Mortgage worries

sheen1234

Hi all,

Im a guy in my early 30s - unfortunately separated from a marriage with kids. I built a house in the boom times around 2006 with my then partner. There is approx €200,000 remaining on the mortgage over 20 years now and I'm now taking on the mortgage on my own.

- I earn approx €30,000 after tax at the moment.
- The mortgage is currently approx €15,000 per year so around 50% of my wages which seems very high

It was all manageable with 2 wages while i was with my ex partner - but now I'm struggling a lot to make these payments alone.

I've spent the last year trying lots of ways of dealing with the situation - speaking to mabs, etc. The bank came back with a suggestion that my repayment would be reduced by approx 300 per month - but extended by 17 years!! ...so i'd be paying the mortgage until I'm 70.

It seems like a lucrative payment drop to give me some breathing space - but will ultimately ensure I'm paying a mortgage until I'm at retirement age. Anyone else in a similar situation? Any advice on what road I should take? Seems like an enormous decision that will shape the rest of my financial life and its causing me a lot of stress.. I work hard and do my best for my kids and just want to keep the home for the kids at the end of the day.

I see two options at the moment...

Option 1 - keep paying the current amount and continue to struggle. Hoping ill earn more money in a few years and be more comfortable with these repayments in a few years time etc..

Option 2 - take the reduction in payment and extension of the mortgage, be a bit more comfortable financially. But keep paying until I'm 70 instead of mid 50's.

Any advice, opinion or insight on what to do would be really appreciated.

Thanks.

Can you not rent out a room?
You can earn 14k a year I believe, tax free.
Should pay your mortgage

Deub

Did you sell your original house?

MissShihTzu

I think you need to speak to an IFA (Independent Financial Adviser). No good speaking to your bank as they will offer only their own products. An IFA might be able to shift the mortgage to a different provider on more favourable terms. Or perhaps a broker?

I hope it works out for you. Good luck!

mickoneill31

You can extend the mortgage and take the reduction. Then as your situation improves you can over pay. You don't have to wait until your 70 to pay it off.

What's your rate and who's your bank? My mortgage is more than yours, similar term and I'm just about paying €15k a year.
Do you get TRS? That should be worth about €150 a month. I think that was applicable on houses bought at that time.

davo10

Obviously we know nothing about your relationship with your ex partner, but is she part owner of the property or a partner in the mortgage? If so, you could be paying the mortgage by yourself for years then your ex could demand half of the house.

sheen1234

@ bubblypop - thanks - I have considered renting many times yes. Im a little hesitant to be honest with young children in the house but if it needs to be done then i will of course do anything to help keep the house. Airbnb may be a better fit I'm thinking too.

However - i'm in a rural area with not too much demand unfortunately - realistically the max rent i think would get for a room in the house would be around €200-300 per month. Nowhere near the 14,000k figure unfortunately.

@Deub - this is the original house I built.

@davo10 - the relationship with my ex is ok. She is still a named owner of the property yes. In time i guess she could do that. Down the road her name will of course be taken off the mortgage - my solicitor had told me i would have to buy her out of the property - and possibly pay her half of the amount that has been paid while we lived together. I can't really consider how this is possible as i can barely pay the current amounts.

The_Conductor

Sheen1234 - I'm sorry to hear of the predicament you find yourself in.
Realistically both you and your ex should be paying the mortgage- your lender is breaking all manner of rules having you pay it on your own to 50% of your net income.

You need to talk to your lender first and foremost- and see what they are in a position to offer you- as to be brutally honest- the proposal to reduce the repayment to what- 900-1000 a month? quite simply is too little- at too great a cost.

Mortgage rates are going up- its now inevitable- by how much is anyone's guess- however, its entirely predictable that you could find yourself in 18-24 months time back paying the exact same amount as you are now- only until you're 70 years of age..........

I appreciate fully the difficulty you're going through- and how you're now left servicing the mortgage on your own- however, really, its not sustainable- and the proposal you've been given, while it might work today- its entirely predictable that it would be wholly unsuitable before long. You need a viable proposal- the current 'offer' (I'd hardly call it an 'offer') is not something that you can shoulder other than immediately.

Talk to your lender- go back to MABS- and see what else they can do.

There was a local authority scheme in the past (damned if I can think of the name of the scheme)- whereby the local authority/council would take over a portion of the mortgage and you'd pay them rent in lieu of say half the mortgage- while paying down the rest of the mortgage- and at a future point in time- you could take over the separate part of the mortgage........... I'm racking my head trying to think of the name of the scheme- it'll probably come to me later.

I know finances are tight- but paying a couple of hundred to an independent financial advisor- probably wouldn't go astray either.

On the brightside- you're not playing ostrich, putting your head in the sand and hoping the problem goes away. You do seem to be doing your best- you just need to hammer it home that the offer you've been given is wholly inappropriate- and unsuitable, on a number of different grounds- most notably the irrefutable fact that interest rates are going up- and you *need* something to insulate you from the rises- along with helping you bring the monthly cost down.

MissShihTzu

The rent-a room might be better in terms of tax. You can earn up to 14k without paying tax. AFAIK, Airbnb will be fully taxable.

Where is your ex partner - are they paying for somewhere too?

Is selling and downsizing an option?

Graham

sheen1234 wrote: »

Option 1 - keep paying the current amount and continue to struggle. Hoping ill earn more money in a few years and be more comfortable with these repayments in a few years time etc..

Option 2 - take the reduction in payment and extension of the mortgage, be a bit more comfortable financially. But keep paying until I'm 70 instead of mid 50's.

Option 3 - take the reduction for now. Revisit the decision in a few years when your financial circumstances have hopefully improved.

The_Conductor

Graham wrote: »

Option 3 - take the reduction for now. Revisit the decision in a few years when your financial circumstances have hopefully improved.

Problem with Option 3- is the OP risks being back in the exact same position in 18-24 months time- only with 17 extra years on the mortgage...........

A severe renegotiation is the only viable option- but MABS have not done anything at all of consequence for the OP thus far.

The position of his partner in all this- is the wildcard- is she likely to randomly turn up and demand he sell the house and give her half the proceeds? It happens........

MissShihTzu

The_Conductor wrote: »

Problem with Option 3- is the OP risks being back in the exact same position in 18-24 months time- only with 17 extra years on the mortgage...........

A severe renegotiation is the only viable option- but MABS have not done anything at all of consequence for the OP thus far.

The position of his partner in all this- is the wildcard- is she likely to randomly turn up and demand he sell the house and give her half the proceeds? It happens........

That is very likely (unfortunately). It happened to me. On balance OP, you might be better selling and cutting your losses. It's not worth the stress...

sheen1234

Sorry folks cant seem to do the quoted reply thing ill try respond individually.
Thanks a lot for all your comments, they are all really really appreciated.
I've been agonising over this for a long time now.

@pg633 - my ex partner is renting another house - she doesnt want anything to do with the house & mortgage. selling and downsizing is last resort stuff the home was built on my family land. Lots of strong emotional attachment there and has been the kids home for the past 10 years now. Of course if it comes to it i will sell and downsize but for now I will do everything i can to avoid that.

@ mickoneill31 - thanks - im on approx 4% fixed with ulster bank. I get TRS yes - it is ending this december too..

@ MissShihTzu - thanks yes I have spoken to one, but feel like i should try another at this stage.

@The_Conductor - thanks a lot, I really appreciate this - has opened my eyes a bit.. i agree, a reduction of 300 per month for an additional 17 years of payments comes in at 100K extra payments for them over the life of the mortgage. Horrible life changing repayments really ...

Back to mabs again i think (not sure how good they really are to be honest unfortunately) - i think a really good financial advisor might be my best approach at this stage.

Thanks again for all advice and opinion - helping the stress levels.

Graham

The_Conductor wrote: »

Problem with Option 3- is the OP risks being back in the exact same position in 18-24 months time- only with 17 extra years on the mortgage...........

A severe renegotiation is the only viable option- but MABS have not done anything at all of consequence for the OP thus far.

The position of his partner in all this- is the wildcard- is she likely to randomly turn up and demand he sell the house and give her half the proceeds? It happens........

I'm not seeing how the OP could try and argue inability to pay when it's apparent that's not the case. Don't ask, don't get I suppose.

The ex would be the bigger concern to be honest. Professional legal advice would be appropriate there.

OP, I'm most definitely not trying to belittle the stress you're under. Hence my suggestion to accept the banks offer so you can take a couple of years to catch your breath, live a little, and give yourself enough headspace to try and work out how to improve your financial position (earnings).

sheen1234

@The_Conductor - thanks - yes MABS really just advised me on the SFS that was submitted to the bank - no real other help. But maybe they'll help some more now - ill be in touch with them early next week again.

@ MissShihTzu - If i sold the house - it would probably just about cover the mortgage repayments remaining - very little or nothing left over - so there would be no proceeds or any real benefit for my ex.. i think..

But I agree anything can happen with an ex though...

@ Graham - thanks - i know thats the predicament I'm in - in one way I'm inclined to take this 'offer' to take immediate pressure off but does this then mean ill be paying this mortgage until I'm very close to 70 or at least 65 best case scenario... if i can afford a bit more down the line..

Graham

sheen1234 wrote: »

@ Graham - thanks - i know thats the predicament I'm in - in one way I'm inclined to take this 'offer' to take immediate pressure off but does this then mean ill be paying this mortgage until I'm very close to 70 or at least 65 best case scenario... if i can afford a bit more down the line..

I can't think of any reason why you couldn't bring the term back down or over-pay if your circumstances change. The only way to know for certain is to speak to your lender.

wordofwarning

Call the IMHO in Dublin. I know people who dealt with them and they are amazing.

IMO you may need to gear yourself up for possibly walking away from the house and asking for a write off of the residual debt. I know you are attached to the area etc. But this house is a massive burden, as well as a home. As you said yourself, you might be paying off this house for the next 35 years! Why continue to put yourself in that situation?

You need someone like the IMHO who are skilled at what they do. You can google them and see their work.

Unfortunately there are a lot of people who are out there to make money off people in your position. I know someone whose OAP parents mortgage was brought by a vulture fund. A 'financial advisor' negotiated a deal where she gets €150 a month for managing their finances, the vulture fund get €600 a month and then when they die the vulture fund takes ownership of their house. They got completely shafted.

kaymin

sheen1234 wrote: »

@pg633 - my ex partner is renting another house - she doesnt want anything to do with the house & mortgage. selling and downsizing is last resort stuff the home was built on my family land. Lots of strong emotional attachment there and has been the kids home for the past 10 years now. Of course if it comes to it i will sell and downsize but for now I will do everything i can to avoid that.

I would take advantage now of the fact that your partner doesn't want anything to do with the house / mortgage and ask her to legally relinquish her interest in the house. She will probably do this now when there is so little equity in the house but may change her mind when equity is built back up after your back-breaking efforts.

The added complication is the bank may want to keep her on the mortgage (I assume you're both named on the mortgage?) which would complicate 'negotiations' with your partner. Would be worth getting the views of the bank - they may be ambivalent if she has no job and no expectations of getting one.

Graham

kaymin wrote: »

I would take advantage now of the fact that your partner doesn't want anything to do with the house / mortgage and ask her to legally relinquish her interest in the house.

+1

Professional legal advise should be sought.

The_Conductor

Are the children living with you- or your ex?
Its a factor in all of this..........

sheen1234

@ The_Conductor - the children are living with us both - changes from week to week depending on work days. A little bit more with my ex perhaps. but they stay with me approx 3 night every week.

@ wordofwarning - thanks ill look them up now. At the stage now where I know this has to be considered - but really cant comprehend paying 900+ euro for an additional 17 years on top of the initial 20... until im 70...

@ kaymin - thanks - definitely something to think about - I know she will be very cautious about taking her name off the mortgage without getting a payout of some kind. She's working, getting the FIS, gets all the children's allowance, has been getting back to work allowance - is now much more comfortable in many ways but plays the poor mouth.

@graham - thanks ive been in touch with a solicitor about it all

- -

Is the consensus that 50% of someones income way too much to even consider paying long term? Long term - i would hope and expect that my wages will increase incrementally over the next few years as I move up the ladder in work - so that 50% figure should drop over time - but easy to say that too...

kaymin

sheen1234 wrote: »

@ kaymin - thanks - definitely something to think about - I know she will be very cautious about taking her name off the mortgage without getting a payout of some kind. She's working, getting the FIS, gets all the children's allowance, has been getting back to work allowance - is now much more comfortable in many ways but plays the poor mouth.

Your partner needs to be made aware that she's on the hook for the mortgage if you default - if I was her I would want my name off the mortgage and give up any interest in the house (which has minimal equity in any case).

You have to present your default as a real possibility so as to get her to relinquish her interest in the house.

EmoCourt

Take the offer to extend the mortgage. If/When you earn more, then overpay the mortgage so you're not paying it off until you're 70.

StupidLikeAFox

sheen1234 wrote: »

@ wordofwarning - thanks ill look them up now. At the stage now where I know this has to be considered - but really cant comprehend paying 900+ euro for an additional 17 years on top of the initial 20... until im 70...

I wouldn't get hung up on the that timeline - you don't want to struggle for 15 years and then realise you have missed out on a chunk of life by being a slave to your mortgage

Plus:
1. Over time the mortgage will be eaten up by inflation so that 900e will become cheaper if you get me.
2.You can always renegotiate payments or over pay over the next few years when/if wages improve,
3. The kids will grow up and cost you less or even start contributing themselves also
4. There's the possibility of meeting someone down the road who could share the cost as well

I would take it for the breathing space an peace of mind at least. In 3 years time things could be different and you can reassess where you are then

wordofwarning

OP have you got a valuation on the property? If the value of the property higher than mortgage?

Have you missed any mortgage repayments in the last 5 years?

sheen1234

wordofwarning wrote: »

OP have you got a valuation on the property? If the value of the property higher than mortgage?

Have you missed any mortgage repayments in the last 5 years?

I haven't got a valuation but the mortgage is around 200,000 the house is in the region of approx 250,000 I think comparing to similar in the area

Yes I have missed some payments over the past 2 years throughout the separation - I've always made a monthly payment - sometimes less than the full amount. I regret it so much now. If I had the ability to struggle and keep up the original repayments I would be in a much stronger position now I think to renegotiate.

Before the separation and all this I never missed a payment for 8 years of repayments... these 2 years of a messy separation could haunt me now I fear ....

PhoenixParker

sheen1234 wrote: »

I haven't got a valuation but the mortgage is around 200,000 the house is in the region of approx 250,000 I think comparing to similar in the area

Yes I have missed some payments over the past 2 years throughout the separation - I've always made a monthly payment - sometimes less than the full amount. I regret it so much now. If I had the ability to struggle and keep up the original repayments I would be in a much stronger position now I think to renegotiate.

Before the separation and all this I never missed a payment for 8 years of repayments... these 2 years of a messy separation could haunt me now I fear ....

Ask Ulster bank for a list of their approved valuers. (Might be on their website)
Call one and pay your €130 and get a valuation. Find out how much your mortgage is exactly and multiply that by 1.25. Tell the valuer your hoping the valuation comes in above that to reduce your Loan to Value ratio.

If it does, go back to Ulster bank and ask for the lower rate (ltv less than 80%) and extend your term. When your payment history is better switch mortgages for a lower rate again. (You could look into this now too, you never know your luck).

Don't worry about the term, take the extension, you can overpay, it just gives you a comfort zone.

sheen1234

PhoenixParker wrote: »

Ask Ulster bank for a list of their approved valuers. (Might be on their website)
Call one and pay your €130 and get a valuation. Find out how much your mortgage is exactly and multiply that by 1.25. Tell the valuer your hoping the valuation comes in above that to reduce your Loan to Value ratio.

If it does, go back to Ulster bank and ask for the lower rate (ltv less than 80%) and extend your term. When your payment history is better switch mortgages for a lower rate again. (You could look into this now too, you never know your luck).

Don't worry about the term, take the extension, you can overpay, it just gives you a comfort zone.

Thanks for this - I'll try any route to help really - I'll do this tomorrow.

wordofwarning

sheen1234 wrote: »

I haven't got a valuation but the mortgage is around 200,000 the house is in the region of approx 250,000 I think comparing to similar in the area

Yes I have missed some payments over the past 2 years throughout the separation - I've always made a monthly payment - sometimes less than the full amount. I regret it so much now. If I had the ability to struggle and keep up the original repayments I would be in a much stronger position now I think to renegotiate.

Before the separation and all this I never missed a payment for 8 years of repayments... these 2 years of a messy separation could haunt me now I fear ....

Would you sell it and walk away? Split the 50/50 profit with your ex and start a clean slate elsewhere?

How much would a similar house cost to rent? I know in some parts of the country, there is a glut of rental properties and some times it does not make sense to buy.

4ensic15

wordofwarning wrote: »

Would you sell it and walk away? Split the 50/50 profit with your ex and start a clean slate elsewhere?

How much would a similar house cost to rent? I know in some parts of the country, there is a glut of rental properties and some times it does not make sense to buy.

What parts of the country have a glut of rental properties? Some counties have less than 50 rental properties available.