail them out??

ANXIOUS

I know a friend of mine, him and his wife work in the semi state. In the boom he joined a golf club that was miles away from him, bought an apartment in china, bought a huge 3litre jeep, invested €150,000 in a business he hasnt a clue in and went on numerous exotic holiday.


Now he cant afford to tax his jeep, he cant afford the sub of his golf club, the business he invested in went bust and to top it off he lost his job. Ive never heard him mention the apartment in china since.

SafeSurfer

byhookorbycrook wrote: »

We bought a small house just before the boom, moved in when it only had a fridge and a telly and did it bit by bit. People I know bought/built huge houses and urged us to do the same. Moved into their houses with even the garden professionally landscaped and had all of the costs of the American style frides, ranges, wooden floors and even lighbulbs put on the mortgage. They then went on exotic holidays and city breaks, trips to New York for shopping etc.
Why should my taxes bail them out??

Your taxes have already bailed out the banks who are at least as culpable as those they lent money to.