Renegotiating mortgage payments with your bank - Has anyone done it

Americaninexile

or does anyone know anyone that has done it?

I'm in a situation whereby approx 90% of my wages are going to service my mortgage. I'm only just keeping my head above water by renting a room in my house.

I intend to go to the bank soon to have a good chat with them and see what options I have but has anyone actually done this already and what was the outcome? I have a good job and am well paid but I bought near the top of the property bubble and I can't afford my mortgage, as it stands, at the moment. Has this happened to you? How accommodating were the bank and what options did they put to you? I know they won't write off the debt but I desperately need them to do something for me or I won't be able to pay off the mortgage at all.

Just to be clear - I'm not looking for advice, I know what I must do and that's talk to my bank BEFORE I start missing payments (which as of yet I haven't done), I just want to know what outcomes people in a similar position had.

Thank you.

Head The Wall

i know someone trying to go through this at the moment, bank not being overly helpful. I have been telling her to go to MABS as they will have a bit more clout and will know who to speak to in relation to renegotiation.

The_Morrigan

Most bank managers will let you sit down for a chat with them - they would prefer re-negotiation than default.

To be honest a massive factor is the remaining term of the mortgage and the age you currently are.
The bank can re-negotiate your mortgage but it usually means adding years to the end of the existing term - if the re-negotiated term goes past your retirement age then they are in a bit of a predicament as they can't lend to anyone after they turn 65.
Depressing I know but with 30-35 year mortgages you have to think that far into the future

nightster1

Americaninexile wrote: »

or does anyone know anyone that has done it?

I'm in a situation whereby approx 90% of my wages are going to service my mortgage. I'm only just keeping my head above water by renting a room in my house.

I intend to go to the bank soon to have a good chat with them and see what options I have but has anyone actually done this already and what was the outcome? I have a good job and am well paid but I bought near the top of the property bubble and I can't afford my mortgage, as it stands, at the moment. Has this happened to you? How accommodating were the bank and what options did they put to you? I know they won't write off the debt but I desperately need them to do something for me or I won't be able to pay off the mortgage at all.

Just to be clear - I'm not looking for advice, I know what I must do and that's talk to my bank BEFORE I start missing payments (which as of yet I haven't done), I just want to know what outcomes people in a similar position had.

Thank you.

Make an appointment with the manager, bring in a list of your income & expenditure, show the current position as best as you can. You should be able to negotiate an interest only repayment period or a moritorium (holiday from repayments)

Head The Wall

I think a good solution is to reduce the payments say for 2-3 years and then start to claw back the difference after that. This is all based on the fact that things improve a bit by that time though.

antoinolachtnai

You are not in too bad a place, by the sounds of things, if you have kept everything current. If it is any help, I have seen banks dealing with people who have not paid anything for 12 months and then the bank agreed to go interest only for a year.

There is a chink in your argument that you should watch out for. Whether the property has gone down in value or not has no impact whatsoever on your ability to pay. The things that effect that are your wages, the interest rate you are paying and your lifestyle.

What can reasonably be done will obviously depend on your situation. If you have some equity in the devalued property, and if the period remaining on your mortgage is less than (65 - your age) and you are on a tracker, it will be quite easy. If not, then it will be much tougher (though still possible, in the case above, the person was on the wrong side of 65).

I would really try to go and get some financial advice before you go to the bank. You need to be quite professional, and maybe a little bit tough to get the best deal out of them. The important thing is not to commit to anything you are not absolutely certain you can follow through on.

The financial adviser will probably suggest to you to price up your lifestyle and determine what you actually can afford to pay. This is what you will offer to the bank. The bank may ask you to justify your lifestyle.

You will be fine, but remember, this is business. You are not going to the bank for 'a chat'. You are going there to tell them that something very serious is happened, that the situation is very serious and that you are very serious about coming to a realistic arrangement with them.

Americaninexile

By the way if anyone has come to an agreement with a bank but does not wish to post publicly on this thread please send me a private message and I will completely respect your anonymity, I would get great comfort out of knowing that others are negotiating successfully with their respective bank.

Head The Wall wrote: »

I think a good solution is to reduce the payments say for 2-3 years and then start to claw back the difference after that. This is all based on the fact that things improve a bit by that time though.

Thanks. That would be something I would be more than happy to happen as my personal circumstances would hopefully be different in a couple of years which would allow me to increase my payments.

antoinolachtnai wrote: »

You are not in too bad a place, by the sounds of things, if you have kept everything current. If it is any help, I have seen banks dealing with people who have not paid anything for 12 months and then the bank agreed to go interest only for a year.

There is a chink in your argument that you should watch out for. Whether the property has gone down in value or not has no impact whatsoever on your ability to pay. The things that effect that are your wages, the interest rate you are paying and your lifestyle.

What can reasonably be done will obviously depend on your situation. If you have some equity in the devalued property, and if the period remaining on your mortgage is less than (65 - your age) and you are on a tracker, it will be quite easy. If not, then it will be much tougher (though still possible, in the case above, the person was on the wrong side of 65).

I would really try to go and get some financial advice before you go to the bank. You need to be quite professional, and maybe a little bit tough to get the best deal out of them. The important thing is not to commit to anything you are not absolutely certain you can follow through on.

The financial adviser will probably suggest to you to price up your lifestyle and determine what you actually can afford to pay. This is what you will offer to the bank. The bank may ask you to justify your lifestyle.

You will be fine, but remember, this is business. You are not going to the bank for 'a chat'. You are going there to tell them that something very serious is happened, that the situation is very serious and that you are very serious about coming to a realistic arrangement with them.

Well without being too dramatic I cannot go on the way I am. I haven't missed a payment yet and won't for the next couple of months but beyond that I will be struggling and it's either go into default or come to some agreement before I do.

My circumstances have changed since I drew down the mortgage. I have taken a pay cut of approx 15% and the cost of my mortgage has increases. However, there is an even bigger elephant in the room, I bought the house with my then partner a few years ago, we had signed for it long before it was ready to move in to and unfortunately we split up. She has not contributed a cent to the mortgage though and I also want to take her name off the mortgage, she wants to be immediately off the mortgage, but I'm sure the bank will resist this.

I'm mid/late 30's, have a 100% permanent safe pensionable job, am earning circa 50k, have no equity in the house, I'm on a variable mortgage and the mortgage will be paid off when I hit 65.

Head The Wall

Don't be so sure about the 100% safe permenant pensionable job. There is no such thing nowadays anywhere. Also includes the PS

bobbysands81

Head The Wall wrote: »

Don't be so sure about the 100% safe permenant pensionable job. There is no such thing nowadays anywhere. Also includes the PS

Bloody sure mate.

antoinolachtnai

Well, you just need to figure out what you can afford. Can you keep on paying 85 or 90 percent of what you are paying at the moment? It would really be better for yourself if you could.

They might lower it to less than that if you push, but all you are doing is pushing back the awful day when you have to pay it back. You will have to increase your payments again in a couple of years if you are to pay the thing off before you are 70. But I guess you know that.

Do you know how much of your monthly payment is interest and how much is principal? If you are at the start of a big mortgage, I guess it is mostly interest. They might accept interest-only and they might give you a few months holiday on the interest, but I'd say that would be about it.

I don't know what to say about the ex situation. She is on the hook with you if it comes down to it. Again, I guess you knew that. If she has any spare money you could go after her for it, but I'm guessing that she probably doesn't. But it is a shared loss, not yours alone and you might find yourself having to go and get the money back from her somehow. This will be a tough thing to do in practice, for all sorts of reasons.

Anyway the most important thing is to deal with this and not to give up. There is a way through. It will not be easy, but you can make it.

Idbatterim

Op where is the property located and how many bedrooms?

Americaninexile

Idbatterim wrote: »

Op where is the property located and how many bedrooms?

It's a three bed in a good area, I'm in negative equity of at least 220k.

Americaninexile

antoinolachtnai wrote: »

Well, you just need to figure out what you can afford. Can you keep on paying 85 or 90 percent of what you are paying at the moment? It would really be better for yourself if you could.

They might lower it to less than that if you push, but all you are doing is pushing back the awful day when you have to pay it back. You will have to increase your payments again in a couple of years if you are to pay the thing off before you are 70. But I guess you know that.

Do you know how much of your monthly payment is interest and how much is principal? If you are at the start of a big mortgage, I guess it is mostly interest. They might accept interest-only and they might give you a few months holiday on the interest, but I'd say that would be about it.

I don't know what to say about the ex situation. She is on the hook with you if it comes down to it. Again, I guess you knew that. If she has any spare money you could go after her for it, but I'm guessing that she probably doesn't. But it is a shared loss, not yours alone and you might find yourself having to go and get the money back from her somehow. This will be a tough thing to do in practice, for all sorts of reasons.

Anyway the most important thing is to deal with this and not to give up. There is a way through. It will not be easy, but you can make it.

Thanks again for the advice mate. Asking the ex for money is not a runner, I know legally she should have to pay but in reality she has not been around since we bought the house and I'm never asking her for money for it. I don't know how this will pan out with the bank though as they'll probably think differently.

Paying about 75%/80% of the mortgage would be do-able. I will have decent inheritance coming to me eventually and I would hope my personal situation would be different within the next couple of years that would allow a second person come on the mortgage with me also, that would obviously increase my capacity to pay back the mortgage. I'm at the start of the mortgage so it's top heavy with interest at the moment.

I had hoped to move home to the States some time soon but that doesn't look likely now!

Reduced payments for a few years whilst continuing to pay the mortgage would definitely be my preferred option.

The_Conductor

Irrespective of whether your partner has paid a red cent towards towards the mortgage or not- legally he/she has an interest in the property- which the bank are not going to willingly quash. If the property boom had continued- and you were now 220k in profit on paper- any solicitor worth their salt would have your ex demanding their slice of the 220k, in exchange for taking their name off the mortgage- irrespective of whether they had made payments or not.

That they did not remove themselves from the mortgage- is pretty irrelevant. There is a debt associated with their portion of the mortgage.

Alongside talking to MABS and the bank- you need legal advice on this. It is my understanding that if you try to take over the mortgage on your own- aside from anything else- you will effectively be transferring 110k to your ex partner- which would trigger a tax demand as it would be viewed as taxable income.

You need proper advice on this.

antoinolachtnai

I think you are being a bit unrealistic here.

A second person won't be able to come on the mortgage with you unfortunately. The problem is that the property is in negative equity and will be for some time to come. It would be against a person's interests to go on a mortgage in such circumstances. To get on the mortgage, another person would need independent legal advice and the aid of a solicitor. No reputable solicitor will give advice or even accept instructions to do something so patently against the client's interests. If someone wants to move in with you and contribute to the mortgage (as rent, basically) that is fine of course, but they won't have any financial interest in the property or responsibility for the mortgage.

I don't know how hard-line the bank will be on this, but the reality of the situation is that you are unwilling or unable to pay the mortgage, but you are also unwilling to even ask the person who owes half the money on the mortgage to pay anything. This is a luxury you cannot really afford. I am sure there is a sad story behind this, but that doesn't matter now. The bankers, solicitors and other advisors will no doubt listen sympathetically, but they really don't care. This is business, it's about money, not emotions.

If you give the line to the bank that you gave us, the bank will ask you if you can access your inheritance now. If you really want to carry the debt without going back to your ex to seek a contribution you will likely have to do this. I have no idea what the practicalities of this would be. Your relatives might have to sell an asset. This is a tough thing to ask a relative, but it seems like a likely consequence of your plan. (If I were the relative, and I knew the full facts, I would refuse to give you the money, because you are essentially going to use it to cover someone else's debt, with no benefit to yourself.)

I have to tell you that this is not looking that good from the bank's point of view. 75 percent or 80 percent is really not enough in your situation. Even at 80 percent, you are turning it into a 45 year mortgage. In other circumstances, that might be acceptable, but the bank will want to pursue the other party before they will settle for that. If they think the other party has any assets or income that could pay off part of the mortgage, the best thing for them to do is to threaten to foreclose now. That might force the other party to settle (for example, by going out and borrowing 100,000 euros and paying it in to the bank to get off the mortgage and deeds). This could well be the best thing for you as well.

I am not sure if this is what the bank would do, but from the facts, this would seem like the most obvious course for them.

It is of course true what smccarrick says. As you are going, if you do eventually pay the thing back, with the help of an inheritance or whatever, your ex is still going to have a claim on the property. Legal advice and financial advice is certainly on the cards for you.

But really you will have to deal with the emotional issue. You might be tempted to cover up or skirt around the facts when you talk to the bank or the advisers. Please do not do this. It is time for the full, unvarnished truth, not for wasting time. Anyway, the figures will tell their own story.

I know you didn't want any advice, and you are certainly right not to depend on advice you get on the Internet. Good luck with it. Keep your spirits up, keep focused on your job.

D3PO

antoinolachtnai wrote: »

I think you are being a bit unrealistic here.

A second person won't be able to come on the mortgage with you unfortunately. The problem is that the property is in negative equity and will be for some time to come. It would be against a person's interests to go on a mortgage in such circumstances. To get on the mortgage, another person would need independent legal advice and the aid of a solicitor. No reputable solicitor will give advice or even accept instructions to do something so patently against the client's interests. If someone wants to move in with you and contribute to the mortgage (as rent, basically) that is fine of course, but they won't have any financial interest in the property or responsibility for the mortgage.

I don't know how hard-line the bank will be on this, but the reality of the situation is that you are unwilling or unable to pay the mortgage, but you are also unwilling to even ask the person who owes half the money on the mortgage to pay anything. This is a luxury you cannot really afford. I am sure there is a sad story behind this, but that doesn't matter now. The bankers, solicitors and other advisors will no doubt listen sympathetically, but they really don't care. This is business, it's about money, not emotions.

If you give the line to the bank that you gave us, the bank will ask you if you can access your inheritance now. If you really want to carry the debt without going back to your ex to seek a contribution you will likely have to do this. I have no idea what the practicalities of this would be. Your relatives might have to sell an asset. This is a tough thing to ask a relative, but it seems like a likely consequence of your plan. (If I were the relative, and I knew the full facts, I would refuse to give you the money, because you are essentially going to use it to cover someone else's debt, with no benefit to yourself.)

I have to tell you that this is not looking that good from the bank's point of view. 75 percent or 80 percent is really not enough in your situation. Even at 80 percent, you are turning it into a 45 year mortgage. In other circumstances, that might be acceptable, but the bank will want to pursue the other party before they will settle for that. If they think the other party has any assets or income that could pay off part of the mortgage, the best thing for them to do is to threaten to foreclose now. That might force the other party to settle (for example, by going out and borrowing 100,000 euros and paying it in to the bank to get off the mortgage and deeds). This could well be the best thing for you as well.

I am not sure if this is what the bank would do, but from the facts, this would seem like the most obvious course for them.

It is of course true what smccarrick says. As you are going, if you do eventually pay the thing back, with the help of an inheritance or whatever, your ex is still going to have a claim on the property. Legal advice and financial advice is certainly on the cards for you.

But really you will have to deal with the emotional issue. You might be tempted to cover up or skirt around the facts when you talk to the bank or the advisers. Please do not do this. It is time for the full, unvarnished truth, not for wasting time. Anyway, the figures will tell their own story.

I know you didn't want any advice, and you are certainly right not to depend on advice you get on the Internet. Good luck with it. Keep your spirits up, keep focused on your job.

I think this is a bit harsh and very alarmist.

I also believe your severly second guessing the bank here. Its of far more benefit to the bank to have a performing loan and if that means stretching out the mortgage term to reduce payments to 80% of its current level Id be pretty sure they would rather this than a default.

Obviously the bank would have a preference that the OP's ex contributes and the term remains as is, but there main priority is cashflow and keeping the loan performing.

Personally speaking OP id be forcing your other half to contribute. Feelings dont come into this why should you let her off the hook for 110k ??

antoinolachtnai

D3PO wrote: »

I think this is a bit harsh and very alarmist.

I also believe your severly second guessing the bank here. Its of far more benefit to the bank to have a performing loan and if that means stretching out the mortgage term to reduce payments to 80% of its current level Id be pretty sure they would rather this than a default.

That would be true if this were a 'can't pay' situation. But it's not. It's a 'won't pay' situation (not by the OP obviously, but by the other party on the mortgage). The bank's hand is being forced.

The bank may take a more gentle route for sure, but it might not make much sense. At a minimum they would want to ensure that the other party doesn't take on any new loans. Otherwise they are putting their principal at unnecessary risk.

I don't mean to be unsympathetic, and banks do not want to foreclose on people who are doing their best, but this situation has an uncomfortable ultimate logic to it.