Am I at greater repossession risk due to no negative equity?

Hi Pinsters, Seeking a quick initial opinion so I will be clear of my options once I need to seek formal professional advice;

The OH and I bought our 3 bed semi in D5 in Q2 of 2008 at 66% of its market value (then valued for probate at 420k). It was her childhood home and she inherited one third of the house in her mother’s will. We got a mortgage to buy out her two siblings for 280k -with about 268k still outstanding.

It was based on my (then pretty decent income c.€50k PA) and her p/t salary.

I am facing redundancy in a professional, built environment job. I know I will be highly unlikely to be re-employed in my chosen field and I have no hope of securing a salary even 60% as good as those earnings that secured the mortgage in the first place.

If I am unemployed and we cannot cover the current c.1,250 per month interest on the 280k mortgage, is my family home at greater risk of reposession than those in hopeless negative equity -as our lender could presumably recover near to the the full value of their loan by foreclosing on us?

Will we be screwed harder than if we were ridiculously insolvent due to this situation?

Similar properties to ours still listing for c.295k on Daft.

The OH won’t even consider downsizing at it is ‘her’ house. Stretching out the timeline to repay the principle is also out of the question due to my age and my OH’s siblings have long since used their inheritance of moving up the property ladder

Might you be better off selling anyway?

Banks are notoriously slow to reposses (400 this yar out of 36000 overdue and the same nuber again restructured.), you won’t have to worry about it provided you can get another job even on a lower salary.

I agree if you can’t get employment again quickly and debts mount up and value of property decreases would it better to sell and rent…sad for your OH I know…

Lets be practical.

If your mortgage payments consume more than 35% or thereabouts of your monthly disposable income, then it is considered unaffordable.

Go to the bank and tell them your mortgage payments are unaffordable and ask them to renegotiate the terms.

They will bend over backwards to stop you from becoming yet another non performing mortgage if they possess a single brain cell between their ears.

It is in their best interest to re-negotiate and keep you in the house in order to keep you on the hook for the full amount owed.

Surely that’s capital repayment plus interest? If so the option of going interest only for a while should be considered although this is not a long term solution. It may buy you some valuable time to try and find alternative work. Hope it all works out.

I’d say they’d be inclined to hope and give you a chance - they last thing they want is more inventory;
for their own benefit of course

No the OH insisted on the 5.5% Fixed being the better option at the time than a tracker and I went along with it against my better judgement :blush: it’s a kicker, we would be due to renegotiate in Q3 of 2011 - I presume that we will not be any position to renegotiate better terms if I am unemployed :frowning:

Thanks to all for the many helpful replies. Guess I am just another mug on the merry go round , I always saw property values falling as inevitable but never envisaged salaries heading so far south at the time of commitment or losing my job, I would work in a consultancy area where my company would have relied on over 70% of its turnover coming from public sector tenders/big semi-state contracts. That work is all gone now in Ireland and the UK as public authorities keep work in house due to the downturn in development activity.

Home repossession → citizensinformation.ie/en/ho … ssion.html

Pay no attention to the asking price on daft. Work out the income multiples of the people likely to buy your house if you want to get an idea of the maximum price likely. You may also have to subtract taxes and duties and conveyancing costs from that. New taxes and credit being hard to get in the following months means property prices are going to continue to undershoot until such time as a coup de grâce is administered to the banks.

Yes. the bank or receiver (failed banks are likely to be end up in wind up companies in the following months) will try to recover the outstanding debt, especially, if the debt is outstanding is less than the outstanding value of the house in the current market*. The danger is if you have other outstanding debts that they will be the first to recover their money, but at the moment, as long as there is a deal being done repossession is likely to be the last option unless you stop paying entirely.

For those in trouble MABS may be able to help advise on options or negotiations with the banks.
A possible “idea” for the future might be to get a relative to buy the house at knock down price so you can continue to live in it. This happened in Japan, and might be possible here.

Mortgage and Rent Arrears → mabs.ie/about_us/mortgage_Arrears.html

*This will be a problem in 10 to 15 years time for many people who have rescheduled payments or extended the period of the loan today. Whoever owns the debts will seek to redeem their value.