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Bank take back the house

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  • 21-10-2009 12:59pm
    #1
    Tim Robbins
    Registered Users Posts: 8,999 ✭✭✭


    Ok, so can someone explain this to me.

    You buy a house for 400K, you got a 100% mortgage. The place is now worth 250K.

    You give the keys back to the bank.

    Does that mean you can never borrow ever again?

    What happens if you get married and just borrow in your partners name?

    You earn 50K a year and continue renting. Can the bank insist you keep paying the mortage and all the extra interest?


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    #2
    Stheno
    Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 51,688 Mod ✭✭✭✭Stheno


    Tim Robbins wrote: »
    Ok, so can someone explain this to me.

    You buy a house for 400K, you got a 100% mortgage. The place is now worth 250K.

    You give the keys back to the bank.

    Does that mean you can never borrow ever again?

    What happens if you get married and just borrow in your partners name?

    You earn 50K a year and continue renting. Can the bank insist you keep paying the mortage and all the extra interest?


    Basically if you give the keys back, then the bank can sell, so if you have an outstanding mortgage of 400k and the bank sell for 250k you still owe them 150k that you borrowed off of them.

    You'd have to pay off that 150k regardless of the fact you handed back the keys.

    You could do all of your borrowing via your partner, or wait until you'd paid off the 150k.


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    #3
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Or declare bankruptcy for 12yrs!!


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    #4
    meathstevie
    Registered Users Posts: 4,772 ✭✭✭meathstevie


    gurramok wrote: »
    Or declare bankruptcy for 12yrs!!

    Which is more or less what the banks have done and then got lorry loads of money and NAMA.


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    #5
    old boy
    Registered Users Posts: 2,658 ✭✭✭old boy


    meathstevie wrote: »
    Which is more or less what the banks have done and then got lorry loads of money and NAMA.

    there is nothing unusual in this, the big guys escape joe and josie soap keep getting shafted.


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    #6
    BroomBurner
    Closed Accounts Posts: 2,737 ✭✭✭BroomBurner


    Why would you give back the keys to a house just because it's been devalued?

    If you can afford it (on 50k, you should be able to work out a repayment scheme), then stay living in it.


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    #7
    Tipsy Mac
    Closed Accounts Posts: 2,559 ✭✭✭Tipsy Mac


    The bank could sell the house for €100k or whatever price someone is prepared to buy it for, you will then owe them the remaining €350k with interest.


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    #8
    Senna
    Registered Users Posts: 8,800 ✭✭✭Senna


    The banks have an obligation to sell the house for as much as possible, but whos to say what that price is. The bank will also add on the cost of auction/EA and legal fees for any sale. So the house could be sold for 250k leaving 150k remaining, but adding all the fees onto that, it could be 170k to 200k of a bill left for you.

    Handing back the keys is probably the worse solution to the problem.


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    #9
    Sand
    Registered Users Posts: 12,588 ✭✭✭✭Sand


    Give the keys back to the bank and tell them to record it on their balance sheet, not at the current market value, but at the long term economic value, which so handily equals whatever you owed them on the mortgage.

    If they have any problems with the LTEV model, refer them to Brian Lenihan.

    If you happen to be a taxpayer, the above doesnt apply - you're ****ed. Enjoy living in Meath and commuting to Dublin for the rest of your life. Think of it as penance for the sins of BoI and AIB. They arent strong enough to take on those crosses, but you are. Its actually a life affirming thing.


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