Advice on helping a friend with mortgage arrears

boodee

I am helping someone with mortgage problems.

They have 3 mortgages, all in arrears.....

The arrears are about €7000.
There is an overdraft of €3000
A credit card of €4000

The remainder of the mortgage is approx €122,000

The monthly payments at the moment are, €816, €132, & €145.

I think the smaller two are interest only as I know the person has being paying interest only. She wants to continue paying interest only which I don't think is going to work.

I am going to the bank with them to try and get a more manageable payment plan going.

Is it possible to get the 3 mortgages amalgamated, or do they not do that anymore.

One of the mortgages is a tracker, are the banks still offering money for these to be sold out or is that a thing of the past.

What do I need to ask the mortgage handler when I go in to clear these arrears, is there anything that would intice them to amalgamate the mortgages so there is just one payment every month instead of three.

I have €10,000 to offer but what's the best way to spend it.....

unclebill98

No, they will not put all the mortgage together as the loans themselves are secured on the individual houses.

Under new regulations you can not be bumped off a tracker and no one has given evidence of this tracker buying programme and it's been talked about on the forum for well over a year.

Like I said there 3 different mortgages.

Are they currently on agreements repayment plans for the mortgages? What bank?

Depending on the lender some options that have been done are,

Interest only payment, reviewed every 3-6 months.
Reduced payments to include some capital, reviewed every 3-6 months.
Sell the house and take on remainder of loan if not fully cleared at the same rate of interest as the original mortgage.

As for walking in with 10k! It's not the bargaining chip you may think it is. Without knowing what's been done so far the process is to evaluate the customers current financial situation and their capabilities to repay all debt. A plan would then be offered and the customer either agrees to try follow the plan or ask for it to be re evaluated by the bank. If a satisfactory plan is not meet then the customer an complain and follow the banks internal complaints to obtain final response and then forward to ombudsman.

I'd be wary to offer 10k over until you got something in line with what you can afford but there is a good chance it would be the same offer if you had the 10k or not.

IMHO mortgage arrears are going to get far worse this year and other options will come on line to deal with them. They could hurry up :rolleyes:

Lastly just to add debt forgiveness will never be put in place.

phormium

All three mortgages may be on same property, original plus 2 top ups, amounts kind of sound like that.

Still the same story as above reply though, unlikely to be amalgamated, not always best option anyway and probably lose tracker as you would taking out a new loan and clearing existing ones. Best to try negotiate lower manageable repayments with bank and hold off to see what solutions will be found down the road. Keep your 10k in your pocket.

unclebill98

Ahhhhhh, true.

I that case there could be 3 different interet rates. The original amount or even two of them could be trackers. If added into one you'll get today's rates and could well end up worse off in the long term.

chris85

Best way to spend the 10k if you could would be to clear the credit card and overdraft as both have crippling interest rates in comparison to the mortgage agreements.

on the assumption here it is one property with top ups I would then go to the mortgage lender with the 3k remaining and ask if they would consider recapitalising the arrears and possibly extending the term of the mortgage and out of good faith the €3k will be paid off the arrears (prior to recapitalising).

That's my thoughts on it anyway.

boodee

hi,
thank you for your thoughts.

Yes, the mortgages are on the same property and selling is not an option. I know 10k isn't a lot by todays standards and i am reluctant to clear the credit card as that is personal debt that may well have been avoided, it also isn't belong to the person i'm helping but it causing stress.( Complicated family issue )

The mortage however is to keep a roof over the heads of two kids. I just don't want to give the money over without it being a solution of some sorts. I agree that amalgamation is not always a good solution, nor a valid option I have learnt, especially if the interest rate is a lot higher.

It is the Bank of Ireland that all debts are with. No payment has been made in months and I don't think they are in a position to make regular payments yet. However, there is light at the end of the tunnel as there will be money coming, but it will be a few more weeks.

Would there be any advantage to having a solicitor on board, my father is encouraging me to go through all the right channells so as not to have the 10k sunk further into a bigger pile of debt.

I just don't want to seem totally clueless going into bank.....I'd rather be cluless here and let you set me straight..adn the person being helped is in no fit state to be dealing with the banks. They are still realing from the first attempt at sorting this and the bank manager was extremely ignorant.

phormium

I think this is a case for MABS, if they are unable to deal with the financial institutions themselves then MABS would help them with it. MABS are all about empowering people to deal with their own problems and will only assist if there is an inability for the client themselves to do it and it sounds like that in this case. You could go with them to MABS but I would be inclined to get their advice at least before you go in offering anything.

chris85

phormium wrote: »

I think this is a case for MABS, if they are unable to deal with the financial institutions themselves then MABS would help them with it. MABS are all about empowering people to deal with their own problems and will only assist if there is an inability for the client themselves to do it and it sounds like that in this case. You could go with them to MABS but I would be inclined to get their advice at least before you go in offering anything.

I agree they could be useful however could be a few months before the OP's friend could get an appointment. Definitely their website has some advice.

OP, a solicitor will cost money and dont think is required. They would not be able to do anything more than your friends could do themselves.

Talk to the bank. They will want mortgage arrears cleared first with the €10k. You could agree to clear the arrears of €7k on the mortgage and then pay the €3k off the other debts as long as the branch provide a loan to clear the overdraft and CC. This loan will have a lower rate and longer period to discharge so may be better. This is an option which the bank will consider as makes good long term sense for your friend.

cookie1977

Look at http://www.keepingyourhome.ie

There's a lot of advice on there for dealing with the banks re mortgages. As long as the person is actively talking and working with the bank there's a lot of protection on offer to them.

The Irish Riddler

For that amount of money would bankruptcy be a viable solution?

What value would you put on the house?

chris85

The Irish Riddler wrote: »

For that amount of money would bankruptcy be a viable solution?

What value would you put on the house?

Bit of a major jump into bankruptcy.

The home would be repossessed and 12 years of bankruptcy to get through which is extremely tough in this country. Basically answering to a court appointed official on all your income/expenditure for 12 years.

The Irish Riddler

Going bankrupt in Ireland is a terrible idea when your in the clear after 12 months in the uk. The e10k could be used to facilatate that if the mortgages and loans are 6+ months in arrears and there is no reason for things to change for the better.

chris85

The Irish Riddler wrote: »

Going bankrupt in Ireland is a terrible idea when your in the clear after 12 months in the uk. The e10k could be used to facilatate that if the mortgages and loans are 6+ months in arrears and there is no reason for things to change for the better.

So why did you suggest it in previous post?

The Irish Riddler

The E10k could be used to facilitate a UK bankruptcy.

chris85

The Irish Riddler wrote: »

The E10k could be used to facilitate a UK bankruptcy.

The residence is in Ireland. Would not be able to avail of UK bankruptcy. Also house would be taken back by bank.

Ste.phen

chris85 wrote: »

The residence is in Ireland. Would not be able to avail of UK bankruptcy. Also house would be taken back by bank.

As far as I can see he's saying that with 10K they could set up shop in the UK; satisfy the residency requirements for the UK bankruptcy system, and once discharged from bankruptcy return to ireland sans house or debt