Selling to get out of mortgage??

lily_white08

I'm going to write this in bullet points to try and make for easier reading.
Hope the moderators are ok with this! All I'm seeking is some advice and am not too sure if this is the right forum, but fingers crossed!

-took out 1st mortgage and bought house for €361,000 in December '07

-house now in negative equity, current asking price for similar properties in area @ €245,000 and have lost roughly 20% of income to paycuts

-am in full time uniformed organisation (no smart comments please, I'm one of many)

-hoping to go back to college in Sept 2011 which means resignation/career break and zero income for four years aside from whatever part-time work I can hopefully find.

-considering the option of selling house, bank have in place a new option of converting balance of mortgage to a special loan for those who have no income

This is a slightly scary thought, but haven't made a mortgage payment (€1700 per mth) since Sept 09, current monthly net income is €1650 and am overdrawn since Dec 09. Have credit card debt and a €13,000 credit union loan. Thinking of just cutting my losses, throwing as much as I can off mortgage from sale and trying to decrease the balance over time...and never darkening the door of any mortgage company ever again!
Does anyone have any advice? I know what I'd like to do with the situation, but feel a little daunted.

woodseb

this is probably not the best forum for that type of question, you need to talk to MABS

pocketdooz

woodseb wrote: »

this is probably not the best forum for that type of question, you need to talk to MABS

Agree 100% - this is a serious debt problem that MABS should be able to help you with.

jon1981

hope it works out for you, is moving home and renting out the rooms an option? ( assuming you are in an area you can get rent)

but seriously earning what you earn, who in their right mind approved you for that mortgage!! thats madness! I had a mortgage broker telling me i was approved for a mortgage that was well above my spending power, luckily i copped on. Sad to see so people suffering from this now.

rugbyman

Lily W, your situation is indeed dire, but you need to balance out whether holding on to that house is a good idea. Is it a millstone around your neck or should you walk away from it.
Bear in mind that you are unlikely to get a mortgage again within ten years or ever.

you do not say things like how you paid the mortgage at all, even when you were earning 20 % more. Are you a sole dweller or do you/did you have a partner?

Mabs, are v. good,do go to them, but have a chat with some straight thinking friend ,, get a blank page, write down all the pros and cons. Dont vacate the house without getting legal advice that you are minimising the down side to yourself,. IMO solicitors frequently dont know. There must be some expert solicitors who deal in this field.

this is a bit of a ramble, but i have seen people continue to try and pay monthly balances on credit cards and loans for ages before they realise the game is up.

Your credit union, which is a great organisation may benefit from writing your loan off, as will you. this does not mean you do not owe it, it is a bookeeping exercise for them but means no further interest accrues.

Hope something works out for you.
Regards Rugbyman

Coles

rugbyman wrote: »

Your credit union, which is a great organisation may benefit from writing your loan off, as will you. this does not mean you do not owe it, it is a bookeeping exercise for them but means no further interest accrues.

Could you explain that. There seems to be a contradiction in what you have posted.

I would have assumed it would be in the interest of the CU (and the wider community) that the debt be repaid rather than written off.

yosser hughes

I'm scratching my head here as to why you were given this mortgage in the first place. Even with your pay cuts this mortgage should never have been given.Do you have a partner/husband/wife?
I'm not sure about the bank letting you take a special loan,especially if you're not earning.
Is there anything you're not telling us?
Either way,you have to talk to MABS.

lily_white08

Tell me about it yosser hughes and rugbyman!

At the time I was working two jobs on opposite sides of the country, about 90hours per weeks and had a net income of about €3000 because I was working so much! I am the only name on the mortgage and do not have a guarantor.

Because my primary job is there until I retire (fire brigade), the mortgage company actually told me to "just find a house, we'll sort you out." They actually offered me €500,000!!!!!!!!!!!!!!
I'd be on the streets now had I taken it.
I have a lodger coming the end of April, doesn't cover the payments enough though.
Rugbyman, how does the credit union write off the debt?? Yes the house is a millstone alright, I'm really thinking of just letting it go and renting as moving home is not an option, however then I'm back to square one with huge payments to landlords and outstanding bank balance and hopes of going back to study next year are not helped by this.

Yosser Hughes, an advisor from the bank called to my home to work out income and outgoings. I quizzed her on what my options re: selling up were when there is negative equity, she said that their new avenue of approach (because so many people are stuck) in some instances is to issue a special loan for remainder of the term, subject to assessment of course.
And I agree, there is no way I should have ever been given that much, but I think like every other young person at the time I kind of wore it like a medal of acheivement.

lily_white08

PS- Have made appointment with MABS.

FYI- The 20% paycut as mentioned in post above was off primary pay, secondary income has gone due to closure of the company.

pocketdooz

Quick Q

Is it a 100% mortgage?

I have a mortgage of slightly less than yours (not much less) and pay a good chunk under 1k per month. Then there is the govt 180 per month tax rebate so I'm paying less than 1/2 of what you state.

1,700 per month seems way too high. Maybe you could restructure?

PM me for details if you want.

lily_white08

Yep, it's a 100%

At a rate of 5.7% fixed for five years hence the €1700pm (€1903 if you don't count the TRS) ...until January 2013.
Bank want to charge me six months interest to buy out of the fixed rate, I don't have this and the arrears and interest are building up. Just found out about an hour ago I have a three month moratorium, however they want the arrears paid up after then.

I know this all sounds way too expensive to be real, but believe me it is very very real and I don't have the funds!

rugbyman

Coles wrote: »

Could you explain that. There seems to be a contradiction in what you have posted.

I would have assumed it would be in the interest of the CU (and the wider community) that the debt be repaid rather than written off.

Of course. Lily white askedsame question

If a loan goes out of control, i.e. is not being repaid, the lender,Bank or Credit Union has to provide in its accounts for its expected non payment, this amount is taken off the annual profits(I think).

When it becomes evident that it is not going to be paid ,it is best for both the lender and the borrower that it is written off. Written off does not let the borrower off, it is a financial tool. The lender puts down that it is v,unlikely to be recovered and its accounts take that as a loss.

At this stage no further interest is added, as adding interest and not getting it in is not a lot of use.
So the amount owed does not get larger, the client is still legally obliged to pay it and can be sued. In the event that the client is by then a no hoper the lender will call off the lawyers(who cost money)
If the borrower still has a job , the lender may continue to get a judgement and attach it to the defaulters salary, but it is a "feathers off a frog situation"

with regard to your last line, better it be repaid etc, of course it would be better, but in a no hope situation, that is unlikely to happen.
The debt can be written off and still be repaid/recouped. They are not neccessarily opposites.

Regards Rugbyman