Can I sell my house?

era030708

If I move out into rented accommodation would it be possible to sell my house? Mortgage balance is currently about €320k and I think I'd sell it for about €210k. So does anyone know if I can legally sell my house, pay €200k off the mortgage and continue paying the balance over say the next 15 or 20 years? Thanks

snubbleste

You'd need the mortgage provider's permission.

Gin Fizz

I think there is some sort of way of doing this now with some banks. I think they give you permission to sell your house even if you are in negative equity

era030708

Gin Fizz wrote: »

I think there is some sort of way of doing this now with some banks. I think they give you permission to sell your house even if you are in negative equity

I hope so, wonder if KBC are doing it?

rcdk1

I think the scheme Gin Fizz is referring to is "negative equity mortgages" and it appears KBC will be offering them (http://www.independent.ie/business/personal-finance/property-mortgages/new-hope-for-families-in-negative-equity-trap-3065012.html). However, these mortgages are for people to sell their existing house and carry the negative equity into a new mortgage to buy a new house.

It is unlikely that your lender would allow you to sell the house and take on the €120k of negative equity as an unsecured loan (i.e. where they have no collateral). Even if they were to allow you, the interest rate on it would probably be four or fives times your mortgage interest rate.

population

It is an interesting issue because my old neighbour tried to sell his house 3 or 4 years ago and received an offer that was 40k off what he would have needed to clear the mortgage. KBC refused to sanction the sale saying that they would not allow him to change the 40k into an unsecured loan.

Now the house is over 130k in negative equity and he is miles behind on his repayments as he has no job and no renters for the house. The bank really seem to have dropped the ball on this as they could have allowed the sale to commence 3 years ago and got something close to the original loan amount back.

Now though it looks like they will be forced to repossess a house that they don't want from someone who cannot pay them anything. All they can do is take out a judgement on him which though destroying his credit record for 12 years will actually get them no closer to recuperating anything on the loan.

Senna

rcdk1 wrote: »

However, these mortgages are for people to sell their existing house and carry the negative equity into a new mortgage to buy a new house.

Maybe.....
There will be a point were the loan will be in effect a bridging loan, unsecured, if you were to stop the process mid way, you could be left with an unsecured loan and the bank could do very little other than raise the interest rate.

killers1

Bear in mind that any loan with negative equity is a partially unsecured loan as the property IS the security...

rcdk1

Senna wrote: »

Maybe.....
There will be a point were the loan will be in effect a bridging loan, unsecured, if you were to stop the process mid way, you could be left with an unsecured loan and the bank could do very little other than raise the interest rate.

The OP was looking for a legal way of selling the house.

riclad

I,VE heard the banks will only give NE mortgages, to people on good incomes,they will be strict about it.IT seems ridiculous to me ,a bank wont let someone whose 40k in ne cant sell their house ,in a case where the bank is government owned,ie we the tax payer, are paying for the government bailout in taxes,we,ll be paying for it it 30 years time.
The people who need it most couples in small apartments, may not be able to get a NE loan.
I think banks take it on a case by case basis,a man, was on the radio, bought house in longford, sold house for 120k, now owes the bank 80k.I dont remember the details, i think he moved out voluntarily, gave the house back to the bank,as he could not afford to pay the full mortgage.
AS above you need to ask the banks permission,if the house is sold,in ne ,your credit rating will be effected ,it may be difficult to get even a small mortgage in the future, it may also depend on your present income.
You need to know,what would be the interest rate on the 90/ 100k balance ,if the house was sold.

Donadea Leo

Difficulty with this is bank (generally although always worth a discussion) will not allow sale of house until mortgage loan is paid off. so unless you can somehow bridge the gap, you're kind of stuck - it's the reason so many houses are still over valued as vendors literally can't sell them cheaper not because they have unrealistic dreams of celtic tiger prices.

Francie Barrett

Short answer - you have too much negative equity to sell at this stage.

BostonB

I don't really understand why a bank won't let someone have a unsecured bank loan when the alternative is a property in negative equity for amounts vastly in excess than the unsecured loan. The bank is exposed to a greater loss if the person goes bankrupt with the house. Is it just greed on the part of the Bank as they potentially make less on an unsecured loan. or am I being simplistic.

engineermike

era030708 wrote: »

If I move out into rented accommodation would it be possible to sell my house? Mortgage balance is currently about €320k and I think I'd sell it for about €210k. So does anyone know if I can legally sell my house, pay €200k off the mortgage and continue paying the balance over say the next 15 or 20 years? Thanks

My experience OP is yes you can, the approach is the key factor.
- my first port of call would be a banking intermediate - to get abreast of your situation and propose a reasonable structure for settlement and if available (!) negotiation on debt amount after sale - to the bank in question.
- Negotiated settlement with either your legal representative or an astute adviser is also a route to explore ( outside of the banking inter).
It's like deja-vu for me personally quite a few friends and acquaintances negotiated with banks for return of property, farms etc. back in the 80's to settle debt through sale and agreed repayment of a 'figure'.

Here we are again in 2012, and I'm party to these kind of talks again!
Approaching bank with a buyer in hand and an idea of your bottom line for a repayable amount (practical repayment structure / current remuneration / job security / repayment history etc. - same criteria as if your applying for loan or mortgage )
Is rental not an option ? for you - allowing time for market to recover with the benefits of obligated debt repayment and ownership, etc.
mike f

riclad

Even if the bank takes over the house, they might sell it at a lower figure,eg 180k then you are left with 100 k loan plus interest.
THE banks sorted out the farmers debts in the 80s ,there was x amount of farmers, now the banks cant afford to write down large amounts for everyone thats in negative equity.IF you can get a good tenant it maybe easier for you to rent it out and see does the financial situation improve.
I,VE not heard of anyone getting a substantial writedown on personal mortgages in ireland.
ALL i ve heard is maybe the bank sells the house,
the customer is told you now now loan minus house sale amount.

the country did not owe massive debts in the 80s ,like it does now.

Lantus

BostonB wrote: »

I don't really understand why a bank won't let someone have a unsecured bank loan when the alternative is a property in negative equity for amounts vastly in excess than the unsecured loan. The bank is exposed to a greater loss if the person goes bankrupt with the house. Is it just greed on the part of the Bank as they potentially make less on an unsecured loan. or am I being simplistic.

Banks lend 'money' in exchange for tangible assets. I've highlighted money because when they lend the money what they do is type in the figure into a computer and literally 'create' the money. It doesn't exist in what we would call a real format and never will. The bank doesn't need to have this cash at any point to make the loan.

By contrast you are now indebted to the bank with a real asset (land and/or property which the bank can take from you if you fail to keep up your payments.

Interest is quite literally the creation of money from NOTHING. A scam of monumental proportions.

Theres only 3 things you need to understand about finance: -

fractionalised banking
compound interest
FIAT currency

It's the finest pyramid scheme ever devised and what we are witnessing now is it's demise.

It's not that banks are greedy or do or dont want the property. They just cannot lose in any situation.

BostonB

In normal circumstances I can understand the value in an asset, and the fear of losing money invested in it. Equity etc. But in a negative equity scenario of such a large amount, its not really an asset anymore. The risk of of someone going bankrupt to escape a 300k debt is much higher than for a 100k one. Though if someone starts talking to their bank about selling something in negative equity, you've got wonder would they not be better going bankrupt (in the UK etc) than staying to pay the 100k loan they are left with.

If someone is on a good salary enough to maintain the 100k payments, and create other income using the money they are no longer servicing the 300k debt with, then that would seem to be a good reason to stay, assuming they have other reasons to be here.

I suspect a lot of this debt is going to written off eventually. By doing later rather than sooner, I think the banks are just making the problem worse.

riclad

Banks can lose, bank stocks lost 90 per cent plus, there will be 1000 s of staff losing their jobs, if prices continue to fall, more people will stop paying their loans ,or just go thru bankruptcy process.AIB bank of ireland would probably be gone but for support from ecb and imf.THE ecb did not want irish banks to collapse because it would damage the european banking system, and the euro ,hence we got a bailout,
and we are paying back all the bondholders.
THE banks are putting off a write down, eventually they,ll have to
write off some debt , theres houses that were 500k, now worth 230k.
IF you have a full time job ,in ireland ,i doubt if its practical
to go to uk ,for bankruptcy ,unless you are on a low income.
I think theres a new bankruptcy law on the way for ireland in 2 years approx.

Balmed Out

Lantus wrote: »

It's not that banks are greedy or do or dont want the property. They just cannot lose in any situation.

Cant stand people banging on like this. The Banks owners ie. the shareholders lost more then any other group in the recent financial crash.