Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

legal basis for changing mortgage to unsecured loan

Options
  • 25-07-2012 6:48pm
    #1
    kdowling
    Registered Users Posts: 375 ✭✭


    Is there any legal basis where a person in negative equity can campaign their bank to let them sell their house and continue to pay the remainder as an unsecured loan?
    I've heard of a solicitor who managed to get this scenario for her client.
    Anyone know how best to approach it?


Comments

  • Options
    #2
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,469 Mod ✭✭✭✭johnnyskeleton


    Yes. Repossession.


  • Options
    #3
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    johnnyskeleton wrote: »
    Yes. Repossession.

    If we did a voluntary surrender could we still pay off the balance on the original terms of the mortgage?
    Our situation is that we are in 150k negative equity so we want to sell up, continue to pay the balance as before and rent out another house.

    I assume a voluntary surrender or repossession would affect your credit history, is it possible to get the banks to agree with it?


  • Options
    #4
    source
    Registered Users Posts: 5,269 ✭✭✭source


    kdowling wrote: »
    johnnyskeleton wrote: »
    Yes. Repossession.

    If we did a voluntary surrender could we still pay off the balance on the original terms of the mortgage?
    Our situation is that we are in 150k negative equity so we want to sell up, continue to pay the balance as before and rent out another house.

    I assume a voluntary surrender or repossession would affect your credit history, is it possible to get the banks to agree with it?

    Will this not wind up costing you more in the long run? You'll be paying the loan and rent, whereas now you're only paying the loan.


  • Options
    #5
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    source wrote: »
    Will this not wind up costing you more in the long run? You'll be paying the loan and rent, whereas now you're only paying the loan.

    We need to move anyways and and won't get much for renting out house so would prefer to cut our losses


  • Options
    #6
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    From a practical point of view, have you spoken to your bank and explained the situation to see if there is anything that they can do to assist you?

    Would there be any disadvantage in the OP doing so?


  • Advertisement
  • Options
    #7
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    GCDLawstudent wrote: »
    From a practical point of view, have you spoken to your bank and explained the situation to see if there is anything that they can do to assist you?

    Would there be any disadvantage in the OP doing so?

    I've been advised that it would be best to get legal advise first and devise a strategy on how to approach this with the bank.


  • Options
    #8
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    kdowling wrote: »
    I've been advised that it would be best to get legal advise first and devise a strategy on how to approach this with the bank.

    I hope that this thread isn't that advice.


  • Options
    #9
    uberwolf
    Registered Users Posts: 7,578 ✭✭✭uberwolf


    kdowling wrote: »
    Is there any legal basis where a person in negative equity can campaign their bank to let them sell their house and continue to pay the remainder as an unsecured loan?

    loan is a contract. Contracts can be renegotiated.


  • Options
    #10
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,469 Mod ✭✭✭✭johnnyskeleton


    kdowling wrote: »
    johnnyskeleton wrote: »
    Yes. Repossession.

    If we did a voluntary surrender could we still pay off the balance on the original terms of the mortgage?
    Our situation is that we are in 150k negative equity so we want to sell up, continue to pay the balance as before and rent out another house.

    I assume a voluntary surrender or repossession would affect your credit history, is it possible to get the banks to agree with it?

    FLAC or mans will be able to go through this with you.

    I'm not advising on the legalities of it. But on a practical level a personal loan could have a much higher interest rate than a mortgage, so just be aware of that.


  • Options
    #11
    krd
    Banned (with Prison Access) Posts: 3,455 ✭✭✭krd


    johnnyskeleton wrote: »

    I'm not advising on the legalities of it. But on a practical level a personal loan could have a much higher interest rate than a mortgage, so just be aware of that.

    But with an unsecured loan, no one can put a gun to your head and force you to pay it.

    Very literally tens of thousands of people, are in negative equity, and would like out of it quickly - there is no quick and easy way out.

    Taking on a loan of 150k with nothing at the end would be a little mad.

    The best deal would be to negotiate with the bank. (and always keep in mind, they're not trustworthy people). Look at dragging the process out for years.

    If at some point in the next few years there's inflation - it may inflate a large chunk of the debt away. The house could be sold and the remainder of the debt could either be small or gone.

    The political plan, is to fix the banks and then get another property bubble going. This could take ten years or more.


  • Advertisement
  • Options
    #12
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    Went to a solicitor today that has experience dealing with the banks in relation to negative equity.
    His advise was to put the apartment up for sale first and get evidence of a bid recieved.
    He said to then go to the bank with this bid and ask to sell the house and have the same interest rate, time line etc applied to the outstanding balance.

    He said the legal arguement will be that due to rising unemployment, mortgage interest rates rising in the future, mortgage interest relief going for FTB's etc etc that house prices are going to fall futher and that by blocking the sale the bank is increasing the negative equity and they may have to assume responsibility for futher losses.

    What do you guys think of that?


  • Options
    #13
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    I can't comment on the advice given to you by a solicitor other than to say Thank you for posting it - adds an interesting slant to the discussion. Well also to say be careful how much weight you put on the opinions of people in a web forum. With that said a question to you if I may?

    What do you hope to achieve? Lower repayments? Could your solicitor not negotiate with the bank? House prices will fall again almost every thing I read on it suggests that. They will rise again so why loose the asset unless you really have to.

    I'd understand it if the idea was to just forget about the debt but wouldn't you be in the same situation if it was just repossessed?

    Please note I'm not advocating any particular position I'm just curious.


  • Options
    #14
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    GCDLawstudent wrote: »
    I can't comment on the advice given to you by a solicitor other than to say Thank you for posting it - adds an interesting slant to the discussion. Well also to say be careful how much weight you put on the opinions of people in a web forum. With that said a question to you if I may?

    What do you hope to achieve? Lower repayments? Could your solicitor not negotiate with the bank? House prices will fall again almost every thing I read on it suggests that. They will rise again so why loose the asset unless you really have to.

    I'd understand it if the idea was to just forget about the debt but wouldn't you be in the same situation if it was just repossessed?

    Please note I'm not advocating any particular position I'm just curious.

    My situation is that I have a 1 bed apartment in Dublin and I need a bigger house (starting family)
    I think it will fall in value maybe 20% more but even in a recovery I don't think 1 beds will increase much compared to houses.
    1 bed apartments are only being brought by cash investors for their relatively good yields ~10% so the only thing that will increase it's value is rent rising and rents are already quite high.
    I want to sell now, rent for a year or two then buy a house at the bottom.
    That's if the bank will let me!


  • Options
    #15
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Surely if you default you'll not be able to buy anything for years? sure what do I know - ask your solicitor about the ramifications I guess.


  • Options
    #16
    kdowling
    Registered Users Posts: 375 ✭✭kdowling


    GCDLawstudent wrote: »
    Surely if you default you'll not be able to buy anything for years? sure what do I know - ask your solicitor about the ramifications I guess.

    I definitely wouldn't default. I am looking to make a legal argument to convince the bank to give me permission to sell and pay remainder as unsecured loan.
    I've heard of a few cases where it's happened with BOI, unfortunately I'm with AIB which might be trickier


  • Options
    #17
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Have you checked into the ramifications of doing this and then being able to get a future mortgage? Unsecured personal debt, and the repayments, are considered when applying for a mortgage.

    I would think the logical thing to do is what most people in our situation do and that is let out the apartment and then either buy or rent somewhere else. I know that there was talk of a negative equity mortgage. Where you could move the negative equity to your new place and sell the old one. Do you know if that has been done in isolated cases at all?

    Not advise its just you seem to want someone to bounce (crazy :P) ideas off.


  • Options
    #18
    Avatargh
    Registered Users Posts: 191 ✭✭Avatargh


    kdowling wrote: »
    He said the legal arguement will be that due to rising unemployment, mortgage interest rates rising in the future, mortgage interest relief going for FTB's etc etc that house prices are going to fall futher and that by blocking the sale the bank is increasing the negative equity and they may have to assume responsibility for futher losses.

    That's not a legal argument. That's a wheeling-dealing argument.

    Banks may do deals, they may not. Its nothing to do with "legal ways" to force it etc. Some banks might see the sense in, say, "buying" back a tracker mortgage, by some sort of deal on a balance. Other banks may not.

    What you're talking about is a re-negotiation and nothing more than that really.


Advertisement