Complicated one!!!!

mozattack

Hi all,

I have friends who need help. As i work in accountancy they expect (or hope) that I have all the answers to their queries but the truth is that I dont. They are good friends and I would like to help them given their financial position - which I am sure many are also sharing. I have fairly detailed information and I hope you can help me who in turn will help them because I am embarrassed enough with how many times I can say "i don't know"

This is the story.... Ann used to work in accounts and her last job (a contract position) ended in March 2010 when she was leaving to have her first child (a daughter). She is with Barry who works as a solicitor earning just over €50k p.a. They bought their current house in peak times paying €350k for a 3 bed semi in Waterford... house is probably worth €250k now and the mortgage is €305k or thereabouts... repayments are €1,650 per month (Capital plus interest) and it is a good tracker rate.

They also have other properties, one being Barry's old apartment which was bought 6 years ago for around €170k and now €140k is owed on it. It is a 3 bed and they find it hard to find (serious issues with tenants going in there). It is Cap & Int and the repayments are €650 per month (tracker) but i think another €100 per month must be paid as a management fee. The most they can rent it for is €450 per month after agent's fees and it is currently empty...again!

Third property is Ann's old house which was bought off plan for €186k and they owed €194k on it (between buying and exectuting the deed the value had increased to €216k so they got finance to fit out some of the house). This house is worth €150k max and is a 3 bed in a village around 7 miles from Waterford. It is rented to someone on social and they are there for nearly 2 years paying rent of €650 per month. The lads can't afford the mortgage on this and are paying interest only of €375 per month which is again a good tracker mortgage.

Finally, Barry refinanced the flat 3 years ago to buy a place in Bulgaria, a one bed apartment in a popular coastal resort. It is a decent size and around 200 metres for a beach which is fantastic... they bought it for €58k to include fit out, legals etc and the loan is now just less than €40k. It is kind of rented with the rent merely paying the management fees and they haven't been there since it was bought. It sounded like an indulgance but they are using it this year and will be able to have a 2 week break in mid summer for 4 people for less than 1k and intend on doing that every year because of the lovely beach and incredibly cheap costs over there.

All in all they owe around €680k, but the good thing is that it is spread across 4 places (is that a good thing???!)

Barry earns €50k per annum and works in another position earning a further €6k per annum - that second job is due to end later this year. Ann only has social welfare, the child benefit for her daughter and also earns a few pound in a job which can be done from home.

They have split in the last few months up mainly due to money pressures (I think) with Barry moving home (so he can rent the other places) and Ann living in their old home. Ann has now got a medical card for the daughter and applied for single parent allowance. Barry pays their mortgage but long term this mightnt be possible but pays it for the moment.

Long term they are doomed, Ann has been offered an interview for a job but the wages are such that she would have less money if she took the job due to loss of social welfare, paying petrol, paying for childcare etc. It is not that she doesnt want to work cos she worked constantly since leaving college but she cant take a job which will end up costing her money (more or less).

They will both lose their part-time jobs in a few months and will struggle to pay the mortgages... and given their circumstances and the long term issue in repayming the mortgages they are checking to see would be of benefit to cease mortgage repayments rather than pay on for a few more years and then lose the houses?

I dont know these rules and given the situation i said i will see what i can do to help!!!!! Its so complicated for them that I feel for them.