'Interest only' Mortgage up for review

Donalh

Hi, I have been on 'interest only' mortgage for last few years. My house has been in negative equity during that time however is now creeping into positive equity.

I am now due to go back to the bank with a completed Standard Financial Statement Form, in order to plead for some kind of further restructuring.

My question is - does being in positive or negative equity influence how the banks decide whether to allow further mortgage restructuring or not?

Do i have more leverage with a house that is in neg equity?

Really appreciate any advice, thks

Bigus

Think of the logic , the bank can now afford to have a row with you, as they'll get their money back in the event of a forced sale unlike before when in negative equity.

However, in Ireland it's not that simple for the bank to force a sale ,so , depending on a number of things inc payment history , whether it's family home etc the bank is ultimately depending on a judge to agree with their position rather than the downtrodden borrower!

Which bank you're dealing with is hugely important .

So hang tough on interest only but be aware the house is going to have to be paid for or sold at some point if a capital arrangement is not entered into, as the money will eventually have to be repaid, some way or other , its logic not vengeance .
Best of luck

Donalh

Thanks for the advice! Makes sense :-)

Donalh

Just to throw another angle on this... would positive equity not be a bonus in the sense that now I am open to other lenders? In other words my current bank may lower my interest rate (as i have heard they do sometimes) in order to keep me on their books. As mentioned before, i am not in arrears, i am living up to an interest only agreement and have not missed a single payment. I could possibly afford to pay capital if the interest were lowered.

3DataModem

If you can only just afford to pay capital you are unlikely to be able to take your business elsewhere.

The more you delay going on capital, the more expensive it gets.

LuckyCharms

Donalh wrote: »

Hi, I have been on 'interest only' mortgage for last few years. My house has been in negative equity during that time however is now creeping into positive equity.

I am now due to go back to the bank with a completed Standard Financial Statement Form, in order to plead for some kind of further restructuring.

My question is - does being in positive or negative equity influence how the banks decide whether to allow further mortgage restructuring or not?

Do i have more leverage with a house that is in neg equity?

Really appreciate any advice, thks

Positive or Negative Equity won't make a difference.

They will review your circumstances and decide from the information you provided what they can offer, be it interest only or a step up to something else.

They cant take a view on the property based on its equity position as they would never be able to put you through the process to force a sale.

My advice would be to comply with what they ask, this is heavily regulated in terms of what they can and cant do so send off the full SFS with the required documentation and if the result is something you are not happy with, feel is unjust appeal it.

Just to reiterate what has been said above, you are only allowing for a stay of execution in the current arrangement so unless you have some plans in the future which will allow you to go back onto full cap repayments, it may be better to consider selling.

TLDR - Positive or Negative equity doesn't matter when deciding on a treatment for properties in distress. As crude as this sounds, its all down to what money you bring in vs what you spend, that will determine the arrangement on offer if anyway. Properties only get forced through a sale if you are not cooperating.

Donalh

Thanks guys, appreciate the advice