Ideas re leaving house behind

tigs2010

Hi,

First time post so please dont mind my juvenility! My husband and I were unfortunate enough to purchase an apartment at extremely inflated price about two months before the market collapsed. We are now stuck with the apartment paying 1400 a month for the next 35 years. He was let go and I was cut down to part-time. Depressing to say the least! Anyway, we have recently been looking into emmigrating to Canada where we both have very good prospective jobs. My only problem now is the apartment! Should I leave it vacant and ask for a 6 - 12 month pay holiday while we decide what we are doing, should I rent it out for the time we are away or should we just post the keys in the letterbox so to speak. It kills me that I pay so much when I could easily get a four bedroomed house for the same amount now. Any ideas/advice would be most gratefully received

ocokev

tigs2010 wrote: »

Hi,

First time post so please dont mind my juvenility! My husband and I were unfortunate enough to purchase an apartment at extremely inflated price about two months before the market collapsed. We are now stuck with the apartment paying 1400 a month for the next 35 years. He was let go and I was cut down to part-time. Depressing to say the least! Anyway, we have recently been looking into emmigrating to Canada where we both have very good prospective jobs. My only problem now is the apartment! Should I leave it vacant and ask for a 6 - 12 month pay holiday while we decide what we are doing, should I rent it out for the time we are away or should we just post the keys in the letterbox so to speak. It kills me that I pay so much when I could easily get a four bedroomed house for the same amount now. Any ideas/advice would be most gratefully received

If you are willing to move to Canada then the best option for you is to rent it out.
You obvisiouly have it furnished to a certain degree so it is tennant ready.
Try going through a leasing company as they will look after any tennant problems when you are away.
Any time that the apartment is unoccupied means that it is costing you money, so have someone ready to move in ASAP.

Joey the lips

You could rent it out. But as your going abroad you will have to use a management company. After all your hardly likely to come back if they stop paying rent.

Alternativly if you have a trusting family member you can ask them to manage it for you.


The downside to what ever you choose is that not only have prices gone down but rents have gone down as well so you may have to put money into it.

Just as a matter of interest if you let it go will you be declared "bankrupt" so to speak and if so will that effect you abroad....? This part I dont know.

danbohan

tigs2010 wrote: »

Hi,

First time post so please dont mind my juvenility! My husband and I were unfortunate enough to purchase an apartment at extremely inflated price about two months before the market collapsed. We are now stuck with the apartment paying 1400 a month for the next 35 years. He was let go and I was cut down to part-time. Depressing to say the least! Anyway, we have recently been looking into emmigrating to Canada where we both have very good prospective jobs. My only problem now is the apartment! Should I leave it vacant and ask for a 6 - 12 month pay holiday while we decide what we are doing, should I rent it out for the time we are away or should we just post the keys in the letterbox so to speak. It kills me that I pay so much when I could easily get a four bedroomed house for the same amount now. Any ideas/advice would be most gratefully received

Its a problem many many people have right now and you wont be alone in thinking of the options you outlined
the keys in letterbox i am sure is tempting , but if you do you will still owe the bank the balance from what they can get on the sale of your apt and your mortgage , that might effect your credit rating in Canada in the future and here if you return . renting is option , but will it cover your mortgage and if not can you afford to pay difference and build a new life in Canada ?, many people i know are on payment holidays or interest only , its just keeping your head above water and their is a tsunami coming in the shape of much higher interest rates. i would suggest you talk to your bank together with a financial adviser / lawyer see what options they will consider .

D3PO

OP sorry to hear about your circumstances.

The bad news is surrendering the property doesnt absolve you of your debt Im afraid. If you were to do thsi the bank would sell and you would still owe the difference between what they get and what the mortgage is.

Now of course if your emigrating and have no intention of ever returning to Ireland thats fine, but if you ever think you will be returning here then thats not an option.

taking a payment break doesnt seem to make sense becasue your interest will be compunded whilst you do this so all that will happen is you will owe more.

Best option sounds like renting the place out and covering the delta between rental income and mortgage yourselves. You will have to do your own sums to see whats the best option for you though, but dont hesitate to contact MAB's and your bank aswell to work out something that works for all parties.

best of luck resolving this, best advise you can be given is to talk about resolving the issue. Dont bury your head in the sand and think it will fix itself

Treehouse72

The problem with renting it is that OP will almost certainly be subsidising the renter as they won't get €1400pm rent for the property. If they get €1000 pm then that is a shortfall of €5,000 pa, before one even considers management fees, mainteance costs, income tax etc. OP could end up subsidising it to the tune of over €6,000+ pa. Over 35 years that will really add up.

The notion that one can simply offload a property's negative equity woes onto a renter is an out-dated one. It doesn't work like that any more since rents and renters are now both well down on where they were.

OP, I am not qualified to advise, but just to say there is no option in Irish law to hand back the keys. If you do that, you will still be liable for the debt. I cannot say for how long, but I believe it is a considerable amount of time.

D3PO

Treehouse72 wrote: »

The problem with renting it is that OP will almost certainly be subsidising the renter as they won't get €1400pm rent for the property. If they get €1000 pm then that is a shortfall of €5,000 pa, before one even considers management fees, mainteance costs, income tax etc. OP could end up subsidising it to the tune of over €6,000+ pa. Over 35 years that will really add up.

The notion that one can simply offload a property's negative equity woes onto a renter is an out-dated one. It doesn't work like that any more since rents and renters are now both well down on where they were.

OP, I am not qualified to advise, but just to say there is no option in Irish law to hand back the keys. If you do that, you will still be liable for the debt. I cannot say for how long, but I believe it is a considerable amount of time.

i dont think anybody was suggesting that the burden could be offloaded to a renter

steerforth80

just offer the bank whatever the renter of your property is paying.. should tide them over for a few years.. explain your situation im sure there is 1000's in the same position. Havent heard of any banks chasing people if there is some payment made.

tigs2010

Thank you all for your advice. I actually work in a Solicitors office so I know that IF I do come back and let the property be foreclosed upon, I will still owe the difference to the bank and my credit rating will be affected for 7 years. Did not know it would still be affected if you live elswhere so thanks for that. Guess i have much more research than I thought, but thanks everyone xx

tigs2010

taking a payment break doesnt seem to make sense becasue your interest will be compunded whilst you do this so all that will happen is you will owe more.

Best option sounds like renting the place out and covering the delta between rental income and mortgage yourselves. You will have to do your own sums to see whats the best option for you though, but dont hesitate to contact MAB's and your bank aswell to work out something that works for all parties.

This is so helpful thank you. I think the idea of a payment break was indeed a head in sand option!

D3PO

tigs2010 wrote: »

taking a payment break doesnt seem to make sense becasue your interest will be compunded whilst you do this so all that will happen is you will owe more.

Best option sounds like renting the place out and covering the delta between rental income and mortgage yourselves. You will have to do your own sums to see whats the best option for you though, but dont hesitate to contact MAB's and your bank aswell to work out something that works for all parties.

This is so helpful thank you. I think the idea of a payment break was indeed a head in sand option!

Trust me the banks dont want to reposess anymore than you want to lose the house. They will be more amenible to suggestions from you than you think.

just start the ball rolling work out every scenario, clearly define your current budget incomings and outgoing and make a proposal to the bank. MABS should be able to help you with this

billybigunz

You made your bed now lie in it. Paying off your debts is the only legal and moral option.

tenchi-fan

tigs2010 wrote: »

Thank you all for your advice. I actually work in a Solicitors office so I know that IF I do come back and let the property be foreclosed upon, I will still owe the difference to the bank and my credit rating will be affected for 7 years. Did not know it would still be affected if you live elswhere so thanks for that. Guess i have much more research than I thought, but thanks everyone xx

Hi
One things you should consider is the affect of declaring bankruptcy if you work in law, accounting or finance. Future employers can consider you a risk.

Also as far as I know if you try to walk away form your debt the bank could sell your debt or pursue you through an agency which could cause you a lot of hassle. I'm not sure if banks can do this or if they would try to.

tenchi-fan

billybigunz wrote: »

You made your bed now lie in it. Paying off your debts is the only legal and moral option.

I'm going to disagree with you, billybigunz, because bankruptcy is also a legal option. As for morality, it would teach the banks not to give such big loans. €1400 is a lot of money to pay for an apartment.

billybigunz

tenchi-fan wrote: »

€1400 is a lot of money to pay for an apartment.

And did the bank force him to pay that?

danbohan

billybigunz wrote: »

You made your bed now lie in it. Paying off your debts is the only legal and moral option.

what has morality got to do with any financial dealings in this country ?, good for the poster shes not stuck in her bed and can build a new life for herself in a new country , maybe you should too, it might do wonders for your attitude!

billybigunz

danbohan wrote: »

what has morality got to do with any financial dealings in this country ?, good for the poster shes not stuck in her bed and can build a new life for herself in a new country , maybe you should too, it might do wonders for your attitude!

Me and my crazy law abiding attitude based on maturity and personal responsibility.

TJJP

billybigunz wrote: »

Me and my crazy law abiding attitude based on maturity and personal responsibility.

Yes, there's quite a 'delta' between the points of view on here alright.....

fontanalis

danbohan wrote: »

what has morality got to do with any financial dealings in this country ?, good for the poster shes not stuck in her bed and can build a new life for herself in a new country , maybe you should too, it might do wonders for your attitude!

You're spot on, as long as there are tax payers in Ireland to pay for others mistakes people should walk away from obligations they were forced at gun point to sign into.

Idbatterim

I was watching the frontline a few weeks ago, and the property crash and the banks were being discussed, one guy said he rented throughout the boom, that he could see how ridiculous the asking prices were and it was all built on nothing. Kenny then says you were "lucky" where exactly did luck come into making a sound educated decision, he then harped on that we had to be close to the bottom! I cant imagine what a unbelievably bad situation some people like the OP are in, what they dont even own, now ownes them! I mean atleast if a marriage or anything else break down you can get out of it, this situation really is awful. Look ofcourse ultimately the buyer bears responsibility. I hope to god these lessons wont be forgotten, but it looks like they will I just read that 78% of first time buyers plan to buy within the year! Spare us all! Read the DMCW article in the INDO today...

radioactiveman

billybigunz wrote: »

Me and my crazy law abiding attitude based on maturity and personal responsibility.

I agree 100% but it seems to be a different law that applies to bankers at the moment, it's hard not to see it in that context

2qk4u

billybigunz wrote: »

And did the bank force him to pay that?

There was no big deal in paying these mortgages when people had jobs. Its not their fault they cant pay.

tenchi-fan

billybigunz wrote: »

And did the bank force him to pay that?

No, but one of the reasons why a bank can charge interest on a loan is because there is a risk of them not getting paid back. The greater the risk, the greater the interest rate!

This isn't about being law-abiding. It's not an issue of morality. You are not "wronging" the bank by not paying them back.

Companies go under the whole time because they can't afford to pay their creditors and the exact same thing can happen to people.

The bankruptcy procedure needs to be strict enough that it doesn't reward reckless behaviour. From the op post you can see bankruptcy is the last option the op wants to consider.

Bankruptcy isn't nice. It has a social stigma and destroys your credit rating for at least 7 years. But it might be a worthwhile alternative to a few decades of poverty. The op thought a house would provide security so why should she be punished, when so many others beg the council for free housing!

danbohan

fontanalis wrote: »

You're spot on, as long as there are tax payers in Ireland to pay for others mistakes people should walk away from obligations they were forced at gun point to sign into.

as far as i know nobody was forced at gun point ,unless you consider slick pressure marketing by the banks as gunpoint , but people made mistakes , genuine uninformed tragic mistakes that will blight the rest of their lives , what exact purpose is served by them continuing to pay for the nightmare , you mentioned the taxpayer baling out the banks , they have not started to bale out the personal defaults that are building up and will become a flood , just because you or me are not in that postion does not mean we can sanctimoniously judge somebody if they decide to walk away

danbohan

billybigunz wrote: »

Me and my crazy law abiding attitude based on maturity and personal responsibility.

i take it your not sean fitzpatrick or michael fingleton so ? dude if you were in the position of the poster you would walk too , a lot of this moral / law abiding crap is just more irish hypocrisy , but of course thats what this country is built on .

Graces7

Was there not a similar thread last year?

am i bovvered

Treehouse72 wrote: »

The problem with renting it is that OP will almost certainly be subsidising the renter as they won't get €1400pm rent for the property. If they get €1000 pm then that is a shortfall of €5,000 pa, before one even considers management fees, mainteance costs, income tax etc. OP could end up subsidising it to the tune of over €6,000+ pa. Over 35 years that will really add up.

Hi OP I believe that renting is the best option for you. If you can both move to Canada and find quite decent jobs and we say an input of 7k per annum needed should be managable, although this figure is speculative but working on that amount for 35 years is €245k at that stage you own the property which would be an income for retirement.
I realise this is not ideal but at least it would keep your options open.

tigs2010

Wow, open a can here! Firstly Billybigun - I am a girl. Secondly, I have a family - two little girls. I had no choice other than to buy a house (apartment) to try give them a secure port of call. Perhaps you would approve more if I had not re-educated myself and just received a Council house for free while living off benefits? Danbohan, thank you - you are completely correct. Bankruptcy is the last thing I want because, unlike the big bankers in this country I do feel a moral obligation to at least try to repay my debts and because I am just "one of the little people" I dont just get mine handed to NAMA. I have to say Billy, your attitude is disgraceful. I can only assume that you were one of the lucky ones who were not affected by job losses that impact severely on your family life. Lucky you. I only hope Karma does not bite you on the way back around. I have, thanks to all of the positive posts, decided to rent and move away. Thank you all for all your help and advice.

RentDayBlues

I had no choice other than to buy a house (apartment) to try give them a secure port of call

Lets be realistic here, this was not a "no choice" decision - you wanted to own your own home rather than rent so you bought an apartment. No one forced your hand on this, you made the decision knowing what you were getting yourself into and now you've got caught out.

Yes - there are loads of people out there in the same situation who have huge mortgages on properties that will never be worth the cost and who have lost their jobs, but trying to justify your decision to buy a property by claiming you had no other choice is ridiculous.

I decided not to buy but to continue renting, while everyone I knew was talking about what a fool I was not to jump in the boat with them. Now that the boat is sinking, I'm sure quite a few of them would give anything to be in my situation. You gave into social pressure to purchase a property and you can't just now walk away from it. Yes, your situation is awful but life is hard!

Gurgle

tigs2010 wrote: »

My husband and I were unfortunate enough to purchase an apartment at extremely inflated price about two months before the market collapsed. We are now stuck with the apartment paying 1400 a month for the next 35 years. He was let go and I was cut down to part-time. Depressing to say the least! Anyway, we have recently been looking into emmigrating to Canada where we both have very good prospective jobs. My only problem now is the apartment! Should I leave it vacant and ask for a 6 - 12 month pay holiday while we decide what we are doing, should I rent it out for the time we are away or should we just post the keys in the letterbox so to speak.

You weren't 'unfortunate', you just didn't think long term when you bought. Now you have to.

Separate the issues: You own an apartment in Ireland, you have jobs to go to in Canada and you have a debt to service.

The worst thing you can do is 'post the keys in the letterbox', this can only result in the apartment being sold at current prices, leaving you with nothing but the outstanding debt.

So rent out the apartment and off you go.

Knock the rent off the repayments and how much will you be out of pocket per month to cover the rest? €500?

In the long term the overall trend is always inflation, but the capital on your loan will never rise - every payment made reduces your capital.

In 10 years, the rent will have risen - the monthly cost to you will be a lot less.

In 15-20 years the rent will easily be covering the repayments.

In 35 years you will be looking at retirement and you will own a city-centre apartment.

billybigunz

I'm a disgrace? You are the one that wants to stiff us all with a bill for a poxy apartment that you didn't have to smarts not to buy.