Negative Equity Situation

Meow_35

Question for anyone in this situation at the moment or anyone that knows anything at all about this.

I currently own a 3 bed property with my Ex. At the moment he currently resides in the property with one other tenant but we are meeting in a couple of weeks to discuss what our options are in relation to the property and to be honest, ideally I would love to try and sell and be done with it.

the problem is, like a lot of other home owners - our house is in negative equity. I have invested a good bit of money in the place over the years getting different improvemens done and I never expect to make this money back, i'm not interested in making a profit and not interested in the money. I would like to sell and make a fresh start.

Is anyone else in this kind of situation or has been in the past? I know I spoke to our bank a good few months ago and they had a few people in a similar situation that sold and were obviously left with a balance oweing to the bank so had to apply for a seperate loan to pay that off. I know this isn't ideal but I would much prefer this than still having a mortgage with my ex.

If anyone has any advice or information would really be grateful.

Thanks

BFDCH.

hand the keys to the ex/bank and tell them tae F when they come for the money they think you owe but do not have.

or take out a loan and pay for something you don't own and never will.

Meow_35

??? is there part of your message missing there?

NEDDURC

Tough situation.

One option would be to rent the place out for a few years and hope the value comes back abit but this is a real unknown.

Secondly, talk to the bank about maybe getting a write down on some of the remaining debt when it's sold. Threaten that you are considering declaring bankrupt under the new laws (due soon) and this may scare them.

Meow_35

NEDDURC - thanks for the advice..I had considered trying to make use of these new laws but we are both on ok salaries - I figured anyone trying to make use of the new law would ideally be almost broke people? Although, my disposable income is pretty awful once all my bills are paid - had even contacted moneyvillage at one point. I have a lot of other debt I'm currently trying to pay off also so the house is just an expense I could do without. I am going to look into renting it also but the rental market is just so up and down at the moment.

we are definately going to have to talk to our bank about anything they can do for us, definately a tricky situation but i hope we can find some kind of a solution..i'm sure there are plenty others in the same boat!

NEDDURC

With the current situation in Ireland, I don't think wages are a good barometer of wealth so I would definitely mention the bankruptcy route to them when discussing and see what they say. Unoffically they should be providing some write offs as they most likely have taken a provision against the house at this stage anyway.

Meow_35

Thanks for that, I will definately consider this. These days it's kind of hard to know exactly what your options are and good point about salaries - can be on a good salary and have basically zero disposable income after anyway.

Thanks again, appreciate it.

Ray Palmer

I very much doubt you will be able to easily claim bankruptcy with the new regulations. The purpose will be to make sure it doesn't last as long. Do you really think the government who own the banks are going to destroy them??
OP you will have to give a good arguement to why the bank would reduce your debt. Proof will have to be shown that you are attempting to solve the problem. Considering banks tell people to drop health insurance, cars and tv packages as standard do you think they won't question your current expenses?
Using a car to save travel time doesn't hold much water financially if it cost and extra €50 a week or even a month. Why would the bank care or accept you should keep the car and not pay them the €50.

Sand Wedge

Meow_35 wrote: »

Thanks for that, I will definately consider this. These days it's kind of hard to know exactly what your options are and good point about salaries - can be on a good salary and have basically zero disposable income after anyway.

Thanks again, appreciate it.

If you are on a good salary, I don't see how you would not have a good disposable income. Banks more likely to get you to reduce what you spend on phone, sky etc. These are luxury items not necessities in my opinion.

NEDDURC

Sand Wedge - have you not seen the stats that 14% of people are struggling to pay their mortgages. They are not all people on lowly paid jobs. More likely they are people who bought at the top of the boom and have highly paid jobs and just extended themselves too far.

Given the additional tax take in the last few years and a large mortgage it wouldn't take long for disposable income to be eaten up.

The New Beginings group seem to be using the argument or bankruptcy as their main negotiating tool with some good success. The banks are scared of this so anything you can do to get a better deal from them may be worth it.

Have you considered interest only mortgage for a few years while you rent it out until such time as you can sell it at less of a loss.

Sand Wedge

NEDDURC wrote: »

Sand Wedge - have you not seen the stats that 14% of people are struggling to pay their mortgages. They are not all people on lowly paid jobs. More likely they are people who bought at the top of the boom and have highly paid jobs and just extended themselves too far.

Given the additional tax take in the last few years and a large mortgage it wouldn't take long for disposable income to be eaten up.

The New Beginings group seem to be using the argument or bankruptcy as their main negotiating tool with some good success. The banks are scared of this so anything you can do to get a better deal from them may be worth it.

Have you considered interest only mortgage for a few years while you rent it out until such time as you can sell it at less of a loss.

The 14% are mainly lowly paid workers, people who have salaries reduced or have been made unemployed.

What other loans does the OP have in addition to the Mortgage and what were these loans taken out for?

NEDDURC

Sand wedge - can you provide a link to where you see that the 14% relate to low paid workers? How can you state this as a fact.

Sand Wedge

NEDDURC wrote: »

Sand wedge - can you provide a link to where you see that the 14% relate to low paid workers? How can you state this as a fact.

I said that they are mainly low paid workers, peolple who have had salaries reduced and people who have been made unemployed.

The people that are highly paid and bought at height of boom will indeed be in negative equity, but is unlikely that they are in arrears unless it is a strategic decision. The majority who bought in boom have trackers. At 2% interest rate i.e. ECB +1% €500,000 Mortgage has a repayment of €1,450 per month. Someone on €50,000 Gross will pull in a net income of circa €2,700 per month. That leaves €1,250 to live on for month. If salary higher than 50k, then disposable income will be higher again. I have based these figures only on one person salary. If joint salary then there would be even more disposable income.

It is widely acknowledged that people who are struggling are those on lower incomes and those whose circumstances have changed since taking out there mortgage such as having salaries reduced or been made redundant.

Ray Palmer

@NEDDURC
Did you read the thread?
She broke up with her partner. That is the main problem. Not about lower income but new expenses and want to seperate investment.
The suggestion of bankruptcy is highly unlikely. You are going off on a wild tangent.

NEDDURC

@Ray Palmer - I don't think it is a wild tangent. If property prices were around the level that they bought at the simple solution would be to sell up and walk away.

However, since property prices have collapsed so much the issue is that they've broken up which is bad enough but now their is the potential that op could be paying for this breakup with a debt for a long time into the future if they sell up now.

The options as I see them are:
1) Try switch the mortgage to interest only for a few years and rent it out until you are ready to sell - (will need to talk to bank)
2) Look to sell now but discuss with the bank the options around a possible write down of the remaining debt. I mentioned that the possibilty of bankruptcy should be mentioned as lererage here.

In most normal economies with bankruptcy laws that allow you to exit quite rapidly there are thousands of bankruptcies each year. In Irleand last year I believe there were actually less than 10 bankruptcies. It is not something we are used to. Many would move to England and declare bankrupt there to avoid the Irish system. However, the new laws should change all that and there could be an explosion of pent up bankruptcies which the banks are very afraid of.

seamus

In order to file for bankruptcy, they would need to collectively show that their income is insufficient to service the debt.

The size of the debt is irrelevant, it's the size of the repayments and the period of the mortgage that matter. If they can still service the mortgage, then they're still financially solvent, and therefore will not be able to file for bankruptcy.

The asset being in negative equity is irrelevant, only the person's ability to service the debt matters, not whether there's any equity backing it up.

Sleepy

OP, one thing to watch out for: interest rates on personal loans are far higher than on mortgage rates: make sure that the interest you're paying on any loan for your share of the realised negative equity doesn't make it not worth your while to sell.

Meow_35

Hi All,

Thanks for all the comments. However, my original post was in relation to a "negative equity" situation - was not supposed to prompt in debth discussions about my salary, my disposable income etc etc. I haven't given ALL of the details involved. I just wanted to find out what people in general have done or would do in this sticky situation. I will definately be discussing with the bank the options of interest only, however our mortgage is a tracker mortgage so I suppose our monthly mortgage repayment might not be as high as others. however, the situation at the moment is I have not been living in this property for the last few years. My ex is currently there but would now like to move out and either rent somewhere or move countries altogether. The ideal solution would be to sell, and as someone commented if the economy were the same now as it was when we originally took out the mortgage it might not be a problem. I even tried arranging with the Co. Council to hand the property over to them to add onto their "affordable housing" list but as the property needs bits of work done they actually refused the property! Nothing major needs to be done, did a good bit of work on it myself when I lived there, invested a good chunk of money but they wanted ridiculous things done, was quite surprising.
Anyway, I also just wanted to see if anyone else had been in this kind of situation at all - thanks again for all the comments.

Grolschevik

Meow_35 wrote: »

in debth discussions

Best Freudian Slip I've seen in a while!

lilmissmoo

Hi Meow_35

My sister found herself in the same situation (but she was only one on mortgage). She is currently working with the mortgage negotiaters to confirm a write down on the amount that she would owe once the house has been sold. Might be worth giving them a call, 016024942 but I think they charge for their service so just keep that in mind.

Meow_35

Hi Lil,

Thanks for letting me know. So was your sis involved in a split also where the house was involved? I suppose the fact my ex is on the mortgage isprobably a good thing as any costs involved are split. Still awkward though.

So, what exactly do the mortgage negotiators do? Do they work with your bank on your behalf? I will definately take the number and give them a call. What's the company name? Is your sister similar to me, in employment, good enough salary etc?

lilmissmoo

No probs!

My sister bought house with her partner but he did not qualify for a mortgage so it was only her name on the mortgage so unfortunately she's been left with a ruined credit rating and he has walked away from it. She's full time working and in the same job that she was in at the time of acquiring the mortgage but has a minus after all bills and daily expenses paid.

As far as I know they're a group of solicitors that negotiate with your mortgage provider for you using the figures from monthly budget but its probably a bit more complicated than that! The name of the co is mortgage negotiaters, http://www.mortgagenegotiators.ie/

Meow_35

Thanks for that, I'll definately look into it. :-)