Negative equity and looking for a personal loan

Headwrecked34

Hi All

Im looking for some badly needed advice. I bought a house in early 2004 for €235,000, myself and my partner broke up a year later and I used the equity release scheme with PTSB to buy him out with €40K. My currently mortgage repayments are €1708 at a rate of 5.75% and I have 18 years left on my mortgage. I am currently not in arrears nor have I ever been. I have not taken a payment break or extended the term. I really want to sell but understand that their is a shortfall which I am more than willing to take as a personal loan over 10 years. I have contacted PTSB about selling my house and they have given me permission to put it on the market and said they would discuss an arrangement with me but only if the house goes sale agreed. I have a financial analyst dealing with the bank on my behalf.

My partner has moved to the UK (he is not on the mortgage) and I plan to follow him over once I get rid of the house, obviously subject to me getting a job please god.

My family think I am absolutely nuts even to be considering selling the house but thats easy for them to say as there not the ones struggling but I come off a fixed rate soon and the only option available to me is 6.05%. I lie in bed awake at nite stressing about whats ahead in the future and thats no way to live.

The house is currently on the market for €199K and Id expect Id be lucky to get 25K less than this giving me a shortfall of 55K approx.

Am I mental to take out such a loan??. I want to be able to go the UK without looking over my shoulder and am perfectly able to afford the repayments even if I have to rent here for a while before going, the total would be less than what im paying at present.

There is absolutely no future for us here and its not an option for him to come over.

Is there anyone else out there who has done this - I feel no attachment to my house and would be relieved to be rid of it if Im lucky enuf.

Thank you for taking the time to read my ramblings.

D

chris85

Headwrecked34 wrote: »

Hi All

Im looking for some badly needed advice. I bought a house in early 2004 for €235,000, myself and my partner broke up a year later and I used the equity release scheme with PTSB to buy him out with €40K. My currently mortgage repayments are €1708 at a rate of 5.75% and I have 18 years left on my mortgage. I am currently not in arrears nor have I ever been. I have not taken a payment break or extended the term. I really want to sell but understand that their is a shortfall which I am more than willing to take as a personal loan over 10 years. I have contacted PTSB about selling my house and they have given me permission to put it on the market and said they would discuss an arrangement with me but only if the house goes sale agreed. I have a financial analyst dealing with the bank on my behalf.

My partner has moved to the UK (he is not on the mortgage) and I plan to follow him over once I get rid of the house, obviously subject to me getting a job please god.

My family think I am absolutely nuts even to be considering selling the house but thats easy for them to say as there not the ones struggling but I come off a fixed rate soon and the only option available to me is 6.05%. I lie in bed awake at nite stressing about whats ahead in the future and thats no way to live.

The house is currently on the market for €199K and Id expect Id be lucky to get 25K less than this giving me a shortfall of 55K approx.

Am I mental to take out such a loan??. I want to be able to go the UK without looking over my shoulder and am perfectly able to afford the repayments even if I have to rent here for a while before going, the total would be less than what im paying at present.

There is absolutely no future for us here and its not an option for him to come over.

Is there anyone else out there who has done this - I feel no attachment to my house and would be relieved to be rid of it if Im lucky enuf.

Thank you for taking the time to read my ramblings.

D

Ok the bank may refuse to let you sell the property firstly even if sale agreed as you will be in the UK and they will view it as a higher risk you having an unsecured personal loan for a house you no longer own and in the UK so they may find it hard to do anything should you choose not to pay. Less risky for them to block the sale of the house and have you maintain your good history of payments on the property.

Would you consider renting out the property and some equity may recover in it over next 5-10 years and you may then be able to sell and not be lumped with a personal loan?

pjmn

Hi HW34,

Looks like you have only two options...

a) do as you say and take on a personal loan of c. E55k over 10 years - would suspect that PTSB would prefer a shorter term e.g. 5/7 years, but's let's assume they agree to 10 years - I'll also assume they lend at a rate of c. 12% (unsecured personal loan) - that would leave you with monthly repayments over 10 years of c. E785 (and your asset (house) is gone).

an alternative to consider...

b) I'm estimating that you currently owe c. E230k based on figures provided. Increase in interest rate will bring repayment to c. E1,746 per month. If your property is resonably located their may be an opportunity to rent same when you move away. Based on assumptions above you'd need to achieve a rental of c. E1k per month to leave you in broadly the same position as the personal loan option (would probably be some small element of tax payable on rental v's interest charge, which would be allowable at a rate of 75% of actual charge). The risks of going this route are a) inability to rent at all or at rental level quoted b) property value continues to fall c) ongoing maintenance costs of property d) changes in tax legislation and e) rising interest rates. The potential upside is that property prices stablise/increase modestly over coming years and you sell at a future date without incurring the hit of E55k or at least a lessor amount.

Unfortunatley we'd need a crystal ball to see what would prove the best option over time - but hopefully the above informs your thinking one way or the other.

Best of luck...