Thinking about giving keys back to the bank..

LegacyUser

I'm probably posting this in the wrong place but I'm sure it will be moved if so!

My situation is as follows:

I live in the UK. I've a house in Ireland which is in negative equity. The rent is not covering the mortgage. To make matters worse the tenant is not paying the rent. It's a right mess basically. I should have kicked the tenant out ages ago. It wouldn't be easy to rent the house in the area where the house is.

Ideally I'd like to move home to Ireland over the next year as I've a business idea and want to set up my own company. I was recently in with the bank explaining my predicament but they said the mortgage has to be paid. I just cannot cope with the stress of all this especially with all the outstanding rent. I would be a lot happier if the house was just gone.

I know if I give back the house I'd probably never get a mortgage in the future. It won't stop me from setting up a company but it may be a problem setting up a company bank account.

I just can't cope with all this stress. Has anyone any ideas of what I can do? Any help would be greatly appreciated. I do understand others are in this situation though.

Neyite

Moving to Accommodation & Property

djimi

I presume you are aware that handing back the keys to the bank does not make the mortgage go away; you are still liable for the difference between what you owe and what the bank sell the place for?

Have you discussed the option of interest only payments on the mortgage for a while until you get yourself sorted? The general consensus seems to be that the bank do not want to have to deal with your house and that they will be open to making a deal that allows you more time to sort your affairs.

Also you need to get the issue with the tenant sorted. There is a very strict process that must be followed to the letter if you want to evict a tenant, but if they have stopped paying the rent then you really need to start proceedings to have them removed. Its not necessarily going to be a quick process; if they dig in their heals it may take a year to get sorted, so you are better to get the wheels in motion now.

handlemaster

would agree with the last poster . Get the tenant out first. Go to PTRB or what ever but get them out and quick. look at renting the house to a local housing agency or council if possible. If not rent it privately. go to accountant and tell them the situation that you are in ( they might big MIGHT charge you less). see what you will have after taxes are paid on the rent received. Then go to the bank tell them this is what you can afford and offer to pay that amount. The period of the mortgage could also be extended. Maybe view your options with the personal insolvency law that has come into place. You are based in the UK so if you are potentially bankrupt that could be an option. After 12 months your depts would be cleared. But that is only if you are genuniely bankrupt.

Best of luck. Remember it is only money keep the head up ! !

the_syco

Get rid of the tenant.

As for giving the keys back, the bank can f**k you over if they want.
You owe €300k, house is now worth €200k, bank sells it for €170k, and you'll still owe the bank the €130k balance. Or the bank could sell it for €70k, and you'll owe the bank €230k, etc.

Oh, and are the bills in your name, or the tenants name? Unpaid bills in tehir name follow them, but if they're in your name, you'll have to pay the bils when you get the tenant out.

Finally, if you're using an Estate Agent to manage the property, check with your solicitor if you can bring a legal case against the EA for negligence, and if so, tell the EA either they get the tenant out, or you sue the EA for whatever.

NIMAN

Being in negative equity is not a good enough reason for the bank I'm afraid.

Nor is the fact that rent doesn't cover the mortgage. When I owned a rental property, I had to add money every month to make up the mortgage.

You don't say if you can afford to pay the mortgage or not. In the banks eyes, you can either afford the mortgage or you can't. It sounds harsh but this is how the bank will look at it. There are lots of people in the country who are in negative equity but can afford to pay their repayments.

If you decide to 'hand the keys' back, is there a possibility that it might affect your ability to set up a business here? Would there not be a black mark on your credit rating?

Either way I hope it works out for you.

fasttalkerchat

NIMAN wrote: »

If you decide to 'hand the keys' back, is there a possibility that it might affect your ability to set up a business here? Would there not be a black mark on your credit rating?

Since he would still owe the difference after the sale of the house it would probably stop him getting a personal loan.

NIMAN

I was thinking of the Personal Insolvency legislation when it comes in.

I would guess we will see large numbers trying to declare themselves bankrupt to get out of their massive mortgage debts, but I am sure that this will have a major effect on them trying to get credit again for a long time.

The_Conductor

No credit cards etc for 5 years- and a bad credit record following you around for a further 5?

OP- as everyone else here has said- first step is get the tenant out. Focus on this issue step by step- forget about melodrama such as handing the keys back at the bank- deal with the issue logically- and the first logical step is get the tenant the hell out of there.

StillWaters

smccarrick wrote: »

No credit cards etc for 5 years- and a bad credit record following you around for a further 5?

OP- as everyone else here has said- first step is get the tenant out. Focus on this issue step by step- forget about melodrama such as handing the keys back at the bank- deal with the issue logically- and the first logical step is get the tenant the hell out of there.

I thought it was 7 years under the Personal Insolvency legislation. If I were you OP, as you are already in the UK, I'd be looking at their bankruptcy laws. Much cleaner and quicker.

skinsuit

If you live in the UK why not apply for bankruptcy in the UK?

This will take 12 months to complete. This time next year you can return to Ireland with a clean bill of financial health and the bank will have to absorb the losses involved in your property sale in which you will have zero interest.

Search for Steve Thatcher online, he seems to be pretty clued into the minutiae of the process. Good luck.

lima

skinsuit wrote: »

If you live in the UK why not apply for bankruptcy in the UK?

This will take 12 months to complete. This time next year you can return to Ireland with a clean bill of financial health and the bank will have to absorb the losses involved in your property sale in which you will have zero interest.

Search for Steve Thatcher online, he seems to be pretty clued into the minutiae of the process. Good luck.

Screw that, pay your debts.

riclad

GET tenant out, you have to follow the law,step by step, register tenant with prtb.Ie give,notice,by registered letter.
How much is house in ne,20, percent,40 per cent?
you,d need to say ,loan is say 150, house is worth 90k,
ie give more info to get more detailed advice.
bank will likely let you sell house,even if sale price is say 90k, loan is 115k.
wont let you sell house .if value is say 90k,loan,is 160k.
Every case is different.And bank also looks at your present income ,assets ,
savings,etc which you have to give ,if you want to get permiision to sell the house.
ie bank looks at ,how much can you pay,? on remaining loan balance.
I dont see how you can apply for bankruptcy if you have a good income in the uk,
but i,m not a financial expert.
theres loads of people living in eire, house is in ne 50 per cent,
they are still paying the full mortgage.
I read in the paper. some article by david mcwilliams, banks may have a veto,
ie if most of your debt is to a bank, 60 per cent approx, they may have a say,or be able to stop you going into personal bankruptcy, i think the details of the new law are still being discussed ,worked out.

skinsuit

lima wrote: »

Screw that, pay your debts.

Why? Some sense of bizarre moral rectitude; stiff upper lip whilst the OP's life is in tatters for the next 30 years?

Every Irish citizen has paid (and will pay) €14,000 each to bail out our banks.
Why would you NOT declare bankrupt?

lima

skinsuit wrote: »

Why? Some sense of bizarre moral rectitude; stiff upper lip whilst the OP's life is in tatters for the next 30 years?

Every Irish citizen has paid (and will pay) €14,000 each to bail out our banks.
Why would you NOT declare bankrupt?

Because he has a job and can clearly afford to live, he is just trying to get rid of a bad investment that he took off his own will. Now he is trying to squirm out of his duties to fulfil his obligations.

He owes money and he should pay. I was dilligent with my outlook on the world during the boom and didnt buy, so because of that I should help bail out some f**ker who wants to not pay his dues from a didgy investment?

It makes me sick.

skinsuit

riclad wrote: »

I dont see how you can apply for bankruptcy if you have a good income in the uk,
but i,m not a financial expert.


The OP is insolvent; i.e he clearly cannot meet his obligations to his creditors. This is enough to petition the courts for bankruptcy, the granting of which would be a formality.

skinsuit

lima wrote: »

Because he has a job and can clearly afford to live, he is just trying to get rid of a bad investment that he took off his own will. Now he is trying to squirm out of his duties to fulfil his obligations.

He owes money and he should pay. I was dilligent with my outlook on the world during the boom and didnt buy, so because of that I should help bail out some f**ker who wants to not pay his dues from a didgy investment?

It makes me sick.

Your problem lies with bailing out the banks not bailing out the OP and people like him. If the former had never happened, the latter would be inconsequential to you.

You are angry at the wrong party.

D3PO

skinsuit wrote: »

riclad wrote: »

I dont see how you can apply for bankruptcy if you have a good income in the uk,
but i,m not a financial expert.


The OP is insolvent; i.e he clearly cannot meet his obligations to his creditors. This is enough to petition the courts for bankruptcy, the granting of which would be a formality.

theres nothing in the opening post that indicated the OP is insolvent. Until I read otherwise Ive no sympathy for him/her.

If they are talking about starting a new business that to me says they have startup capital for it. Which means they have money to pay but havent been.

Pay your bills.

kippy

Being in negative equity/the rental income not covering the mortgage, are not reasons to default on your mortgage.
As mentioned here, handing the keys back doesn't make things any better. You go from having a potential asset/income and a debt to having nothing and a debt. Especially in the climate where the banks generally want to make it as straightforward for you as possible to hang onto the property.
I'd also add there may be implications for your ability to start a business also.

lima

skinsuit wrote: »

Your problem lies with bailing out the banks not bailing out the OP and people like him. If the former had never happened, the latter would be inconsequential to you.

You are angry at the wrong party.

I don't like people using this economic situation to get things for free either, debt forgiveness is disgusting and it skews normal working capitalism.

This person should pay his obligations. That goes for the everyone

StillWaters

lima wrote: »

debt forgiveness is disgusting and it skews normal working capitalism.

On the contrary. Some form of bankruptcy /debt forgiveness would be a feature of all capitalist societies, look at non recourse mortgages in the US, or the much more lax bankruptcy regime in the UK. It encourages entreupeurship and risk taking.

lima

StillWaters wrote: »

It encourages entreupeurship and risk taking.

I take your point, and it is fine for entrepreneurship but a lot of these people wanted to make a quick buck by purchasing property, now look where it has left us..

riclad

From what i,ve heard bout new insolvency law, you,ll only be allowed
a limited income, i understand ,its awful to have a house,say worth,1ook, loan 200k, The rent wont cover loan ,you are in ne ,ie its hard to sell it.
You have the option of going to interest only payment.
I believe the banks should say if you sell it, we,ll take off x per cent of the loan.
Remember ,the banks were bailed out by the government,
we,ll be paying the debt for 40 years.
THE banks are writing off some debts right now, but each case is unique.I know someone got about 18 per cent write off, btl loan.
This person works abroad, is not declaring bankruptcy,just put house up for sale.
IF i buy a house for 200k in athlone i,m stupid, but the bank is stupid to lend me 190k, on the basis of prices will rise ,and the rent no way covers the loan,
ie bank lend on btl was reckless and stupid.
ONCE prices dropped x amount of people had difficulty paying the loan ,and are trapped by negative equity.

lima

riclad wrote: »

From what i,ve heard bout new insolvency law, you,ll only be allowed
a limited income, i understand ,its awful to have a house,say worth,1ook, loan 200k, The rent wont cover loan ,you are in ne ,ie its hard to sell it.
You have the option of going to interest only payment.
I believe the banks should say if you sell it, we,ll take off x per cent of the loan.
Remember ,the banks were bailed out by the government,
we,ll be paying the debt for 40 years.
THE banks are writing off some debts right now, but each case is unique.I know someone got about 18 per cent write off, btl loan.
This person works abroad, is not declaring bankruptcy,just put house up for sale.
IF i buy a house for 200k in athlone i,m stupid, but the bank is stupid to lend me 190k, on the basis of prices will rise ,and the rent no way covers the loan,
ie bank lend on btl was reckless and stupid.
ONCE prices dropped x amount of people had difficulty paying the loan ,and are trapped by negative equity.

Another one blaming the banks for peoples collective STUPID decisions on buying property.

Why should I, as someone who pays tax, and who didn't buy a property as I knew Ireland wasn't the paradise people thought, have to help bail you people out, all the while having no choice but to buy an overinflated house thats not going down in value because the govt won't let the banks reposess them?

If the banks were allowed to sell the houses then it wouldnt be so bad I guess, but letting someone off e200k is ridiculous. Maybe up to e50k if they are truley screwed but this op guy could well afford it he just wants to get rid of a bad investment.

lima

riclad wrote: »

ONCE prices dropped x amount of people had difficulty paying the loan ,and are trapped by negative equity.

How could someone suddenly not afford to pay the agreed mortgage sum , just because their house went down in value? If anything their repayments went down because of lower interest rates??

Just because your house costs less doesn't give you the right to stop paying the loan, you agreed to it, you need to pay it off.

kippy

riclad wrote: »

ONCE prices dropped x amount of people had difficulty paying the loan ,and are trapped by negative equity.

People dont have "actual" difficulty in paying the loan unless their own financial circumstances changed (losing a job,paycuts etc etc)

D3PO

lima wrote: »

Why should I, as someone who pays tax, and who didn't buy a property as I knew Ireland wasn't the paradise people thought, have to help bail you people out, all the while having no choice but to buy an overinflated house thats not going down in value because the govt won't let the banks reposess them?

.

you have a choice. You don't have to buy an overinflated house you can rent.

lima

D3PO wrote: »

you have a choice. You don't have to buy an overinflated house you can rent.

I currently rent, Sorry I mean if I wanted to buy a house I'd have no choice..

Ipso

skinsuit wrote: »

Why? Some sense of bizarre moral rectitude; stiff upper lip whilst the OP's life is in tatters for the next 30 years?

Every Irish citizen has paid (and will pay) €14,000 each to bail out our banks.
Why would you NOT declare bankrupt?

And you will pay extra for any house some one decides they no longer want/can pay for.

riclad

I Don,T think he has the option to go bankrupt, as he,s working full time in the uk.
Theres many btl investors, their income has gone down, the rent doesnt fully over mortgage. Unless you can afford to pay surplus, after sale,
you can,t sell the house.You have to get permission from bank to sell the house.
They will require full info re your ,income, savings etc before they give permission.
UNless you are bankrupt ,the bank will always pursue you for outstanding debt.
They will make sure you can afford to pay the surplus ,after house sale,
i believe they, may write off x amount ,depending on your income,savings.
iT SOUNDS more like he feels fed up,eg i,m paying a 150k, loan on a house thats worth
80k.

jmayo

skinsuit wrote: »

Why? Some sense of bizarre moral rectitude; stiff upper lip whilst the OP's life is in tatters for the next 30 years?

Every Irish citizen has paid (and will pay) €14,000 each to bail out our banks.
Why would you NOT declare bankrupt?

And with the shi* you propose some of us will be paying a lot more than €14,000.
Should I and my family thank you for that proposal ? :mad:

skinsuit wrote: »

Your problem lies with bailing out the banks not bailing out the OP and people like him. If the former had never happened, the latter would be inconsequential to you.

You are angry at the wrong party.

No his/her problem I would bet is in bailing anyone out.
Because, and try and get this little salient point into your head, it will cost him/her yet more money.

It is unbelievable how some people fail to realise that "bailouts" cost taxpayers and indeed citizens money.
The only one benefiting from personal bailouts is the person getting it.

At least with the bailout of some banks (note I didn't say all) the country benefitted to an extent.
I know some would argue that, but a country losing it's systemic banks overnight would be in total chaos and turmoil.

And as for being angry at certain parties.
Maybe, like me, the poster is angry at people like you who are so willing to make me pay more for other people's financial decisions.
:mad: